A number of large employers have garnered praise recently for creating higher-education benefits for their employees in partnership with one or more universities. For example, Starbucks has established a program through Arizona State University; Walmart has partnered with several institutions, including the University of Florida, Brandman University, and Bellevue University; and Peet’s Coffee has an arrangement through Oregon State University. Arizona State is planning to create a for-profit subsidiary to broker employer-university partnerships on an even larger scale.
These programs have generally been seen as both innovative and enlightened; they provide evidence that employers are willing to invest in their workers — many of whom are at entry-level, low-skill jobs — and that universities are developing new ways to expand access and respond to the needs of the work force. At first glance, arrangements such as these appear to deliver benefits to everyone concerned. Employers gain from more stable and better-educated workers; employees gain access to educational programs they might not otherwise have; and universities hungry for revenue gain a new wholesale business model to supplement the traditional retail approach.
While it is easy to appreciate both the good intentions and the opportunities represented by these arrangements, we should be concerned if they become the new standard pathway to college. Doing so could replicate the problems created decades ago when access to health care became linked to employment.
Employer-sponsored health-care plans became prevalent during World War II as a way for companies to skirt federal wage freezes. Employers realized that offering fringe benefits such as health insurance would increase worker compensation without adding to cash income. These programs gained momentum when, in 1943, the IRS ruled that health benefits are exempt from taxation. The practice quickly spread, and as health-care costs rose, employer-sponsored health insurance became the only way most people could afford even basic medical care. The U.S. health “system,” such as it is, arose more by accident than from thoughtful policy making.
The unintended consequences of this model have haunted us ever since. We have developed the most unequal and expensive system of health care in the world. While important corrections to the system were made through the Affordable Care Act, millions of people still remain uninsured or underinsured, and access to health care remains problematic for many who most need it. Furthermore, health-care rights are vulnerable to the dysfunctions of both our political system and our economy. The system reduces job mobility (because it is risky to leave a job with good benefits); and it has created powerful vested interests that consistently stand in the way of reform. The link between employment and health insurance also effectively privatizes an important public-policy issue and has allowed the federal government to avoid addressing it adequately for decades. It is not difficult to imagine a similar fate for higher education. If employment becomes a precondition for most people to gain a college degree, it will freeze many people out of the system.
It will be difficult to claim that higher education is a public good if it is dominated by private arrangements.
Instead of viewing barista jobs as entry-level, high-turnover positions, there will be increased competition for them, and incumbents will stay in them longer. Indeed, making lattes or stocking shelves could become the new way most students pay for tuition — even those who could finance their education in other ways. This would be fine if everyone had access to these jobs, but this is unlikely to be the case. As total compensation (salary plus tuition and other benefits) from these jobs rises, those who already have difficulty competing in the job market are likely to get crowded out.
Furthermore, if the benchmark cost of education becomes a matter of private negotiation between companies and universities, the experience from health care suggests that it will skyrocket even more so than it has in recent years. Colleges, as rational economic actors, may limit or reduce their commitments to financial aid, preferring instead to attract students who are subsidized by their employers.
Finally, and perhaps most importantly, the pressure on states and the federal government to support higher education will erode even further. Indeed, it will become increasingly difficult to claim that higher education is a public good that deserves sustained support if it is dominated by private arrangements among firms and universities.
The history of American higher education has been marked by many efforts to expand access. Some of these efforts, such as the establishment of land-grant universities and community colleges, have undoubtedly created opportunities for students who might otherwise have been excluded.
Other initiatives have arisen from the same democratizing spirit, but have had at best mixed results. Standardized admissions tests were meant to mitigate ethnic and class-based bias, but in practice they have tended to amplify the effects of privilege. Portable federal loan programs put power in the hands of student consumers, but may also have inflationary effects on tuition and create perverse incentives which are seen most clearly (but not exclusively) in the for-profit side of higher education. Well-intended innovations often have unintended consequences, particularly in the absence of a coherent policy framework supporting clear purposes and goals — a state of affairs that characterizes both higher education and health care in the United States.
Public education has been radically defunded by state governments in recent years, and new ways must be found to maintain access to good quality institutions at reasonable cost to students. But those who most need education also most need jobs and frequently cannot get them. Linking access more closely to employment could well exacerbate a vicious cycle that is already unacceptable.
Tying health care to employment was arguably one of the greatest failures of public policy in U.S. history. We should learn from this experience rather than replicate it.
Geoffrey M. Cox is senior associate dean for administration and finance in the Graduate School of Education at Stanford University.
