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Wednesday, December 6, 2023

Amazon, Walmart, Target are paying for college, but money isn’t everything in education

  • Major employers of low-wage workers have made the right decision to offer tuition payment upfront for those who want to go back to school, as reimbursement programs placed a financial burden on employees.
  • But education experts are concerned too much focus on money misses many of the other reasons workers don't go back to school.
  • The history of employer-sponsored education is one marked by low participation rates, and more data on improvement in uptake will be key to judging these efforts, but knee-jerk skepticism about corporate intentions won't help employees succeed, the experts say.

Employees restock shelves of school supplies at a Wal-Mart Stores location in Burbank, California, U.S.Bloomberg | Bloomberg | Getty Images

Amazon, Walmart, Target and McDonald's are among the companies now offering various ways for their employees to obtain an education for free. It's not a new idea in the world of employee benefits — employer-sponsored education has a history that goes back decades. But the education programs for low-wage workers are receiving more focus as the companies promote them in tight labor market, and that inevitably has led to skepticism about who benefits more: employer or employee?

Claims of lesser online degrees and a timeline to degree completion that will tie an employee to a low-wage job for years — if they even stick with the learning — are easy to make.

"They're doing this because it sounds great and it's cheap – almost no one can use them, they are all online/cut rate degree programs," said Peter Cappelli, director of Wharton's Center for Human Resources. 

Some of the earlier, successful efforts in the employer-sponsored education market were locally-based and included in-person education. As more programs migrate to nationally scaled online degrees, inherent challenges in that learning model will be tested. It is an efficient model for employers and education leaders, and it holds promise, but it remains unproven on a large scale.

"We don't know much about the value of these programs to workers," said Iris Palmer, a senior advisor for higher education and workforce with the education policy program at New America. "We don't have great data."

Among Palmer's concerns: it is a good messaging vehicle for companies right now, and an easier and cheaper way to recruit than continually increasing wages or improving jobs. "In a world where there is increased worker power and labor power, it's a way to change the subject, say 'it is a transitional job' and helping people move up," she said.

It can reduce regulatory and public opinion pressure on the companies, which is valuable to them, and as a result, Palmer says it is appropriate to approach these programs with skepticism. But education experts also say knee-jerk skepticism about the companies' motivation won't ultimately help employees. The goal should be to increase participation in these programs and that requires understanding the reasons why so many adult learners don't go back to school, and even if they do, don't complete degrees.

Employee education participation rates low

One finding that has been consistent in the history of employer-sponsored education — participation rates are low.

Wharton's Cappelli said the limited historical data on these programs showed that they did attract better candidates and people stayed longer with employers. But that was a minority of workers. "Works for the companies, but in the past, employers never made use of them," he said.

Part of the problem was the use of tuition reimbursement rather than upfront payment by employers, a lesson that the big companies have learned and are addressing through debt-free, 100% education payment.

"Reimbursement, for an entry level position, is relatively meaningless," said Dan Ash, vice president of research at The Graduate! Network, which has long studied adult learning programs and employer-sponsored education benefits.

Chipotle introduced its debt-free degree program in 2019 and it has seen a significant increase in participation among employees. In 2020, the first full year of the debt-free degree program, about 25% of the 4,500 employees taking advantage of Chipotle-sponsored education benefits were in the debt-free degree program, or roughly 1,100 employees. "That's huge uptake for us," said Marissa Andrada, the company's chief diversity, inclusion and people officer.

But money is not the only hurdle. The gulf between what employers think explains low participation — that many employees are not interested in going back to school — and the reality from the employee lens, is large. One consistent finding, according to Sallie Glickman, co-founder and interim CEO of The Graduate! Network, is lack of awareness among employees.

"Even in the most well-meaning places, companies that sincerely want people to know, it turns out they don't," Glickman said. "It is always startling to us how few employees really know about the programs. You and I know more about these programs than the vast majority of front-line workers."

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