Like Starbucks, more companies expanding benefits

When Starbucks said this week that it would pay for employees to get a four-year college degree online, the coffee company joined a growing number of employers that are adding benefits to attract and keep workers.

Tuition assistance, paid time off, wage increases and other benefits increasingly are being added to compensation packages, said John Bremen, managing director at Towers Watson, a human resources consulting company.

Starbucks’ tuition program may not be a novel idea, but experts say tuition assistance has usually been limited to white-collar employees -- not workers at or near the minimum wage. McDonald’s announced a similar program earlier this month.

With an improving economy and more job choices, workers can expect to see more generous benefits, Bremen said.

The unemployment rate has plummeted from double-digit highs during the Great Recession to a low of 5.5% in March. Combined with rising wages, the labor market is the healthiest it has been in years.

“Clearly companies are reacting to tighter and more competitive labor markets,” Bremen said. One sign: “They try to get a much better sense of what employees want by asking them.”

An employee survey led McDonald’s to offer its workers tuition assistance for college, spokeswoman Lisa McComb said. The company, which has been targeted by labor unions demanding higher pay, also announced last week that it would raise the minimum wage at company-owned restaurants and provide paid time off for workers.

Employees at both company-owned and franchised locations can take part in the Archways to Opportunities tuition aid program, said Lisa Schumacher, director of education strategies for McDonald’s.

Crew-level employees can receive up to $700 a year, and franchise owners and operators can get up to $1,050. The assistance levels are based on the average cost of community college classes, Schumacher said.

In addition to college, the program also gives employees the opportunity to take classes in English as a second language or to earn their high school diploma, a $1,295 cost that is covered entirely by McDonald’s.

“From a business perspective, when you invest in people’s development ... you have the opportunity to drive retention and potentially have an impact on who you’re recruiting into the business,” Schumacher said.

Starbucks’ tuition announcement may encourage other companies to follow suit, said Nicholas Clements, a professor of human resources management at Georgetown University.

“Starbucks is a highly visible organization,” he said. “Monetarily, it’s quite an unprecedented move.”

More employers, especially in the service sector, are starting to see the benefit of investing in their workers, said Rita McGrath, professor of management at Columbia Business School.

That’s a sharp contrast from the recession, when many companies slashed or eliminated benefits.

“We’re starting to see more companies getting more savvy about the kinds of benefits that will help people be more effective in their lives,” McGrath said. ”We may be on the brink of a real transition in how that kind of employment is viewed.”

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