By Te-Ping Chen
As companies compete for workers in the tightest labor market in
years, they're rolling out new education benefits like college
coaching and student loan repayments to recruit employees.
Rariety Monford, 27 years old, product supervisor at health-care
company Abbott Laboratories, is a beneficiary. Growing up in
Cincinnati as the daughter of a single mother, Ms. Monford was the
first in her family to attend college. But it meant racking up
$60,000 in student loans, which Abbott is now helping her pay down
as part of a program launched this summer.
"It's a really good deal, especially right now early in my
career," said Ms. Monford, who is also pursuing a master's degree
in engineering management at the University of Houston-Clear Lake.
Her employer is paying for that degree in full.
Unemployment is near an 18-year low, and many companies are
competing for talent across industries by dangling extra perks.
With student loan debt at $1.5 trillion and counting, according to
the Federal Reserve, education benefits are top of mind, experts
say.
"We hire close to 900 people a day," said Tim Massa, Kroger
Co.'s senior vice president of human resources. Today's workers
"want to know what companies will do to grow and develop them."
The grocery chain recently launched a program that offers up to
$3,500 in education expenses annually to employees, including those
who bag groceries part-time. HCA Healthcare Inc. plans to spend up
to $300 million on worker benefits, mostly education-related,
including a student loan repayment program it is rolling out next
year. Home Depot Inc., which has already spent about $136 million
on tuition reimbursement over the past 13 years, recently expanded
worker eligibility for funding, eliminating a 90-day waiting period
for tapping those funds.
Scott McGurl, a partner in Minneapolis at Ey, a consulting and
accounting firm, had seen friends around him spend as much as
$40,000 on college counseling and prep for their children. His
employer offers the same service through College Coach, which
provides one-on-one phone calls with college counselors, many of
them former admissions officers with prestigious schools, as well
as help with essay review. Mr. McGurl used his employer's
service.
"It's a big decision and a huge investment," said Mr. McGurl,
47, of his son's college search. "We're nowhere near helicopter
parents, but we're involved and we want the best for our kids."
Increasing salaries would be more costly and education perks
make "employees feel appreciated," said Deniz Gevrek, associate
economics professor at Texas A&M University, Corpus
Christi.
This summer, Abbott began offering employees who pay at least 2%
of their gross salary to student loans a new benefit. Abbott will
contribute 5% of their salary into a 401(k), a tax-preferential
arrangement the company obtained special permission from the IRS to
create. Traditional student loan-repayment programs don't get the
same kind of pretax treatment as 401(k) funds do.
The company hires more than 1,000 college-educated workers under
age 35 each year, said Steve Fussell, the company's executive vice
president. Many, like Ms. Monford, are struggling with college
debt.
"Our assumption is this will actually pay for itself," Mr.
Fussell said, adding that for such employees, it costs the company
about 13% of their salary to replace them.
Abbott isn't the only company to make that calculation. In July,
Bright Horizons, a child-care provider, began offering full tuition
to child-care-center employees pursuing associate or bachelor
degrees in early childhood education. The company estimates it will
get $1.67 in return on every dollar invested in higher retention
rates alone.
"It's not charity," said Peter Cappelli, professor at the
University of Pennsylvania's Wharton School, who noted online
university programs make it easier for companies to offer such
perks "quite cheaply."
Research from the Society for Human Resource Management, an
association of HR professionals, shows around half of U.S.
employers offer to help fund undergraduate education for employees,
up to $5,250 of which can be excluded from taxable income per
year.
Chatrane Birbal, congressional affairs director at SHRM, said
she expects more companies to step up spending on education perks
because of the labor market. The percentage of employers offering
college selection and referral programs has already more than
doubled since 2014, to 10% today.
Lindsay Tharp, a 37-year-old nurse in Missouri, attended
community college before transferring to nursing school two decades
ago. She said navigating the admissions process with her son, now a
student at the University of Missouri, felt extraordinarily
complicated. It meant heated conversations over how to balance his
desire to study at Kansas State University, a more expensive
out-of-state option, with their financial needs, she said.
"It's a very big burden, because your children are looking to
you for answers in waters you haven't navigated," said Ms. Tharp,
who works for DaVita Kidney Care, which began offering college
counseling last year. Ms. Tharp received help from the counseling
service.
Ms. Birbal said the uptick in interest from employers in
school-related perks reminds her of how employer-sponsored health
programs partly grew in response to World War II, when the U.S.
also faced a labor shortage and companies offered health insurance
as a way to compete for workers.
"In a few years, like health insurance, these could also become
a new norm," she said.
Write to Te-Ping Chen at te-ping.chen@wsj.com
(END) Dow Jones Newswires
October 03, 2018 08:14 ET (12:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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