Amazon is enticing workers with college fees. What's the catch?

by David Sherfinski | @dsherfinski | Thomson Reuters Foundation
Tuesday, 28 September 2021 15:25 GMT

An employee scans packages at Amazon's JFK8 distribution center in Staten Island, New York, U.S. November 25, 2020. REUTERS/Brendan McDermid.

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To attract workers, Amazon has said it will offer free college tuition for more than 750,000 of its hourly employees. But what does the fine print say?

Amazon.com Inc said this month it would cover college tuition fees for more than 750,000 operations employees in the United States from next year, becoming the latest big company to boost worker benefits as the U.S. labor market rebounds from COVID-19.

The e-commerce giant's new benefits - which expand its "Career Choice" education programs - kick in after hourly workers have been at the company for 90 days, meaning about 400,000 hired during the pandemic should be eligible right away.

But what about the small print? And what factors should be considered by existing Amazon employees or people thinking of joining the company in the hope of getting free tuition? 

How will the new benefits work?

Starting in January, hourly Amazon employees in the United States will be eligible for full, pre-paid college tuition benefits at hundreds of education partners up to a certain limit, covering the cost of classes, books, and fees.

There is no time limit to the benefits, which will also cover programs for high school diplomas and equivalency and English as a Second Language (ESL) proficiency certifications.

"We recognize it often takes adult learners more time to finish their bachelor's degrees, so that's why we don't have a lifetime limit," an Amazon spokesperson said in an email.

How much will they cover financially?

Amazon says it will pay "100% of tuition" for full-time U.S.-based employees up to a maximum of $5,250 per year - a fraction of the average cost of public and private four-year colleges and universities in the United States.

"I mean, $5,000 a year is great. It's just not enough to support an actual bachelor's degree in a reasonable amount of time, depending on where you go," said Iris Palmer, a higher education and workforce expert at New America, a U.S.-based think-tank.

But many employees already have some college experience under their belts when they join, the Amazon spokesperson said, suggesting many will only take a few courses while working at the same time.

What's new compared to the 'Career Choice' program?

Amazon previously covered up to 95% of costs for associate degrees and other education programs, and workers were required to complete 12-months' employment to be eligible.

The company announced the new benefits amid intense scrutiny of its labor practices, including the use of algorithms and surveillance to monitor employees and allegations of brutal working conditions at some of its warehouses.

Palmer said that while the schooling grant would be beneficial, Amazon could address more immediate concerns about working conditions for its lowest-paid staff.

"If you're an Amazon delivery person and you're eligible for these benefits, that's great," she said. "But maybe it would be better if you had breaks to use the restroom or things like that which are a little more useful in your practical day-to-day."

Amazon has said it supports its workers and is committed to regular breaks.

Which educational institutions will participate?

Amazon said tuition fees will be paid for at "hundreds" of education partners across the country, but did not name the institutions that will participate.

"Our team is working to build out our full roster of partners," the company spokesperson said, noting more details would be available when the program launches.

Flexibility will be key because many minimum wage earners might simply not have time for education outside work, said Stephanie Hall, a senior fellow at the Century Foundation, a U.S.-based think-tank.

"If they're working at least one full-time job, they probably already have other responsibilities – so they tend to be the kind of student who's going to need a really supportive program," Hall said.

Why is Amazon announcing the move now?

Labor shortages are pushing companies to offer sweeteners beyond traditional benefits such as health insurance, said Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans, a non-profit group.

"Most companies are struggling right now to be fully staffed and employers, therefore, are looking at what they can do to differentiate themselves," Stitch said.

The move follows similar announcements in recent months by several major U.S. retailers including Target and Walmart.

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