The Walt Disney Company announced this week that it is now offering to pay full tuition for its hourly workers to earn a college degree, complete a high school diploma, or learn a new skill. In a blog post on the company’s website, Jayne Parker, senior executive vice president & chief HR officer, called the “Disney Aspire” initiative “the most comprehensive program of its kind,” adding that it would cover 100 percent of tuition upfront and reimburse employees for application fees and required books and materials. The program covers a wide range of educational endeavors, she noted:
The program is designed for working adults and offers our Cast Members and employees maximum choice and flexibility with their studies, regardless of whether the program and classes they choose are tied to their current role at Disney. Disney Aspire includes a network of schools that offer a wide array of disciplines and diplomas—including college and master’s degrees, high school equivalency, English-language learning, vocational training and more.
More than 80,000 Disney employees are eligible to participate in the program, which the company is implementing in partnership with Guild Education, an online adult education platform that helps companies provide tuition assistance and other education benefits. Other US employers with large numbers of hourly workers have partnered with Guild to provide tuition benefits, including the fast food chains Chipotle and Taco Bell, the retail giant Walmart, and the home improvement retailer Lowe’s. McDonald’s expanded its education benefit, a partnership with Cengage Learning, earlier this year, while Chick-fil-A increased the number of scholarships it was awarding though its longstanding annual program.
In a recent post at the Atlantic, Amy Merrick cast a skeptic’s eye on the growing trend of student loan assistance benefits among US employers, arguing that these benefits may not be as helpful to employees as they seem. “For one thing,” Merrick notes, “the student-loan industry is notoriously opaque and difficult to deal with”:
By the time college students graduate, they may have accumulated loans from a number of different places. In contrast with credit-card companies, which typically provide in monthly statements what’s called a minimum-payment warning,student-loan servicers don’t have to tell borrowers how long it will take to repay their loans if they contribute only the minimum every month. … Last year, the [US Consumer Financial Protection Bureau] reported complaints from borrowers that student-loan servicers inexplicably returned payments from employers, applied funds to the wrong account, or made other servicing errors that took months or even years to resolve. In some cases, the benefit affected people’s eligibility for loan-forgiveness programs.
She also points out that student loan assistance is not tax-advantaged in the same way a 401(k) plan or a health savings account is. These payments are treated as regular wages for tax purposes, so employees have to pay income tax on them even as they go directly toward paying off their student debt. A bill that would introduce more favorable tax treatment for student loan benefits was introduced in the House of Representatives in February 2017 but has been stalled in the House Ways and Means Committee ever since and was not addressed in the tax reform package Congress passed last December.
Merrick leverages these points to question whether student debt benefits are really any more valuable to employees than a raise. There are obviously issues to be worked out in the implementation of these relatively new benefits, and of course Congressional action to improve their tax treatment would make them more valuable, but to dismiss them outright at this early stage is premature. For all the media attention they get, student loan benefits remain comparably rare: According to our forthcoming analysis of education benefits at CEB, now Gartner, just 7 percent of organizations offer them. Akhil Nigam, the head of emerging products for Fidelity’s workplace-investing division, tells Merrick that up to 90 percent of the employee student loan payments they process have no issues: Not a perfect track record, but hardly sufficient cause to throw out the baby with the bathwater.
The American fast food chain Chick-fil-A recently announced that it was awarding $14.5 million in scholarships to over 5,700 of its employees across the country this year:
The investment in this year’s program marks a $5.7 million increase since 2017 and is the one of the highest unrestricted per-employee scholarship investments in the industry. Team Members who are beginning or continuing their higher education will be awarded scholarships in the amount of $2,500 or $25,000.
Chick-fil-A’s “Remarkable Futures” education initiative allows students employed by the company’s local franchise Operators to receive up to $25,000 in scholarships that can be applied for any area of study at any accredited institution of their choice, including any two- or four-year colleges and universities, online programs or technical/vocational schools. There is no requirement of hours worked or length of service to qualify. In addition to $14.5 million in scholarships, all of Chick-fil-A’s 120,000 Team Members also have access to tuition discounts and other educational benefits at 100 colleges and universities nationwide.
Chick-fil-A, which has been awarding college scholarships since the 1970s, has provided more than $60.5 million in education funding for nearly 46,700 employees over the years. The company launched the Remarkable Futures program in 2016 to expand this initiative considerably, more than doubling the amount of funding it would provide for employees’ educations.
