Employers have funds, workers need degrees. Why are dollars going unused?

Courtesy of MacLaff Inc.
Naomi Vasquez and Morgan James, employees with MacLaff Inc., which owns and operates a group of McDonald’s restaurants in southern Louisiana, pose with associate degree diplomas awarded to them after completing a company-sponsored college program.

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Charletta Thomas is exceptional for many reasons, but for this one in particular: She’s a working American whose employer paid for her college.

Ms. Thomas, who supervises worker training for a chain of 44 McDonald’s restaurants in southern Louisiana, earned her bachelor’s degree in 2019 and is now on her way to an MBA. 

Why We Wrote This

While U.S. employers often tout benefits that promise to subsidize a college education, most workers can’t tap them. Listening to students – and tailoring options accordingly – could change that.

Companies in the United States increasingly demand college degrees of their workers, yet few have actually paid for those degrees – even though they set aside billions of dollars each year to do so. Some employers, like the one Ms. Thomas works for, are finding ways to make tuition benefit programs work. The pandemic has brought additional insights about how best to help employees. But with many Americans unable to access these benefits, lingering hurdles need to be addressed, labor and education experts say, before progress can be made and disparities resolved.

Ms. Thomas says the public education system in Louisiana hasn’t served her colleagues well and sees it as her task – and her company’s – to compensate for that inadequacy. “These individuals may have come from dysfunction, may have come from a school with dysfunction, and they may have lost hope,” she says. “We build them up.” 

College had always been a goal for Charletta Thomas.

Ms. Thomas didn’t doubt she was smart enough. Her barriers were external – tuition and time. She’d married not long after graduating from high school in 1981, had three children soon after that, and then had gone to work for McDonald’s to make ends meet after her marriage ended.

She started as a bookkeeper, and currently supervises training for a chain of 44 McDonald’s restaurants in southern Louisiana. But after 27 years at a company with education benefits – benefits Ms. Thomas pitches to other employees – she still hadn’t taken advantage of them herself.

Why We Wrote This

While U.S. employers often tout benefits that promise to subsidize a college education, most workers can’t tap them. Listening to students – and tailoring options accordingly – could change that.

“I always wanted to go to college, but, like I say, life happened,” she says. “It had always been a life purpose to get that done.”

It was peer pressure that made the difference. Her colleague Hillary Dixon, a kitchen supervisor then studying for her Master of Business Administration degree on McDonald’s’ dime, wanted to know why Ms. Thomas wasn’t in college.

“I was preaching and talking about the program, but I was not in the program,” Ms. Thomas says, laughing over the phone. She earned her bachelor’s degree in July 2019 through an online program; she is now on her way to an MBA.

Ms. Thomas is exceptional for many reasons, but for this one in particular: She’s a working American whose employer paid for her college.

Companies in the United States increasingly demand college degrees of their workers, yet few have actually paid for those degrees – even though they set aside billions of dollars each year to do so. Some employers, like the one Ms. Thomas works for, are finding ways to make tuition benefit programs work. And the pandemic has brought additional insights about how best to help employees. But with many Americans unable to access these benefits, lingering hurdles need to be addressed, labor and education experts say, before progress can be made and disparities resolved.

Most employer-based education benefit programs are a recruiting tool that may have less to do with delivering education and more to do with “the optics around having a large, relatively underpaid frontline workforce,” says Mary Alice McCarthy, director of the Center on Education & Labor at the think tank New America. “It’s a way to show that you’re doing something for them, other than raising wages.”

Usage rates for these benefits are “extremely low” at companies that rely on low-wage workers, Ms. McCarthy says. For her, that lack of engagement raises a foundational question: “Is this really what these employees want?”

Lots of money, little use

Funding cuts to public colleges have pushed costs onto students even as Americans’ real wages have been basically stagnant since the 1970s. Despite recent talk of debt relief and free college, little government help has been forthcoming, especially for working adults.

Without government investment, it might be impossible to line up the tuition help, career counseling, and subsidies needed to sustain a robust adult education program in the U.S., says Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce. “In the United States, lifelong learning is a line in a speech; it’s not a line in the budget,” he says. “Adult education and training is not us.”

With the government mostly out of the picture, employers set aside billions each year for tuition benefits programs, supposedly with the hope of building the skilled workforce they need. 

