Employer-based college programs aren’t just enduring, they’re growing

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Dec 3, 2020

Conventional wisdom is that higher education is countercyclical. During recessions, and periods of high unemployment, people use the time to go back to school and upskill. 

Another article of faith is that—even as adults go back to school—employers will cut back on their education programs in recessions. As Mary Alice McCarthy, director of the Center on Education and Skills at the left-of-center think tank New America, told Inside Higher Ed, benefits get cut when times are tough.

This is why it’s noteworthy that that isn’t happening right now. Against a backdrop of historic unemployment and high uncertainty for America’s employers, there’s been renewed interest and investment in education and upksilling. Flagship publications like Inside Higher Ed have picked up on the trend: Savvy and forward-thinking employers are doubling down on education right now because it’s a strategic move with a clear return on investment.

Some of the key points in the Inside Higher Ed piece were that companies like Chipotle, which pays tuition up-front for its employees through a partnership with Guild Education (where I’m a senior strategist) has expanded its debt-free college program during the pandemic.

After all, as the article points out, the retention rate for employees that use it is three and a half times higher than for those who don’t. Given the high cost of replacing employees—at least $15,000—that’s significant.

The education costs are not a cost center in other words. They represent an investment that has a positive—and quantifiable—return on investment.

The popular narrative is that education benefits are just a recruitment and retention tool. That’s not the case, however. Investing in higher education is also used for strategic upskilling.

As of July, 43% of companies had stepped up their upskilling efforts since the pandemic started. A whopping 88% of learning and development leaders surveyed in May 2020 expected their organization’s spending on education to increase in 12 to 18 months. Sixty-six percent agreed that their function had become a more strategic part of the organization. 

In response to layoffs and demand spikes, companies across every industry made updates to their technology and processes. That meant an acceleration of digitization and automation—efforts we knew would happen, but that now occurred faster.

And that also means needing to upgrade talent. Given that technical talent is scarce—and now even more in-demand—it’s also expensive. For organizations, hiring new people wasn’t a viable solution by itself. Upskilling and reskilling their workforces for this digital world is an imperative. 

Companies are turning to higher education in many cases to aid them in that effort.

Walmart, for example, is opening health-care supercenters across the country. With over 4,000 stores in the United States, staffing these supercenters with qualified health professionals will be critical, which is why it has partnered with schools like Penn Foster to prepare its retail workers for optician and pharmacy technician roles.

The Inside Higher Ed article makes one final point about why corporate education programs are surviving intact: They don’t cost all that much. That’s because fewer than 5% of employees take advantage of these programs at places like McDonald’s.

At Guild Education, however, we’ve found that when companies tackle some key barriers, uptake rises and companies still aren’t cutting back because the investment is worth it. Guild currently supports 25% more students since the start of the pandemic.

Those barriers range from making employees aware that the programs exist to offering a range of programs that connect to both employer and employee needs and goals and address learners’ worries about their ability to succeed in a higher education environment. 

It’s also important to tackle the question of cost.

Another significant reason many employees don’t leverage these programs is that although tuition reimbursement sounds nice, it asks a lot of adults working on the frontlines who are, in many cases, living paycheck to paycheck.

Contrast that with a program in which the employer pays the tuition up-front and doesn’t put costs on the shoulders of students and you change the calculus—and Guild has found that uptake of corporate education programs doubles.

All to say that in a time of high unemployment, savvy companies are showing their mettle by deepening their investment in education for their workforces and doing well by doing good. The results are right there — better retention, recruitment, upskilling, and a stronger bottom line.

Michael is a co-founder and distinguished fellow at the Clayton Christensen Institute. He currently works as a senior strategist at Guild Education.