Starbucks to expand online college tuition program
NEW YORK - Starbucks (SBUX) says its workers can now have four years of tuition covered for an online college degree from Arizona State University instead of just two, marking the latest sign that companies are rethinking their treatment of low-wage workers.
The Seattle-based coffee chain says the decision is part of its commitment to "redefine the role and responsibility of a public company."
The expansion of the program comes as employers increasingly seek to win favor with customers by cultivating their images for being socially responsible. Last week, McDonald's (MCD) also announced it was expanding a college tuition assistance program to workers at its more than 14,300 U.S. stores. At its company-owned stores, McDonald's said workers would get a pay bump and be able to earn paid time off as well.
Among the other major employers that have announced wage hikes recently are Wal-Mart Stores and Gap Inc.
The public declarations of improved pay and benefits come as the growing income disparities between the richest Americans and everyone else have become a major political issue. Last year, more than a dozen states and multiple cities raised their local minimum wages, according to the National Employment Law Project. And since late 2012, ongoing protests by labor organizers have highlighted the financial hardships of fast-food and retail workers, and generated negative publicity for McDonald's and Wal-Mart in particular.
"People understand the glaring differences between those at the top, and workers who aren't making that much," said Tsedeye Gebreselassie, a staff attorney at the National Employment Law Project, which gets funding from unions and has supported the protests for pay of $15 an hour and unionization for low-wage workers.
Already, Starbucks is known for offering workers health care coverage and company stock, which are considered unusual benefits in the retail and fast-food industry. And Starbucks CEO Howard Schultz said the coffee chain's education program is helping build customer loyalty as well.
"Consumers want to choose those companies that have like-minded values as them," he said.
Additionally, Schultz said Starbucks is fighting to "attract and retain great people," and that workers have higher expectations from employers.
"The benefits of yesterday may not be as relevant today," he said.
The tuition program is a collaboration between Starbucks and Arizona State University, which charges roughly $30,000 for two years of its online degree program. Without providing details, Arizona State University President Michael Crow said the school will "more than break even" with the tuition it collects for Starbucks workers. He said that money will be reinvested into expanding educational opportunities.
As part of the agreement with Starbucks, ASU is providing an upfront discount or scholarship of about 42 percent of the standard tuition for eligible workers at the chain's company-owned U.S. stores. That means Starbucks would be responsible for up to 58 percent.
The amount Starbucks pays stands to be less, however, since many workers are expected to qualify for federal Pell grants and other aid as a result of their limited incomes. Workers would pay whatever costs are leftover, and Starbucks would reimburse them at the end of each semester.
Previously, Starbucks had said it would pay back workers after the completion of 21 credits, which had prompted some criticism that workers were being forced to wait too long for reimbursement.
So far, Starbucks Corp. says nearly 2,000 workers have enrolled for the program; the chain has more than 140,000 workers at its company-owned U.S. stores and support centers. Workers can pick from a variety of fields to study and are not required to stay with Starbucks after earning their degrees.
As part of the initial agreement, Starbucks agreed not to promote undergraduate degrees from other universities to its workers, and Arizona State University agreed not to enter into a similar partnership with another company without prior approval from Starbucks for the first couple years of the program.