Starbucks to Pay U.S. Workers to Get ASU Online Degree

Starbucks Corp., which has offered company stock to store employees for more than two decades, will now begin picking up most of the tab for workers to get a degree through Arizona State University online.

Starbucks employees who work at least 20 hours a week and enroll in the university’s online bachelor’s degree will get $6,500 -- about half of their tuition -- for the first two years, the company said in a statement. They will then get full tuition for the final two.

“We’ve always known that our partners work hard every day,” Cliff Burrows, president of Starbucks’ Americas region, said in a phone interview. “This is the best way we can serve them.”

Starbucks, the world’s largest coffee-shop chain, has offered cafe workers restricted stock, known as Bean Stock, since 1991, and has a 401(k) matching program. Store employees get a free pound of coffee weekly, plus free beverages on work breaks and a 30 percent discount on Starbucks food, drinks and merchandise. The company previously offered as much as $1,000 a year in tuition reimbursement for employees who had worked at Starbucks at least one year.

Student-loan borrowers in the U.S. have amassed more than $1.2 trillion in debt, putting a drag on the economy because some young people avoid making big purchases or starting a business. President Barack Obama issued an executive order on June 9 to expand a program easing student-loan payments. Still, on June 11, the U.S. Senate blocked a measure to let student-loan borrowers refinance their balances at lower interest rates.

Underemployed Grads

Recent college graduates are ending up in more low-wage and part-time positions as it becomes harder to find education-level appropriate jobs, according to a January study by the Federal Reserve Bank of New York. The share of Americans ages 22 to 27 with at least a bachelor’s degree in jobs that don’t require that level of education was 44 percent in 2012, up from 34 percent in 2001, the study found.

The rise in underemployment for college grads represents a return to the levels of the early 1990s, according to the study. The rate rose to 46 percent during the 1990-1991 recession, then fell in the following economic expansion as employers hired new graduates to keep up with technological advances.

Among 22-year-old degree holders who found jobs in the past three years, more than half were in roles not requiring a college diploma, said John Schmitt, a labor economist for the Center for Economic and Policy Research in Washington.

40 Programs

Under Starbucks’ new program, workers can choose from about 40 programs, including engineering, nursing and business. Employees working in support centers and roasting facilities, as well as for the Teavana, La Boulange and Evolution Fresh brands can participate. Workers won’t be required to stay at Starbucks for a specified period after being reimbursed for tuition.

“This is the most significant investment we’ve made in our partners since the introduction of Bean Stock,” Burrows said. The program is meant to help with the financial burden of education, he said.

The program was designed during the past six months, said Michael Crow, Arizona State’s president, who has known Starbucks Chief Executive Officer Howard Schultz for several years and has worked with him on past projects. Crow expects as many as 15,000 Starbucks students to enroll.

“We’re able to be a part of a corporation which is valuing human capital at a whole new level,” he said.

Tuition Reimbursement

Other U.S. companies offer college tuition reimbursement -- some with stricter requirements. L Brands Inc., owner of Victoria’s Secret, gives employees who’ve worked at least one year full-time as much as $3,000 a year for college tuition. Home Depot Inc. offers tuition reimbursement for salaried and full-time hourly workers.

Of Starbucks’ 135,000 U.S. store employees, about 25 percent already have a bachelor’s degree. Seattle-based Starbucks has about 11,600 U.S. locations. More schools besides ASU may be added to the program in the future, Schultz said during a webcast earlier today.

Starbucks shares rose 0.5 percent to $75.09 at the close in New York. They have lost 4.2 percent this year, while the Standard & Poor’s 500 Index has gained 4.8 percent.

(Updates with closing share price in last paragraph.)
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