McDonald’s announced last week that it was expanding its education benefits program for employees to both increase the value of the benefit and widen the pool of employees who are eligible for it, USA Today reported on Thursday:
Previously, employees had to be on the job for nine months before having a shot at tuition assistance, but that’s been dropped to 90 days. Plus, the weekly shift minimum was 20 hours and now is 15 hours. The changes will make close to 400,000 U.S. employees eligible, the company said. Now, staffers can get as much as $2,500 a year from the Archways to Opportunity program for a trade school, a community college or a four-year university — up from $700. For managers, the figure jumps from $1,050 per year to $3,000.
Some employees’ family members will also now be eligible for assistance. The changes, which McDonald’s attributed to a tight labor market and the savings it accrued from the recent cut in the corporate tax rate, are funded by a $150 million commitment the fast-food giant is making to the program over the coming five years. Since launching in 2015, the company says, Archways to Opportunity has distributed over $21 million in assistance to around 24,000 people.
The program, which is open to employees of both McDonald’s franchises and company-owned restaurants, is offered in partnership with the online education company Cengage Learning. Amanda Eisenberg goes into more detail about how the expanded program will work at Employee Benefit News:
Taco Bell announced this week that after piloting a program to provide employees at 700 of its restaurants with education benefits in partnership with Guild Education, the fast-food chain is expanding the program to 210,000 employees at its 7,000 locations, including many franchises, Amanda Eisenberg reports at Employee Benefit News:
Through Guild Education’s reduced-cost courses and degree programs, both corporate and hourly Taco Bell workers have access to more than 2,000 classes and programs in their pursuit of undergraduate or graduate degrees, college-level education, a GED, or mastery of English as a second language. Combined with the company’s education benefit of up to $5,250 in tuition assistance, paid upfront, and access to federal financial aid, employees are expected to pay little to nothing for the benefit. …
Two thousand Taco Bell employees enrolled in the nine-month pilot program, and 98% of those employees stayed at the company for more than six months, says Rachel Carlson, CEO and co-founder of Guild Education. “That’s phenomenal, especially in fast casual,” she says, noting the retention rates of workers in the program were 34% higher than those who were not enrolled.
Taco Bell took inspiration for its education benefit from Chipotle, which also partnered with Guild Education to help its employees finish college, and McDonald’s, whose employees can earn high school diplomas through the company’s “Archways to Opportunity” program, a partnership with Cengage Learning.
Most of the new jobs created in the US in the wake of the Great Recession have gone to workers with college degrees, and the wage premium Americans gain from holding a bachelor’s degree rather than just a high school diploma is higher than it has been in 40 years. Partly due to the higher number of college-educated candidates on the market, a bachelor’s degree has become a baseline requirement for most middle-class jobs. The decline of good jobs for less educated and lower-skilled workers is commonly understood to be a driver of inequality and social stratification in the US today.
A new report published on Tuesday by Harvard Business School, Accenture, and Grads of Life underlines the extent to which “degree inflation”—jobs for which a college degree was once optional and is now a requirement—is compounding this problem. According to the report, 6 million American jobs are at risk of degree inflation, as employers have “defaulted to using college degrees as a proxy for a candidate’s range and depth of skills.”
Axios’ Christopher Matthews discusses the report’s implications with one of its authors:
“This phenomenon is a major driver of income inequality,” Joe Fuller of Harvard Business School tells Axios. “We’re hollowing out middle-class jobs and driving everyone to the extremes of the income spectrum.” …
By at least one measure, Massachusetts has the most educated workforce of any state in the US, according to a new report from the Massachusetts Budget and Policy Center. Citing an analysis of Current Population Survey data by the Economic Policy Institute, the report reveals that 50.2 percent of Massachusetts workers hold at least a bachelor’s degree. New Jersey is the second most educated state, with 45.2 percent of workers holding BAs, followed by New York, Maryland, and Connecticut. Nationwide, 35.5 percent of the workforce has a bachelor’s degree.
The report, titled “Education and State Economic Strength: A Snapshot of Current Data,” also notes that these high levels of education correlate with high median hourly wages: $21.35 in New Jersey and $21.22 in Massachusetts compared to a national average of $17.80.
“While it might seem obvious in 2017 that higher levels of college education would be associated with higher earnings at the state level,” the report adds, “this relationship is actually a fairly recent feature of the US economy. In 1979, the correlation between the educational attainment of a state’s workforce and its median hourly wage was weak.”
Indeed, the EPI’s latest research has found that the college wage premium is at an all-time high since economists began measuring it over 40 years ago. Other studies have shown that the class of 2017 stood to earn higher starting salaries than their peers who graduated in other recent years, while holders of two-year associate degrees are also finding more decent-paying jobs than they were a generation ago.
Wages in Massachusetts have also been growing faster for more educated than less educated workers, and a key challenge for the state today is ensuring that young people can afford the advanced educations they need to remain competitive in a highly educated job market, the Boston Globe’s Katie Johnson points out: