Starbucks is upping its game in the perks department. The Seattle-based coffee chain has announced that it will now cover four years of college tuition reimbursement for employees.
Last June, the company started its Starbucks College Achievement Plan, which allowed juniors and seniors two years of tuition reimbursement to earn an online degree from Arizona State University in any of its 49 degree programs. Since the program was initiated, 2,000 of Starbucks’ more than 140,000 workers have enrolled.
The announcement comes at a time when unemployment rates are declining, pushing companies to create more appealing employment opportunities than their competition.
Do such incentives signal a more employee-friendly job economy in the future?
Starbucks is committed to producing at least 25,000 graduates by 2025, an investment they estimate will reach up to $250 million. Workers who average at least 20 hours a week are eligible for the program, which is only open to employees at company-owned stores.
Howard Schultz, chairman and CEO of Starbucks, said tuition reimbursement is one way the company can continue to invest in its workforce in a way that aligns with their mission.
“Everyone deserves a chance at the American dream,” Mr. Schultz said in a press release. “The unfortunate reality is that too many Americans can no longer afford a college degree, particularly disadvantaged young people, and others are saddled with burdensome education debt. By giving our partners access to four years of full tuition coverage, we will provide them a critical tool for lifelong opportunity. We're stronger as a nation when everyone is afforded a pathway to success.”
When the program launched in June 2014, it also ended the company’s previous college assistance program, which enabled employees to attend any accredited university or college that fit their needs. Students were given between $500 and $1,000 per calendar year to pursue degrees that “directly prepare [them] for a job at Starbucks.” Critics argue that while the financial gain may have been less, it was a better fit for Starbucks’ employees, who fit into the demographic that are more likely to succeed in classroom setting than in online coursework.
Dr. Siva Vaidhyanathan, the Robertson Professor of Media Studies at the University of Virginia, told Think Progress:
So far we know that online degree programs do the worst possible job with adults of low income who are working full-time. That’s the segment of society that tends to do worse online and better in person . . . It seems to me to be a huge scam that Starbucks is running here in conjunction with ASU, because the idea here is to make both brands shine here in the public mind . . . But in fact this is nothing close to anything helpful.
Starbucks has a low employee turnover rate for the food industry, but overall industry rates for turnover are high. Offering incentives that are appealing to its employees—70 percent of which are either college students or hoping to receive a college degree—could help reduce turnover costs, estimated at $3,000 per employee. The program does not require employees to stay at Starbucks post-graduation, but it could keep them there for up to four years. The Economist published a paper exploring the challenges of human resources departments in attracting a workforce as the job market continues to grow.
“As the demographic composition of the workforce changes, their motivations and expectations evolve too,” reported The Economist in a paper exploring the challenges of human resources departments in attracting a workforce as the job market continues to grow. “It is not enough simply to recruit able staff. Companies have to make sure that their people are committed, productive, and do not leave after a short period, incurring substantial turnover costs and wasting all previous training invested in them.”
College tuition reimbursement is an attractive perk for any employee looking to earn a college degree. According to USA Today, college tuition costs increased by 3 percent last year, averaging over $9,000 per year at an in-state public school. Private schools averaged over $30,000, resulting in serious student loan debt across the country. PBS has reported the U.S. has $1.2 trillion in student debt, averaging about $30,000 in debt per student who graduates.
This article contains reporting from the Associated Press.