Protocol | Workplace

The problem with Amazon’s ‘free college’ benefit

The new "free college" benefit is not so free, and probably not that useful for most workers, according to education experts.

Amazon sign

Education experts told Protocol that programs like Amazon's Career Choice benefit have limited value in helping people actually earn degrees they can use.

Photo: Soeren Stache/picture alliance via Getty Images

Last week, splashy headlines about a new and expanded "free college" benefit for all of Amazon's blue-collar workers made the country's second-largest private employer look like it had fixed the problems with higher education in one fell swoop. Two months ago, the same headlines had about the same energy for Walmart, the only company that employs more people in the United States than Amazon.

Walmart and Amazon are the largest employers to embrace the trend in expanding tuition-reimbursement and education benefit programs (Amazon calls it the Career Choice program) in the mad dash to attract labor in an increasingly tight market. But while these benefits might make companies more appealing to applicants, the reality of the programs is far more complicated. Education experts told Protocol that the programs have limited value in helping people actually earn degrees they can use.

"I am not sure if actual degree attainment is on the mind of the corporation despite what press releases may say. I think simply offering the benefit gets a company like Amazon and Walmart really good PR in terms of cleaning up their reputation as an employer," said Stephanie Hall, a senior fellow at the Century Foundation who researches higher education policy.

Amazon had previously offered a limited version of its Career Choice program, where workers could enroll after one year of employment and could opt mostly for skills training programs and GED completion (but no reimbursement for bachelor's degrees). The new program will be available after three months of employment instead of one year, and it will provide an expanded range of new offerings, including reimbursements for bachelor's degrees. Ardine Williams, Amazon's vice president of workforce development, said that the company decided to expand the program because it had observed a surge in demand for its current skills training program. The company also cited a Gallup study commissioned by Amazon that found that just over half of workers surveyed want to participate in "upskilling" programs. The study also found that the benefit is particularly important for young adults, ahead of retirement, vacation and paid leave benefits.

Actual, peer-reviewed research on the impact and success of these programs (rather than on their uptake, like the Gallup survey) is limited, but what research does exist usually centers on Arizona State University's relatively longstanding, seven-year education partnership with Starbucks. Those studies indicate that long-term student uptake of the benefit is very low, according to Iris Palmer, a senior adviser for education and workforce policy and research at the New America Foundation. "It's very very low, the amount of people that take advantage of it," she said.

The first major limit to the value of these programs stems from federal tax rules, which prohibit employers from spending more than $5,250 in education expenses before the reimbursement becomes taxable income. While employers could negotiate special deals with schools for more expensive programs, this rule almost immediately precludes reimbursement for the higher price of many well-ranked programs and schools, and most state schools.

After cost, by far the largest issue for workers with these programs is time scarcity. "Time is the number one resource that workers in places like this lack," Hall said. While training programs, GEDs and ESL certificates can be completed in shorter periods of time and are constructed so that part-time, online work can lead to success, actual college degrees usually require more hours than someone working a full-time job at Amazon has available.

"If you really want frontline workers who do not have bachelors degrees to take advantage of this type of benefit you need to provide more support for them, but also time away from the job that's paid to participate in some of these programs," Palmer said. "Otherwise, If you're starting at the beginning of your bachelors' degree, it could take eight to 16 years, if I'm being generous." Amazon's Career Choice site and FAQs indicate that full-time workers can negotiate a more flexible schedule to accommodate their classes, and that some courses will take place on-site at Amazon.

Time is such a crucial question because it might actually be more expensive for employers to give workers the time they need to make their jobs less grueling than it is to hand over tuition reimbursement for every employee. "Amazon, if they scheduled their drivers and delivery people so they could take bathroom breaks, that might be a more expensive thing to address than tuition," Palmer said.

Employers, including Amazon, also get to choose what types of programs and specific schools their students can enroll in (areas like IT, nursing and transportation are listed on the current Career Choice page). Those limits can frustrate workers who want to study at a particular school near where they live, or study in person, or enroll in an educational program not sponsored by Amazon, according to worker conversations on forums like Twitter and Reddit. Hall also worries that students will opt for one of the educational programs provided by Amazon because it is free when they would be much better suited to a higher-quality option outside of the range of choices, and that they might qualify for other tuition benefits and financial aid programs outside of Amazon's.

The skills training and certificate programs have more obvious value than the degree reimbursement for Hall, who is more skeptical about the promise of a bachelor's degree compared to the other programs. This also seems to mirror the experience of the workers who spoke to Protocol and asked for anonymity for fear of repercussions from Amazon: Compared to the workers who said that longer degree programs like nursing were exceptionally difficult to complete, one Amazon worker told Protocol that they found the shorter-term skills training programs in areas like computer science and IT to be useful and easy.

The new Amazon Career Choice benefit will likely help some minority of workers, but both Hall and Palmer doubt that there will be any long-term serious social impact in terms of employment and economic mobility for Amazon workers."The benefit sets the employer apart from other employers who are looking for low skill workers and are in a bit of a pinch. And for companies, it's something they can invest in because they actually know a lot of people aren't going to take advantage of it," Palmer said.

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Photo: David Paul Morris/Bloomberg via Getty Images

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