Walmart will begin offering free college tuition and books to its 1.5 million U.S. employees, the latest effort by the country’s largest private employer to attract and retain workers in a tight labor market.
The retail giant said Tuesday that it will invest nearly $1 billion over the next five years in career training and development programs for workers who want to pursue majors in high-demand fields, such as business administration, supply chain and cybersecurity. The company had previously required its Walmart and Sam’s Club workforce to pay $1 a day to participate in the program.
“We are creating a path of opportunity for our associates to grow their careers at Walmart,” Lorraine Stomski, the company’s senior vice president of learning and leadership, said during a media call. “This investment is another way we can support our associates to pursue their passion and purpose while removing the barriers that too often keep adult working learners from obtaining degrees.”
Walmart’s Live Better U education program, which will be free beginning Aug. 16, was created three years ago to help employees advance within the company. Workers can choose from 10 academic partners, including the University of Arizona, the University of Denver, Purdue University Global and Southern New Hampshire University. More than 52,000 employees have participated and 8,000 have graduated since 2018.
“Our education offerings tie directly to our growth areas at Walmart, and what better way to fill the pipeline of future talent than with our own associates,” Stomski said.
Walmart has taken steps to boost pay for some hourly workers in recent months, although its starting wage of $11 per hour lags many of its competitors; Target, Amazon and Costco all pay at least $15 an hour. (Amazon founder Jeff Bezos owns The Washington Post.)
Tuition reimbursement, once a cornerstone of Corporate America, has been pared back in recent decades as companies looked for ways to cut costs, said Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School. But as hiring becomes more competitive, large employers have begun offering such incentives in hopes of attracting motivated workers and getting them to stay longer.
Soaring college costs – which averaged nearly $25,000 in 2019 – have made tuition reimbursement a particularly attractive employee perk. A number of major employers, including Home Depot, Chipotle, Best Buy, UPS and Fed Ex cover as much as $5,000 a year in tuition costs, while Starbucks offers its workers free online college degrees through Arizona State University.
“The companies that are doing this – Amazon, Starbucks, Walmart – are very concerned about their reputation in the labor market, and they have the resources to do something about it,” Cappelli said. “But these are not your father’s tuition reimbursement programs. They are far more targeted and self-interested than the traditional tuition reimbursement programs, where you can get them from any university and study whatever you want.”
He added that such programs tend to be relatively low-cost corporate investments because very few employees have the time or resources to sign up. At Walmart, for example, 28,000 employees – or less than 2% of its U.S. workforce – are currently participating in the program.
“It’s the kind of corporate benefit that can be very generous without costing so much because it’s not going to be used very often,” he said.
Higher education levels tend to correspond with higher earnings and lower unemployment rates: The median weekly pay in 2020 for workers with a bachelor’s degree was $1,305, compared with $938 for those with an associate’s degree and $781 for high school graduates, according to the U.S. Bureau of Labor Statistics.