Three Cheers for Starbucks, But ...
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Earlier today, Starbucks announced a College Achievement Plan in which it will pay for its baristi and other employees to go back and finish their college degrees.
Employees only have to work 20 hours a week to be eligible. The plan is an online program in partnership with Arizona State University.
For the first two years, Starbucks will pick up about half the employees expenses. For the final two years, Starbucks will pick up all of them. This presumes the students are eligible for Pell grants, which most of them should be as the employees make about $10 per hour.
Moreover, and unlike programs at other companies, there are no strings attached. Workers do not have to stay employed at Starbucks for any length of time after they graduate.
The offer only applies to company owned stores, not franchises. But that's not my "but ...", which I will get to in a moment.
Many Positives
From a marketing standpoint as well as a business standpoint, the announcement makes sense. For the students, what can be better?
In return, Starbucks will get very dedicated workers for four years. Employee loyalty will be exceptional and turnover low.
Think students will prefer Starbucks over other brands? I do. Many will be loyal to Starbucks for the rest of their lives.
Other Details
MarketWatch has other details in its report.
Bloomberg reports Starbucks to Pay U.S. Workers to Get Degree From ASU Online
Starbucks employees who work at least 20 hours a week and enroll in the university’s online bachelor’s degree will get $6,500 -- about half of their tuition -- for the first two years, the company said in a statement. They will then get full tuition for the final two.Please note that 25% of Starbucks workforce already has a degree. Clearly they cannot find jobs in their field of expertise.
“We’ve always known that our partners work hard every day,” Cliff Burrows, president of Starbucks’ Americas region, said in a phone interview. “This is the best way we can serve them.”
Of Starbucks’ 135,000 U.S. store employees, about 25 percent already have a bachelor’s degree. Seattle-based Starbucks has about 11,600 U.S. locations. More schools besides ASU may be added to the program in the future, Schultz said during a webcast earlier today.
Cost of Education
The Huffington Post reports "Tuition for an online degree at ASU is about $10,000 a year, roughly the same for its traditional educational programs."
That is my "but ...":
- Why should an online education cost as much as a traditional program?
- What has Arizona State done to lower costs for everyone?
To be sure, a degree at ASU is not as expensive as degrees from other universities, but $40,000 is a lot of money for most kids attempting to work their way through college.
Moreover, I am not in favor of Pell grants or student loans. The former is a taxpayer subsidy to teachers and administrators, not students.
Pell grants do nothing to increase competition, and everything to keep costs high. And student loans make debt slaves out of kids for decades.
While the Starbucks program addresses the debt slave issue, it does nothing to address the real problem: the extremely high cost of education at most US universities.
Still, this move by Starbucks is likely to pay dividends to both the students and the company. Things would be much better still if only government would get out of the way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
