Companies lure hourly workers with college benefits
NEW YORK (AP) — When Daniella Malave started working at Chipotle at age 17, the main perk she was looking for was a free meal. As it turns out, she also got a free college education.
While working full-time at the chain, Malave completed two years of community college with a $5,250 annual scholarship from Chipotle. She then enrolled in the company’s free online college program, which earned her a bachelor’s degree in business administration from Wilmington University in 2020.
“I didn’t have to pay for my education,” said Malave, 24, who now works as a recruiting analyst at Chipotle in New Jersey. “Every time I say it out loud, I think, ‘Is this real?’
Chipotle is one of more than a dozen companies that have launched free or near-free college programs for their front-line workers over the past decade. Since 2021 alone, Walmart, Amazon, Target, Macy’s, Citi and Lowe’s have made free college available to more than 3 million US workers.
Companies see the programs as a way to recruit and retain workers in a tough job market or train them for management positions. For hourly employees, the program removes financial barriers to obtaining a degree.
Thousands of people are now enjoying the benefits. Starbucks, which operates an online college program through Arizona State University, says it currently has 22,000 employees enrolled in the program. Guild Education, which manages programs for Walmart, Hilton, Disney and others and offers online programs at more than 140 schools, says it has worked with 130,000 students in the past year.
But some critics question that the programs gloss over deeper problems, such as pay so low that workers can’t afford college without it, or hours so erratic that it’s too difficult to go to school in person.
“I really think they’re providing these programs to get around the problem of just paying people more, giving people more confidence, improving their quality of life,” said Stephanie Hall, a senior fellow at the nonpartisan think tank The Century Foundation.
Hall said the lack of data also makes it difficult to evaluate the programs’ effectiveness. Chipotle, Walmart, Amazon and Starbucks, for example, do not share graduation rates, in part because they are difficult to count because students often take a semester or more than four years to earn a degree. Rachel Carlson, CEO of Guild Education, which also does not disclose the number of graduates, says the more relevant data is whether taking college classes helps employees get raises or raises.
Others question the quality of online programs and whether students’ degrees will sell or help them pursue other careers, especially since many companies limit what employees can study. For example, Discover fully funds 18 undergraduate degrees at eight universities through the Guild.
“It seems to me that most of these programs are counting on employees to stay with the company,” said Kathryn Meyer, a fellow in the management studies program at the Brookings Institution’s Brown Center for Education Policy.
Amazon, for its part, advertises college programs that offer opportunities outside the company, such as nursing. But Walmart cut the number of programs it offered to 60 from 100 because it wanted to focus on skills that fit careers with the company.
More than 89,000 employees have taken part in Walmart’s college program and more than 15,000 have graduated, said Lorraine Stomsky, Walmart’s senior vice president of learning and leadership.
Tanner Humphries is one of them. He started working at Walmart in 2016, bouncing between hourly jobs while trying to fit his intramural schedule at Idaho State University. But as part of the company’s online program, which it launched with the Guild in 2018, he transferred his credits to Southern New Hampshire University and graduated in February with a bachelor’s degree in computer science. At 27, he now works at Walmart headquarters on the cybersecurity team as a salaried employee.
“I was working paycheck to paycheck, living with a whole bunch of friends to pay the rent and stuff,” he said. “The transition from hourly pay is truly life-changing.”
Companies paying for college or graduate school is nothing new. But for decades, benefits were mostly offered to salaried professionals. In many cases, workers had to spend thousands of dollars to pay for training and then get reimbursed by their company.
The Starbucks program, which launched in 2014, was originally a tuition reimbursement program, but in 2021 it began covering tuition costs in advance. Now 85% of the company’s stores have at least one employee in the program, which will celebrate its 10,000th graduate in December.
Carlson said companies see an average return of $2 to $3 for every dollar they invest in education because it saves on recruiting and retention costs. Walmart said that participants are four times less likely to leave the company than non-participants and are twice as likely to receive a promotion.
“If I know my cashier isn’t going to show up tomorrow, it’s going to cost me $7,000, I’d rather spend the average of our partners today — $3,000 to $5,000 — to pay for her college education,” Carlson said.
The companies say the programs also provide opportunities for minorities. Macy’s, which started its program with Guild earlier this year, said half of the women who signed up are women of color.
Some companies, such as Chipotle and JPMorgan Chase, offer online programs through the Guild, as well as scholarships that students can put towards in-person training at local institutions. Amazon’s college programs offer a combination of online and face-to-face learning at local colleges or universities.
Hall said she wishes more companies offered that flexibility, since online learning isn’t for everyone.
Zachary Hecker, 26, a Starbucks employee in New Braunfels, Texas, began working toward a bachelor’s degree in electrical engineering last summer through the company’s college program.
Hecker appreciates the free tuition, but often wishes he could take classes in person or have more choices outside of Arizona State. He said his classes are challenging and teachers can’t always meet and offer guidance.
But Carlson said the online classes are ideal for the Guild’s average enrollee, who is a 33-year-old woman with children. Carlson said students in his programs often don’t have constant access to a car and need to be able to study at any time, such as when the kids are in bed.
The chance to get a free degree can be life-changing. Angela Batista was 16 years old and homeless when she started working at Starbucks in New York.
“College was never in my dreams,” said Batista, now 38. “I didn’t even have the guts to fantasize about it.”
She will graduate from Arizona State University this December with a degree in organizational leadership, paid for by Starbucks. And now her son, who also works at Starbucks, is starting work on his degree.