Company schooling benefits take a hit

Starbucks drew a lot of attention when it announced in June that its 135,000 employees could get a college degree on the house.

The coffee emporium will be “the first U.S. company to provide free college tuition for all our employees,” CEO Howard Schultz said.

Turned out there was some fine print. Not all employees are eligible, and those who are can only take online courses from Arizona State University. And Starbucks isn’t the first U.S. company to cover workers’ college expenses.

An Atlanta company has been giving employees free rides to college for years.

Still, the Starbucks’ move spotlighted Corporate America’s pullback from financially supporting workers who want to further their vocational or college education. Companies’ laser-like focus on the bottom line, along with a tight job market that enables them to be selective, have led to huge cutbacks in training, apprenticeship programs and higher education subsidies.

Workers today are expected to come prepared and skilled. In Georgia, state taxpayers sometimes foot the training bill for workers as part of huge incentives packages used to lure companies.

A few CEOs scoff at what they consider the penny-wise, pound-foolish corporate trend.

“They look at all these programs simply from an expense point of view and don’t look at all the benefits,” said Brownlee Currey, who runs a medium-sized home furnishings wholesaler in Atlanta. It offers full-ride educational opportunities for all workers.

“People who engage in these programs tend to be the highest functioning employees, optimistic, helpful and smart people who will develop the skills to move ahead.”

Currey & Co. hired an education coordinator before hiring a human resources manager. Currey won’t hire an employee unless they’re willing, at least initially, to take GED, ESL or college classes. He plans to extend education benefits to the company’s 750 factory workers in the Philippines.

Unlike many companies that tie education to job skills, Currey and Co. allows employees to study whatever they want without any obligation to remain with the company upon graduation.

“Allowing an employee the opportunity to go to school, and making it easier for them, makes for a better employee and a better company whether they stay there or not,” said Anita Sanchez, a 15-year Currey & Co. veteran who used the company’s program to become a registered nurse at Grady Memorial. It also enables the employee to become a more productive member of their community too.”

Programs squeezed

American companies, manufacturers in particular, routinely hired unskilled workers in past decades that they molded into productive employees. Employees then parlayed education benefits into supervisory or management roles. But a series of recessions starting in the early 80s, and the ensuing mass layoffs, produced leaner operations and fewer training programs. As profit margins got squeezed, so too did education opportunities.

“In a recession, we typically see benefits like these pared back,” said Bruce Elliot, manager of compensation and benefits for the Society for Human Resource Management (SHRM). “Training and development are hit first. Those benefits can get quite expensive.”

Five years ago 62 percent of SHRM’s members offered undergraduate technical assistance. This year, 54 percent do.

“Even though 2013 was a banner year, 2014 is a little bit challenging and companies could be paring back the benefits as a result of the economic headwind,” SHRM’s Elliot said. “But I don’t anticipate this down trend (continuing), especially with the moves Starbucks has made.”

Starbucks employees who work 20 hours or more per week are eligible for the on-line education, though not all expenses will be covered. Freshmen and sophomores will receive a scholarship from the university — not Starbucks — that will cover about 22 percent of tuition.

Baristas and others who finish junior and senior years will get a 44 percent scholarship from Arizona State with student loans likely covering the remainder. Starbucks will pay off the loans upon completion of each semester. The company and the university expect students to rely heavily on federal assistance, primarily Pell grants, to lower program costs. Online tuition at the university runs about $15,000 a year.

Nearly 1,500 Starbucks employees have applied to the university so far. Starbucks won’t require that employees remain with the company. But if they drop out of school, they won’t be eligible for reimbursements.

Currey & Co. pays tuition up front to Georgia Perimeter College, Gwinnett Tech or Emory University. Brownlee estimates the company has spent $250,000 educating nearly four dozen workers the last 12 years. That doesn’t include the salary and benefits for Lauren Gold, the company’s education coordinator. Currey & Co. also is building a classroom with a half-dozen computers where Gold will offer in-house training.

Fewer than two percent of workers quit the 105-employee company each year. An “above average” hourly wage helps, Currey says. But free education instills a sense of loyalty in Currey employees that is remarkable given the recession’s impact on employee-employer relations.

“If we don’t have that education program I would not have my career today,” said Tung Pham, 43, the company’s production manager. “We can train, build up the people from the beginning to help a lot of workers out.”

Pham emigrated from Vietnam to Atlanta and began work in the packing department a decade ago. Gold taught English as a Second Language classes that helped Pham earn a GED. She also teaches citizenship classes that have benefited Pham and other Asian and Latin American employees.

Pham now manages 25 workers and plans to use the company benefits to get a college degree in business or IT.

“I want to learn in the future so I can give back to the company,” said Pham, a forklift whirring past. “I see my life here.”

Partial support

Representatives of the Metro Atlanta Chamber and the University of Georgia couldn’t name other companies offering similar, all-paid, no-strings educational programs. Canterbury Court, a retirement community in Atlanta, is creating a scholarship program for its employees with the help of Currey & Co.’s Gold.

Larger companies across the nation offer a variety of educational and training opportunities for employees, but typically don’t cover all expenses. Atlanta-based United Parcel Service provides tuition assistance to full- and part-time employees. Last year, the package delivery company helped 16,500 workers go to school at a cost of $23 million, about the same amount as three years ago. Many part-time employees can receive up to $5,250 a year for tuition or $25,000 total towards a degree.

“Obviously, the priority for us is to be able to have that retention so you’re not making continuous investment in both recruiting and retraining,” explained UPS spokeswoman Susan Rosenberg. “And it’s an opportunity for (workers’) career development and positions them for advancement within the company.”

Full-time workers at Atlanta’s Home Depot can attend any accredited college, university or technical school upon completion of a year’s employment. Salaried workers can receive up to $5,000 annually. Hourly workers get $3,000.

Currey & Co. sent Guillermo Portillo, 44, to Perimeter College to study accounting. It hired an instructor to teach him computer basics. He’s now enrolled at Gwinnett Tech studying welding. An odd choice, perhaps, for the guy in charge of cost accounting.