The Business Case for Investing in Education for Unskilled Workers

As business leaders compete to attract and retain talent, they look to employee benefits. This is not only reserved for top-tier workers with college degrees. Unskilled workers without higher education can also reap rewards for both themselves and their employers when education is among benefits offerings.

Low unemployment nationwide is forcing employers to offer more services to attract workers and then provide them with the skills both parties need for success, said Dara Warn, chief operating officer at Penn Foster, a digital skills and credentialing provider in Scranton, Pennsylvania.

Employers with education benefits gain access to more talent that will become better skilled and stick around longer while also being more productive, Warn said. Employees gain access to education, which will help with career prospects and thus earning potential. “Being able to offer not just a livable wage but an opportunity to advance their career and establish long-term financial health and wellness is a benefit that education brings,” she said.

Business leaders should not be mistaken; education as a benefit is not simply job training. “The companies getting it right are the ones who are starting first with how might we do this to help our employees and offer them something that they value rather than coming at it from strictly a workforce development angle,” said Rachel Carlson, CEO and co-founder of Guild Education, a workforce development company in Denver.

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When employees feel their employer values them, they tend to stay at the company. Guild Education partnered with Chipotle Mexican Grill Inc. to provide front-line workers with education as a benefit along with a platform to manage their tuition reimbursements and speak with coaches who can help them juggle responsibilities. Arrangements such as this and those with other clients at Guild Education led to a 17 percent increase in recruitment of quality candidates, thus saving money on talent acquisition, Carlson said. They also see twice the retention rates and 2.5 times the promotion rates among the employees who use the benefit. Promoting from within helps solve the issue of filling middle-level management roles that trouble many employers, Carlson said.

Even if employees do not reach that manager role, their likelihood to stay longer helps company bottom lines. Retail, for example, saw 65 percent of workers turn over in 2016, according to Korn Ferry’s Hay Group. These companies are not looking to retain their front-line workers for 10 years, but rather for more than one year, Carlson said. Yes, the worker could leave for another opportunity, but the company still achieved its goals and had a positive return on the education investment.

Why Now?

Many outside forces are at play in the decision for companies to offer education as a benefit to frontline, unskilled staff.

Most recently, “the tax reform bill had a whole lot to do with it,” Carlson said. Companies have more room in their budgets to invest in these workers, and education is a more sustainable, renewable method of investment than a one-time bonus, she said.

The rise of the gig economy also means employers must make traditional workplaces appear more appealing and fruitful than bouncing between companies, Carlson said.

The economy in general is another major driver of education investment, said Pamela Tate, president and CEO at the Council for Adult and Experiential Learning, or CAEL, a nonprofit career navigation, development service provider and advocate based in Chicago. The strong U.S. economy seen in the past few years has “absolutely” increased demand for the benefit, she said, as employers compete for workers.

During recessions, “there’s always some degree of disinvestment in education and training of the workforce,” she said. Companies that feel pinched begin to cut back on discretionary costs. However, the last recession saw less disinvestment than others, she said.

Part of the recent improvements in education benefits could be due to the advancements in technology, Tate said. Jobs today rely on technology, requiring workers with higher levels of knowledge than years past, she said.

The need for education today require removal of financial and structural barriers at workplaces and educational institutions, she said. For business leaders, Tate suggested having flexible work options or sabbaticals so workers can focus on their education. Smaller firms that might not have the resources of education benefits could also help workers save for school by setting up lifelong learning accounts and matching employee contributions, similar to a 401(k). Along with the advancement of affordable online programs, there are a wealth of options for education. “We’re in a very special time now,” Tate said.

Lauren Dixon is a senior editor at Talent Economy. To comment, email editor@talenteconomy.io.