But nearly half that money sits unspent, according to research conducted by The Graduate! Network, a consultancy that surveys employers and employees about education programs. Surveys show many of the benefits don’t match working adults’ interests or meet their needs, and – crucially in a country where most adults live paycheck to paycheck – most offer only to reimburse student workers for college expenses they’ve already incurred.

While people over age 25 make up a quarter of all American college students and a slim majority of part-time students, only a tiny fraction of those 3.5 million students are using employer-provided education benefits. Estimates of how many eligible workers use those supports vary, ranging from roughly 1% to 10%, and participation has always skewed toward white-collar workers.

Boosters for employer-based college benefits note their value in recruiting and retaining employees. They’re also put forward as a powerful tool in correcting disparities that deny nearly half of Black Americans, half of Native Americans, and most Latinos a shot at postsecondary education. This is especially true since any amount of higher education makes people far more likely to live a healthy life, earn a family-sustaining wage, and shape their communities by volunteering or engaging politically.

Reimburse or assist?

Pinpointing what employees want and need is complicated, and events of the past year have added more layers. 

Adult workers often can’t balance education with their family commitments. Without access to affordable child care, for instance, it is very difficult for most working parents to consider spending time on education. And many employer-sponsored programs require workers to front costs they can’t cover or direct them toward educational tracks that don’t credibly promise a pay bump.

Programs built with adult learners’ needs in mind have seen enrollment spike, even during the pandemic. Indeed, the pandemic may have shown that the previous low participation rates in employer-funded education had more to do with lack of time than with lack of desire.

Some large employers, like JetBlue, kept educational programs rolling even as their industries imploded. Idled workers enrolled in JetBlue Scholars, a streamlined bachelor’s and master’s degree program that includes credit for on-the-job training. In Las Vegas, casino workers flooded the Culinary Academy of Las Vegas, an employer-subsidized vocational school, after the Strip shut down. The forced expansion of remote learning jump-started new efforts at online higher education, viewed as a good fit for older students.

Julio Cortez/AP/File
A Walmart employee scans items while conducting an exercise during a Walmart Academy class session at the store in North Bergen, New Jersey, on Nov. 9, 2017. In 2018 Walmart, working with benefits management firm Guild Education, started offering employees a new perk: affordable access to a college degree.

Historically, though, larger employers have typically spent only about half of what they’ve set aside for tuition reimbursement, according to Dan Ash at The Graduate! Network.

And many employees have no access to such benefits. Only about 35% of customer-facing retail workers report being offered educational support at all, Dr. Ash says. Often those come as promises that tuition payments will be reimbursed at the end of a semester or course, a nonstarter for many working adults.

“If I don’t have $600, you can offer me $1 million in reimbursement and I still can’t go to school,” says Dr. Ash, an experimental psychologist who helped found Kentucky’s Metropolitan College, a workforce development institution partnered with shipping service UPS. 

Despite the shortcomings, reimbursement programs remain common, says Matthew Daniel of Guild Education, a benefits management firm working with employers, like Walmart, to vitalize their educational offerings. Mr. Daniel, a human resources researcher with Guild, describes the current programs as having “millions upon millions” of unused dollars, which has led Guild to recommend that its clients drop reimbursement and shift to tuition assistance, which relieves working students of most out-of-pocket costs.

Partnering with colleges

In January, the University of Virginia launched an adult education program, UVA Edge, offering a year’s instruction for $300, when combined with employer benefits. The yearlong, six-course program nets students about a semester and a half’s worth of transferable undergraduate credits.

The expansion came at a moment when an unprecedented number of Americans were thinking about their futures, says Alex Hernandez, dean of UVA’s School of Continuing and Professional Studies. In the U.S., 1 in 3 workers had lost or changed jobs between February and late October 2020. Many of those were among the 116 million American adults with a high school diploma but no college degree. 

“After the initial shock, people really started thinking about their futures and their careers and opportunity,” Mr. Hernandez says. “People really thought about, ‘How am I setting myself up to thrive?’”

UVA Edge is small, little more than a pilot, with 40 students. But its launch also marks a recognition that universities must expand their reach.

“As a public university, success is not who we keep out of our classrooms,” Mr. Hernandez says. “Success is what we do with people once they’re in our classrooms.”

Changes like those recently made by UVA are needed to broaden who gets the chance to use employer-funded benefits, says Haley Glover of the Lumina Foundation, an Indianapolis-based group advocating for greater access to postsecondary education. (Lumina Foundation is one of the many funders of The Hechinger Report, which the Monitor partnered with for this article.)

