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Maniala Lucien, an immigrant from Haiti who built a new life in Florida, always wanted a college degree. But between raising three children and working as a housekeeper at Disney resorts, it seemed impossible.

Then she received a postcard from her employer with an offer: study for a part-time degree online, with tuition fully paid.

“I didn’t believe it at first, but I thought I had nothing to lose,” she recalls. “In a few minutes I’d signed up, and within five weeks I was enrolled … I still can’t believe I have a bachelors degree, and now almost a masters, and I haven’t paid anything for books or tuition.”

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Disney’s Aspire programme, launched in 2018, has paid for 4,800 staff to graduate from courses. The media and entertainment group is one of a growing number of U.S. companies funding employees to study for degrees and other courses in their spare time.

Some companies focus on improving skills that are relevant to employees’ existing work — such as training in human resources, for example — while others are using the perk as a way to attract or retain staff by offering a range of new subjects.

“It’s not only about helping frontline talent put their careers and dreams within reach,” says Tonya Cornileus, Disney’s senior vice-president for learning. “It does wonders to help us attract a diverse talent pool.”

Advocates say so-called employer-funded training is a powerful social and economic good, opening up the U.S.’s expensive higher education system to people who might otherwise be sidelined, and helping employers to attract, retain and train workers with the skills they need. But critics regard it as an unsatisfactory result of America’s tough-to-access college system, warning that courses are often poor quality and limited in choice.

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The boom began a decade ago, when Michael Crow, president of Arizona State University, met Howard Schultz, then chair and chief executive of Starbucks Corp. The pair were sitting on a task force for Rework America, a network focused on improving the labour market through training. But the group’s progress felt slow. “We thought this will take forever, and what could we do with Starbucks now?” recalls Crow.

Schultz was thinking about how to help some of the 75 per cent of his staff who had some college credits but had failed to complete their degree. “We were trying to remedy these casualties of American higher education, and we thought why not create a Starbucks college achievement programme?” Crow says.

His vision was to make ASU accessible to more people by putting lectures online — a radical proposition before the pandemic prompted a widespread shift to remote work and study. The institution invested in an online platform and enrolled lecturers from the college to teach on it. Since 2014, ASU has taught 25,000 Starbucks staff of whom nearly half have graduated.

Other large employers have launched similar programmes with ASU, including Uber, which since 2018 has funded 1,000 drivers through courses ranging from nursing to political science. Liza Winship, director of U.S. and Canada driver operations, says the programme is meant to “reward drivers for their engagement … We really think of it as an investment to make us the best choice for flexible employment. We don’t necessarily see Uber as the final destination.”

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However, there are questions as to what extent employer-funded training makes a difference to the quality of the labour force or the opportunities available to individual workers.

Two decades ago, Wharton business school professor Peter Cappelli concluded that workers who received support with college costs from their employer were more productive and loyal than those who did not, at least while they were studying.

Starbucks says staff who go through its college programme are promoted at nearly three times the rate of its other U.S. employees and typically stay with it 50 per cent longer.

But Cappelli is less convinced by the current round of programmes, which he says “may be a cheap way to generate better PR.” “Employers are only willing to support really cut-rate online education programmes,” he notes, which may not give students the same social mobility boost as in-person degrees.

The corporate programmes certainly include an element of economic self-interest. Employers receive tax relief on tuition spending of up to US$5,250 a year per employee. Universities also gain, since online training allows them to increase student numbers and fees with minimal additional costs.

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The recent interest has also created an ancillary industry of small companies that match employees to courses. One such company, Guild Education, says demand has grown from clients including retailers Walmart Inc. and Target Corp., and restaurant chain, Chipotle Mexican Grill Inc. as “we have started to see the pressure of the talent shortage for business.”

“It’s become strategic to find ways to close the skills gap, think about the future of the workforce and retain talent,” says Guild Education’s chief executive, Bijal Shah.

At its rival InStride, chief university officer Michelle Westfort says a tight U.S. labour market means employer needs have evolved. “Retention was a primary driver historically. It’s grown into diversity, developing specific skills and career mobility.”

One of the companies that InStride is assisting is Utah-based Intermountain Healthcare. “My biggest concern right now is less about filling open positions,” says Intermountain’s vice-president and chief learning officer, Marguerite Samms. “Things are changing so fast and the challenge is the skills gap. We could have every position filled and not be able to upskill our workforce quickly enough.”

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The online courses Intermountain funds, mainly at Colorado Technical University, particularly benefit indigenous employees and those in remote rural areas. “There are a lot of social obstacles to getting an education, especially for new Americans, those on lower incomes and who are racially marginalized,” Samms says.

There are limitations to the tuition programmes. Balancing work, family and study means many participants do not complete their courses. The conditions companies impose vary widely, with some only willing to reimburse a limited choice of courses.

Eligibility of workers also varies, although staff often have to work a minimum number of hours to qualify. Uber, for example, only allows its most active drivers to take part, and they must continue work a certain number of hours to receive tuition reimbursement.

Starbucks has taken some action to allay such concerns: it allows employees’ family members to join, and now pays tuition fees upfront, rather than reimbursing participants. It has also worked with ASU to offer support such as language tuition and mentoring.

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Grace Alhadjaboodi, a shift supervisor and bargaining delegate for the Starbucks Workers United union in the Texas region, is studying for a degree in biology at ASU as part of the programme.

She says the benefit should be improved by enshrining it in employee contracts, so it is no longer discretionary; and that staff should be guaranteed the 20 hours of work a week required to get tuition. At present Starbucks aims for staff to have the hours they want but does not guarantee it.

“It’s a good benefit, but we want to make sure people can access it,” says Alhadjaboodi.

After completing her bachelors in hospitality management, Lucien is now studying for a masters in human resources. She hopes to move into that area at Disney. “My son in high school is ready to join me” in the tuition programme, she says. “His [college] will be paid just like for me. It opened so many doors.”

© 2024 The Financial Times Ltd

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