In their flurry to produce trillions of dollars of new infrastructure and stimulus for taxpayers, progressive politicians have put prominent emphasis on free college. Joe Biden promised free two years of community college, while Bernie Sanders and others want to provide four years tuition free. Congress is wrestling mightily with this and other entitlement issues in the coming days and weeks.
Yet behind the scenes and quietly, many of Americas leading companies are moving to provide essentially free college opportunities for millions of Americans: their employees. Wal-Mart, which has had an extremely low cost program for employees in a few majors at a small number of colleges, is expanding the number of majors and schools, and is dropping a one dollar per day charge to the employee-student.
Not to be outdone, Amazon is enthusiastically jumping onto the free college for employees bandwagon. Some 750,000 workers who have been employed for at least 90 days are eligible to participate in studying subjects like IT engineering or data center technology. Many other iconic American corporations have joined the movement, such as Target, Chipotle, McDonalds, Starbucks, etc.
Are American companies suddenly becoming altruistic, wanting to do something special to advance the public good? Not really. They are responding to incredibly tight labor markets. There are record numbers of vacant jobs openfar more than the number unemployed. Big firms like Wal-Mart and Amazon are desperate for dependable workers. They have been raising wages considerably and upping fringe benefits. Since many of the potential new workers are young individuals without college degrees, the offer of free college is enticing. Markets are working as they almost always do, reallocating resources to where society says they are needed. The invisible hand of the market is accomplishing much of what D.C. politicians are haggling about, probably quicker and more efficiently.
To be sure, working at Wal-Mart or Amazon wont get you a free college education at a spiffy private school, studying something academically trendy but vocationally nearly useless, such as gender studies. There are three things in common with many of these company sponsored programs: they are generally on-line (remote instruction), often limited to certain majors that the company wants employees to have, and they are limited to a modest number of respectable but not superlative schools.
There is something paradoxical about all of this. The same tight labor market is leading companies to reduce educational requirements in order to widen the pool of applicants. Some major high tech companies no longer formally require degrees. A computer nerd who dropped out of college but who is a whiz at programming now can potentially get a good, high paying job at some prominent firms. Yet at the same time, other companies (and maybe even the same company) are saying we will pay you to get a college degree. Or, perhaps coming soon, we will pay your tuition at a non-degree coding academy if you agree to work for us for two years after getting your coding certificate.
The real story here: credentials still matter. Companies are desperate for workers, so they are forced to pay less attention to degrees, and for unskilled workers at companies like Amazon they will dangle a potential credential (college degree) in front of them in order to entice them to keep working. At the same time, however, more and more Americans are disillusioned by collegea decade of declining enrollments, exacerbated by the pandemic shows Americans are questioning the value proposition of a college degree.
Meanwhile back in Washington, D.C., Democrats may soon face a realization that they might be able to get a $1.5 trillion dollar program through Congress but not one over twice that large. What to cut out to get to the lower figure? My guess is some new entitlements (child care allowances, family leave, etc.) get pared back, but also generous free college provisions as well. The corporate provision of college tuition fringe benefits might provide a rationale for mainstream Democrats to give way on free tuition or, for the most progressive ones, to demand that companies be required to provide tuition benefits for full time employees. But right now, markets are working to provide that benefit anyway.