w3.1 - Howard Schultz, the CEO of Starbucks Corp. announced...

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Howard Schultz, the CEO of Starbucks Corp. announced his company will spend more on health insurance for its employees this year than on coffee beans. Howard Schultz said his firm provides health care coverage to Starbucks employees who work at least 20 hours a week. Schultz is not alone in his concern about employee health care costs. General Motors spends more on health insurance than on steel. For GM, the cost amounts to $1,525 per car produced. However, it is misleading to compare the $200 million Starbucks spends on its 80,000 U.S. employees, or the $5.6 billion GM expects to spend on its 1.1 million workers and retirees this year, to the cost of a cup of coffee or an automobile. In the case of GM the exorbitant amount GM pays to cover its workers, their families, and retirees have little to do with building cars. GM made the decision decades ago to offer generous health coverage and deferred benefits such as retiree health care. The company also confused that the cost of health benefits would not rise significantly. But as technology evolved and third party payment for medical care became common, the prices for health services rose at three times the rate of inflation. GM's gamble, combined
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This note was uploaded on 07/26/2010 for the course MBA MBA 5002 taught by Professor Drhahn during the Spring '10 term at South Georgia College.

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w3.1 - Howard Schultz, the CEO of Starbucks Corp. announced...

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