Earlier this year, Walmart, the biggest employer in the world, announced that it would offer free college for all 1.4 million of its U.S. employees.
The benefit builds on a program introduced by the retail behemoth in 2018, which offered subsidized higher education for employees who would pay just $1 per day to earn an associate’s or bachelor’s degree in business or supply chain management from the University of Florida, Brandman University and Bellevue University.
Walmart’s education benefits program expansion comes at a time when retailers are struggling to convince workers to work in person and face the threat of the highly contagious Delta variant. To address hiring and retention concerns, many companies are beefing up their benefits.
“Our education offerings tie directly to our growth areas at Walmart, and what better way to fill the pipeline of future talent than with our own associates,” said Lorraine Stomski, senior vice president of learning and leadership at Walmart. “We are creating a path of opportunity for our associates to grow their careers at Walmart, so they can continue to build better lives for themselves and their families.”
Over the past several years, Walmart has been far from the only large employer to offer, expand, and advertise its employee education benefits. Some of the biggest employers in the country, including Amazon, Chipotle, Target and Starbucks now offer college as a benefit.
Here’s why these types of education benefits are becoming the new norm:
The evolution of education benefits
“There’s definitely been an increase in companies offering educational benefits for their employees and there has been a morphing of the type of education benefit that they’re offering and how they’re actually offering them,” says Shawn VanDerziel, executive director at the National Association of Colleges and Employers.
VanDerziel points out that many high-paying companies in fields such as finance have long paid for employees to earn graduate degrees such as MBAs. Today, education benefits can range from employers giving employees funds directly for education expenses, to employers offering internal training and certificate programs, to employers funding specific programs at external colleges and universities.
“Traditionally, it was used as a recruitment and retention tool but those that really took advantage of it, and those that it was really targeted at, were professional-level employees. Employees who were thinking about pursuing advanced degrees as an example, or further certificate programs,” he explains. “The difference in the programs that are being offered now is that these programs are being targeted at entry-level employees. And it’s being offered to employees who traditionally would not have had the same access to education to begin with.”
At companies like Walmart, these programs have evolved over time. When Walmart first introduced its 2018 education benefits, representatives for the company said the $1 price tag was a way to increase completion rates.
“What research has found is that when people have a personal investment in their education and in empowering and engaging themselves, they’re more apt to finish,” Erica Jones, Walmart’s then-senior manager of communications, told CNBC Make It. “So that $1 a day is kind of that skin in the game. They’re essentially having their education paid for but it’s also their own investment.”
In a strikingly similar pattern, Amazon announced in 2018 that it would cover 95% of tuition, fees and textbooks — up to $12,000 over four years — for hourly associates with one year of tenure to earn “certificates and associate degrees in high-demand occupations such as aircraft mechanics, computer-aided design, machine tool technologies, medical lab technologies and nursing.”
In 2021, the company announced it would cover 100% of such programs.
VanDerziel adds that “there has also been a rise in the types and number of companies that are providing third-party systems” that act as “middleman” between companies, employees and colleges.
Dr. Jill Buban is the vice president and general manager of EdAssist Solutions, a third-party servicer that has coordinated education benefits for “230 of the world’s largest employers” including Bank of America, Home Depot, T-Mobile, for over a decade.
She says the coronavirus pandemic has “shone a greater spotlight on workforce education.”
According to recent research from EdAssist Solutions, 45% of American workers feel their education became even more important for their growth in the past year. Researchers also found that 30% of working adults list not having the money to pay for an education program as the top barrier to pursuing advanced education.