Chipotle is the latest company to spend millions on this expensive benefit for its employees—here's why
On Oct. 15, fast-food chain Chipotle announced it would expand its education benefits program. It will now provide employees with the opportunity to earn a degree in 75 different business and technology fields, debt-free.
The initiative covers 100% of tuition costs up front, for eligible employees to earn associate's and bachelor's degrees in fields ranging from cybersecurity to supply chain logistics at the University of Arizona, Bellevue University, Brandman University, Southern New Hampshire University and Wilmington University.
To qualify, Chipotle employees must have worked at the company for at least 120 days and work at least 15 hours — approximately two or three shifts — per week.
The program is run in partnership with Guild Education, a tuition reimbursement and education platform with a list of clients that includes massive employers like Walmart, Disney, Lowe's and Taco Bell.
In 2018, Walmart announced a partnership with Guild Education that would give Walmart's roughly 1.4 million employees the opportunity to earn an associate's or bachelor's degree in business or supply chain management from the University of Florida, Brandman University and Bellevue University. Since then, Walmart has dramatically expanded its educational benefits to include more than 50 programs.
When Guild works with other large companies, they typically "highly curate" the types of programs employees can choose from, Marissa Andrada, chief people officer at Chipotle, tells CNBC Make It.
"What's different with us is we've decided to pivot and focus, for now, on business and technology degrees," she says.
It makes sense for Chipotle to select those types of programs, she says. "If you think about those two spaces, it really plays into our growth plan for not only the company but our growth plan for our employees."
The new program benefits both Chipotle's bottom line and employees, Andrada says.
"It's not only the right thing to do, to take care of people, but it also makes good business sense," she says, citing statistics that link advanced degree attainment with increased lifetime earnings. Chipotle's internal figures also reflect 90% higher retention among Chipotle employees who participate in the education benefits program.
Chipotle employees can also seek up to $5,250 in tuition assistance reimbursements if they pursue a degree outside of the program run by Guild Education. Over the past two years, Chipotle has distributed more than $20 million in tuition assistance.
Daniel Zhao is a senior economist at Glassdoor and studies wages and benefits. He says while bread-and-butter benefits like healthcare and retirement plans remain the most desired benefits among workers, he and his team have noticed an uptick in education benefits like those at Chipotle.
"Anecdotally, we've certainly heard more companies advertising these kinds of benefits and pushing them," he tells CNBC Make It. "It's consistent with the state of the labor market right now. These new benefits show that employers are feeling the pressure of a tight labor market and are expanding benefits and experimenting with new ways to attract workers."
He also says that these kinds of education benefits can help companies grow their skilled work forces.
Initiatives like tuition benefits "help companies build up a workforce that can then take on other jobs at the company that might require more advanced skills like technical jobs, engineering jobs," explains Zhao. "By developing that pipeline, not only are you expanding the set of candidates that you can hire, you're also instilling some amount of loyalty in your workforce."
Andrada says companies like Chipotle have a civic responsibility to help their employees. "We employ 80,000 people ... we have the opportunity to really shape the economy," she says.
But amid calls to raise the federal minimum wage, Andrada says simply raising wages doesn't accomplish what providing educational benefits does.
"At the end of the day, we have 2,600-plus restaurants, and they've all got to run really well. And at the core of it is people. I don't think a higher wage will buy you that," she says.
The average salary among Chipotle employees in the United States is $12 per hour.
"People do want a fair wage and we know we're paying that," says Andrada, arguing that workers, especially younger workers that Chipotle often employs, are looking for more. "They want to work for a manager and companies that invest in their growth and development. And I think that's different than 'I'm just going to pay you a dollar more.'"
Zhao says that there is some evidence that workers sometimes value expanding the benefits that are offered over raises, pointing to unions which he says often advocate for improved benefits and retirement plans, rather than dramatic pay increases.
But he maintains that it is yet to be seen if education benefits like these will have a lasting impact on workers.
"I think that they're a healthy sign that employers are experimenting, but we just don't yet which ones workers will end up loving and which ones might end up being as important in the future as some of the core benefits like 401(k)s," he says.
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