Employer-funded continuing education has rapidly become a major benefit for young people entering the workforce who want to gain the skills and training needed to advance their careers and build futures. While employers have no legal obligation to assist employees in this way, the law does provide tax benefits for employer investments on behalf of their employees.
It was estimated back in 2015 that U.S. employers were spending a collective $177 billion a year on formal education programs for their employees, largely through capped tuition reimbursement programs. But recently, a Harvard study found that such programs benefit primarily economically secure employees, those with sizable savings accounts.
Other companies partially fund continuing education in the belief that direct financial “skin in the game” represents co-investment and commitment to the company. The Harvard study concluded that both these schemes create barriers, especially for low-income and low-education employees, that result in conversely, a further widening of the income equality gap.
Starbucks and ASU create a template
Starbucks launched its Starbucks College Achievement Plan in partnership with Arizona State University back in 2014. That program enabled Starbucks employees working an average of 20 hours a week to earn a bachelor’s degree via ASU’s online college program. Under ‘SCAP’, Starbucks covers 100 percent of the tuition costs with no strings (continued employment at Starbucks) attached. The results from SCAP have been significant: over 80% of Starbucks stores have at least one participating employee, 20% of people who apply to Starbucks cite SCAP as a major reason for their application, and employees who participate in SCAP stay with Starbucks 50% longer than non-participants while seeing a 3x promotion rate.
After working with Starbucks for a few years, ASU decided it could best extend similar opportunities to employees of multiple companies by creating a separate public benefit company to foster new partnerships. The university worked with TPG’s The Rise Fund, an impact investing firm, to create InStride, which in just four years has brought in over 40 corporate partners and a growing number of new university partners.
Amazon’s Career Choice expands
Two years before Starbucks and ASU partnered to start the SCAP program, Amazon had started its own Career Choice Program. Amazon offered to prepay 95 percent of the cost of courses such as aircraft mechanics, computer-aided design, machine tool technologies, medical lab technologies, nursing, and other professions in high demand for employees who had been with the company for at least 3 years – regardless of whether those skills were relevant to a continued career at Amazon.
Founding CEO Jeff Bezos said of the program, “We want to make it easier for employees to make [choices] and pursue their aspirations….[because] it can be difficult in this economy to have the flexibility and financial resources to teach yourself new skills,” Amazon decided to step in and reward those who had helped the company grow.
The results have been so rewarding that Amazon recently expanded its outreach to employees of the many private companies who contract with Amazon to deliver the products it sells - Amazon calls this new venture the “Next Mile.”
After a quarter century of transforming a fledgling online retail business into the world’s largest online retailer (and much more), the brain trust at Amazon.com decided to change its delivery business model. Rather than continue to manage a massive delivery fleet from the top down, Amazon in 2018 created its Delivery Service Partner (DSP) network, contracting with independent entrepreneurs and creating pathways to wealth for a growing number of them.
The program, which began with nearly 180 delivery service owners, has expanded to nearly 3,000 entrepreneurs in 14 countries who employ some 275,000 drivers who collectively deliver an estimated 10 million packages per day. As of August 2022, these companies had generated a collective $26 billion and brought prosperity to communities across the globe.
In less than five years, Amazon expanded its DSP network to Canada, India, and Brazil and most of western Europe – and recently launched a program in Saudi Arabia. Amazon also launched incentive and grant programs to encourage participation by companies led by veterans, women, and Black, Hispanic, and Native American entrepreneurs.
In furtherance of this vision, Amazon in 2022 launched its Road to Ownership program that provides top-performing delivery driver associates and DSP team members the opportunity to upskill and reskill through access to education, hands-on experience, and resources that can put them on a pathway to becoming an Amazon Delivery Service Partner.
In a new partnership with InStride, Amazon is for the first time extending an upfront tuition program to include employees and owners who work directly for its Delivery Service Partners. InStride Chief Operating Officer (COO) Jonathan Lau stated that this $19 million investment in education, skills training, and career advancement will make education obtained through the InStride platform freely available to up to 275,000 third-party delivery drivers.
This then opens up nearly 3 ,000 different learning options including bachelor’s and associates degrees, high school diplomas, industry certifications, certificates that can stack to a degree, and English-language proficiency courses, all at no cost to the participant, up to $5,250 in tuition coverage per year.
So, Amazon has called the distance between distribution centers and individual homes and businesses “the last mile.” The “Next Mile,” then, equates to the steps that those delivery drivers can make to further their own careers and build prosperous futures on the foundation of their service to Amazon and its customers.
Just five years after Amazon started its Delivery Service Partners program, the company points to a number of entrepreneurs who have built new careers thanks to the opportunity provided to them.
If the Next Mile is as successful as other employer-funded continuing education programs have been, these smaller entrepreneurs and their employees will quite likely reap similar benefits of employee loyalty and in-company career advancement.
