The Job: Free College for Workers

Hello! This issue looks at Amazon’s decision to go it alone with an expanded free college program. Also a new certificate for front-line managers from the University of Denver and Guild, and some data on results for students in Walmart’s education benefit program. (Sign up here to get this newsletter.)

Companies and colleges are facing similar problems as they seek to attract and retain lower-income Americans. Increasingly, they’re joining forces, blurring the boundaries between education and work as employers struggle with a tight labor market and colleges seek to reverse serious enrollment declines.

For example, Amazon last week joined Walmart and Target in offering free college as a benefit to its 750,000 front-line employees in the U.S. The company will cover tuition, books, and other fees for its workers, who will be eligible to participate 90 days after starting on the job.

About 60 percent of businesses offer their employees some form of tuition support. Many are expanding or adding online college benefit programs, which increasingly are geared toward entry-level employees, particularly in retail, hospitality, and other industries that face the “great resignation.”

Amazon is scrambling to reduce turnover and to recruit tens of thousands of hourly employees in its fulfillment centers and delivery network, The Wall Street Journal reported, even after hiring 400,000 workers during the pandemic. It plans to spend $1.2 billion on education and skills training for U.S. employees over the next three years.

Notably, Amazon is going it alone with the free college program and apparently not working with a skills and education platform. Sources say the company will seek applications from individual colleges that are interested in participating. Amid enrollment declines, it’s an especially attractive market.

Other recent moves indicate that competition—and the complexities and scrutiny that come with it—is increasing. Just this week, for example:

Like its fellow retail giants, Amazon views college education benefits as a crucial hiring and retention tool. “Career progression is the new minimum wage,” Ardine Williams, vice president of workforce development at Amazon, told the WSJ.

In the past, relatively few employees have used their education benefits, with usage rates hovering around 2 to 5 percent or less. For example, Amazon said more than 50,000 employees have participated in its Career Choice education program since it started 10 years ago. While that’s enough people to fill a baseball stadium, it’s 7 percent of Amazon’s current U.S. workforce and likely a much lower percentage of employees spread over a decade.

Some observers predict that participation numbers for tuition benefit programs could rise amid the labor shortage. Likewise, the increasing focus on front-line workers is giving a boost to nondegree credentials in the space, which historically was focused on bachelor’s degree completion programs for mid- and upper-level employees.

A key reason for this shift to shorter-term programs is that time often is as much of a barrier as money for lower-wage employees as they consider whether to pursue a college education. “Most adult learners don’t have the luxury of quitting their jobs and going to school full-time,” Williams said.

That statement echoes those made by community college presidents, who increasingly say workers want to quickly gain skills to help land a new job or promotion or to change careers.

“Midcareer adults whose jobs have been eliminated don’t have time for a year or two of traditional academic education,” a dozen community college leaders wrote last week in a letter to the U.S. Congress. “They need short, targeted bursts of training that enable them to reenter the labor force as quickly as possible.”

Competition for Partners: As companies use free college as a perk to compete for employees, there’s a lot of money at stake for colleges and intermediaries like Guild, InStride, and Bright Horizons EdAssist. Guild hit a valuation of $3.75 billion in June. And a shake-up in the growing tuition benefit industry will have ramifications for the working learners it’s supposed to be serving. 

Walmart recently dropped the University of Florida Online as an education provider for its employees. UF Online, which currently enrolls 30 Walmart employees, was one of three original university partners when the company rolled out its college benefit three years ago.

The university said it was disappointed by the decision, noting that it was told that UF Online’s programs are too selective for most Walmart employees to gain acceptance. The university has admitted 46 percent of the 182 Walmart student applications it’s received.

“UF remains committed to expanding access and seeking out new partners with whom we can work to provide fully accredited and high-quality online, academic pathways for professionals worldwide,” says Evangeline Cummings, the university’s assistant provost and director of UF Online.

The university just announced its own network, dubbed Gator Pathways, through which company partners can offer tuition benefits to be used at UF Online and a small group of open-access Florida institutions: Santa Fe College, Seminole State College, and the College of Central Florida.

The Broader Market: That announcement would add to a growing, if not yet crowded, field. EdAssist, for example, currently works with 235 colleges and education providers. Workers can choose from those programs when they tap into the $1 billion worth of annual tuition benefits offered by EdAssist’s employer network, which includes Bank of America, the Home Depot, Raytheon Technologies, and T-Mobile.

Companies typically prioritize these factors with their tuition benefit programs, says Jill Buban, vice president and general manager at EdAssist, a veteran in online higher education:

“They’re looking at quality indicators and seeing who wants to play ball,” she says.

New Cert for Front-Line Managers: Guild has seen recent movement with nondegree credentials offered through its learning marketplace, which includes Bellevue University’s people and business leadership certificate and Spelman College’s new eSpelman certificate program.