Until recently, educational benefits have largely been reserved for middle and upper management, Ms. Glover says. Whether the newer programs are reaching communities of color or the frontline, low-wage workers at whom they are aimed isn’t at all clear, she says.

“It’s those folks who need to be helped the most, and it’s also where the most opportunity for change lies,” she adds.

Employers doing education right are paying for tuition upfront and offering guidance to would-be student workers while curating the list of colleges with which they partner, Ms. Glover says. They offer paths ending with anything from an associate degree to a master’s, as well as professionally useful certifications. Their programs recognize on-the-job training with credit and can be short or, for students unable to take a heavy course load, long and flexible.

Concerns persist about the value and quality of the offerings geared toward working learners. For example, the parent company of Colorado Technical University, the McDonald’s partner institution that Ms. Dixon attended and Ms. Thomas currently attends, recently canceled $494 million in student debt in a settlement with regulators, who contend the company’s vocational programs lacked proper accreditation. 

But not everyone feels that critiques of quality are valid. Ms. McCarthy and others examining the criticism often find it rooted in an elitist view of higher education. Traditional bachelor’s degrees – or any degrees – are often overvalued, Ms. McCarthy says. Apprenticeships and skills-based training often better serve workers looking for economic security and respect.

Any push toward skills-oriented education runs into a political minefield that Congress has yet to clear, says Mr. Carnevale at Georgetown. Part of the concern, he says, is a return to educational “tracking” that saw Black, Latino, and low-income students shunted into vocational programs that effectively denied them a chance at college. He agrees that tracking remains a problem but argues that a few months of training can also be exactly what a jobless worker needs to gain some economic security. He thinks the degrees-versus-training divide is also geographic.

“If you go South and West, there is a lot more support for training,” he says. “The closer you get to Harvard, the less support you get for training.”

In Louisiana, a way forward

No bright line has been drawn between college degrees and training in south Louisiana’s Acadiana region, where leaders aim to get 55% of adults in the nine-parish region around Lafayette a degree or professional certification by 2025.

The goal is extraordinarily ambitious – Louisiana ranks 48th in the nation when it comes to attainment of an associate degree or higher. In Acadiana, roughly 1 in 4 residents holds a degree, according to a recent report by One Acadiana, a business organization leading the educational initiative. But the need is also pressing; the time when a high school graduate could draw a good living out of the Gulf of Mexico’s oil fields is passing fast.

In Acadiana, a model for renewal through education has been set, perhaps unexpectedly, by McDonald’s. Specifically, MacLaff Inc., the franchisee based in Lafayette that employs Ms. Thomas and Ms. Dixon, has gone all in.

While the education benefits from McDonald’s had long been widely advertised, they weren’t consequential. The $700 in tuition assistance for crew members didn’t go very far. 

That changed in 2018, when McDonald’s deepened and broadened the benefit, adding free counseling for employees and their families, high school and English instruction, and higher benefits of up to $2,500 a year for crew and $3,000 for managers. Now, the McDonald’s program offers a national model for companies hoping to spend more of the dollars they’ve set aside for employee education benefits.

Chris Krampe, co-owner of MacLaff, says the franchisee’s leaders promote the McDonald’s benefits constantly and celebrate graduates, bringing them onstage at quarterly leadership meetings. The franchisee’s outreach to area community colleges netted workers an additional $500 a semester in financial help.

“It makes a difference,” Mr. Krampe says. “It gets down to that level of money that’ll keep somebody from going to college.”

Through the McDonald’s education benefits program, MacLaff provided over $250,000 in 2020 alone and helped put 106 of its 3,300 employees in college.

Most MacLaff workers arrive at orientation with minimal education, Ms. Thomas says. She describes one crew member, a woman about her age, who had never been taught to read; Ms. Thomas guided her to a high school equivalency program, provided for free through the company. She says the public education system in the state hasn’t served her colleagues well and sees it as her task – and her company’s – to compensate for that inadequacy.

“These individuals may have come from dysfunction, may have come from a school with dysfunction, and they may have lost hope,” she says. “We build them up.”

She describes herself as a “walking billboard” for higher education and takes pride in pushing her colleagues to bet on themselves.

At the end of new employee orientation, she tells people, “If I can do it at age 58, there’s no reason why anyone in this room can’t do the same or better.”

This story about education benefits was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. 

Editor’s note: This story has been updated to remove an incorrectly described statistic.

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