This week, the University of Denver welcomed 200 students to a new online certificate program offered through Guild as part of employee benefits. The short-term certificate comes with five credits and can be completed in 12 weeks. Like certificates from Spelman and Bellevue, the new program is aimed at front-line workers and first-time managers, says Paul Freedman, president of Guild’s learning marketplace:

The University of Denver, a private institution, previously has created certificate programs for employer partners through its University College, a career-focused continuing education division. But working with Guild’s network rather than designing a credential for a specific employer had several benefits, says Michael McGuire, the dean of DU’s University College.

Guild solicited proposals from its university partners for the certificate. DU was selected and spent 18 months developing the program. While the university knew the certificate would be aimed at front-line managers in the retail or fast casual industries, faculty designers didn’t know which companies specifically would offer it. Guild acted as a buffer in handling that side of the process.

“They vetted it with their corporate partners,” says McGuire. “Really what we want to see is the growth of these students in their organizations.”

He says the program isn’t as narrowly customized as it would’ve been if created through a direct partnership with a company, which likely would require the inclusion of competencies that are specific to their business. That ideally means the certificate will help students develop useful skills for a new job, perhaps even in a different industry.

The certificate is designed to be stackable, so students can add it to other short-term credentials as they work toward earning a degree. The university is limiting class sizes to 15 students per instructor. And students are required to have six one-on-one coaching sessions during the 12-week program, with the option of adding three more after they complete.

“That really helps faculty members personalize it,” McGuire says. “A lot of these students have either very little college credits and experience or none at all.”

Payoff for Students: Big questions loom amid the boom in college tuition benefits for front-line employees. How many earn certificates or degrees? And do those credentials help them get promotions or new jobs?

Guild has become a major part of the promotion strategies of its employer partners, says Freedman. For example, Chipotle employees who participate in Guild’s university programs are 7.5 times more likely to be promoted to management positions.

Walmart released some numbers about its Live Better U program in July, when it expanded the benefit. Roughly 28,000 employees were actively participating this summer, the company said, and 8,000 have completed and earned a credential. 

A new report from the Lumina Foundation offers some more clues about whether the Walmart benefit is paying off for its 1.6 million front-line employees. The report was written by Haley Glover, strategy director for state action and equity at Lumina, which became a shareholder in Guild in June, after the analysis was completed. Lumina brought in Accenture to look at program data from Walmart.

The findings include:

An estimated 3.7 million community college students in the U.S. are enrolled in noncredit programs, according to a new estimate from a national survey conducted by Lumina, Wilder Research, and Opportunity America, an advocacy group.

The federal government keeps no data on this sector, according to the analysis. Many states collect little or no data themselves. And without national standards, the report says state-to-state comparisons get messy.

More than half of the students across noncredit programs in the two-year sector (57 percent) are enrolled in job-focused education tracks, the survey found. And community colleges report having many employer partners—an average of 541 for two-year colleges that enroll more than 20,000 students.

The survey asked colleges to sort their employer relationships into four categories: employer sponsors, employer advisers, employer partner/customers, and contract training clients. Respondents on average said a quarter of their employer partners pay for customized contract training, which is usually a fairly intensive collaboration.

Most noncredit programs can be completed in less than a semester, according to the report. And they can be created quickly to adjust to shifting labor market demand.

“We must help all students, especially first-generation students, gain access to work-based learning,” Félix Matos Rodríguez, chancellor of the City University of New York, said in a new report from Handshake, a career connection platform for college students. The report recommends metrics colleges should use while embedding career services in their core missions. 

Americans largely agree on skills colleges should provide for workforce success, according to a survey conducted by the Bipartisan Policy Center and the Association of American Colleges and Universities. Adults who responded to the survey said critical thinking/problem solving and written communications were the top skills needed for jobs, a finding that lined up with responses from employers in a recent AAC&U survey.

The Biden administration this week launched the White House Initiative on Advancing Educational Equity, Excellence, and Economic Opportunity for Hispanics. The executive order includes the creation of an interagency federal task force that will seek to connect education to labor market needs through programs such as dual enrollment, career and technical education, registered apprenticeships, and work-based learning.

“Dropout culture appears to have jumped the education-employment barrier,” writes Yustina Saleh, a former executive vice president of research and analytics at Emsi who is now an adviser to the National Laboratory for Education Transformation. And while struggling to retain their own employees, Saleh says, companies continue to look outside for hires who offer less in “talent, credentials, and experience than their own.”

The nation faces a dire shortage of skilled workers to fill jobs under the $1 trillion infrastructure bill, reports The New York Times. Researchers and economists say companies may find it difficult to find workers for new jobs the bill could create in construction, transportation, and energy. The construction industry could face a shortage of at least two million workers through 2025.

What should I be covering? Catch you next week. —PF @paulfain