Can Starbucks Save the Middle Class from Financial Ruin?

Photo by Christopher Furlong/Getty Images

Christopher Furlong/Getty Images

The American middle class is exhausted. In a post-financial crisis economy, where more than 93 million people are not included in the labor force, simply getting out of bed in the morning and going to work almost feels like an accomplishment. That is, until you consider tepid wage gains and the lackluster quality of available jobs, especially if you don’t have a college education.

Two summers ago, Starbucks CEO Howard Schultz started developing a plan with Arizona State University President Michael Crow to save the middle class, according to an in-depth piece by author Amanda Ripley, published by The Atlantic. In short, the two leaders were tired of waiting for change, so they decided to bring the change themselves by revolutionizing education opportunities. In America, college degrees are currently served as a cup of higher standard livings stirred with a bitter amount of tuition bills and student loans. But it doesn’t have to stay that way.

In order to help more students achieve the American dream without life-crippling debt, Schultz launched the Starbucks College Achievement Plan in June 2014, with an expansion announced in April 2015. The plan seeks to improve Americans’ financial situations by providing 100% tuition coverage at Arizona State University for more than 140,000 full-time and part-time Starbucks employees, for all four years of college with access to 49 online degree programs. The only catch is that you need to believe Starbucks when they say there is no catch. Employees in the plan have no commitment to stay with Starbucks post-graduation.

“Everyone deserves a chance at the American dream,” said Schultz, in a press statement. “The unfortunate reality is that too many Americans can no longer afford a college degree, particularly disadvantaged young people, and others are saddled with burdensome education debt. By giving our partners access to four years of full tuition coverage, we will provide them a critical tool for lifelong opportunity. We’re stronger as a nation when everyone is afforded a pathway to success.”

Numerous studies show that college graduates typically have lower unemployment rates and higher lifetime earnings than high school graduates. The caveat: debt associated with a college degree can also hinder your path to the middle class. Americans owe $1.2 trillion in student loans, more than any other consumer debt category with the exception of mortgages, according to the Federal Reserve. More than 11% of that debt is officially at least 90 days past due. Due to deferment, grace periods, and forbearance, the Fed admits the true delinquency rate on student loans is roughly twice as high.

While some people may view Starbucks merely as a hipster hotspot serving coffee, the company has long considered itself a force of good — for employees and society. Employees are referred to as partners and receive a pay package called “Your Special Blend.” In addition to the College Achievement Plan, ingredients include bonuses, 401(k) matching and discounted stock purchase options, and health insurance to partners working at least 20 hours a week. In fact, Starbucks was one of the first U.S. retailers to offer affordable and comprehensive health coverage to full-time and part-time partners.

Can Starbucks actually save the middle class? Nearly 2,000 partners have successfully enrolled in the College Achievement Plan to date, and Starbucks commits to at least 25,000 graduates by 2025. Over ten years, Starbucks’ estimated investment could reach $250 million or more. These numbers are dwarfed by the total number of Americans struggling, but you have to start somewhere. In 1988 Schultz, who was the first person in his family to attend college, bought Starbucks for $3.8 million. Today, Starbucks has a market value of $70 billion and more than 21,000 retail stores in 66 countries.

Perhaps the most encouraging part of the Starbucks College Achievement Plan is that it serves as a model to the business world. A model that says: Believe it or not, it’s possible for companies to do right by their shareholders and employees at the same time. Starbucks recently reported its best non-holiday quarter since becoming a public company, sending shares to fresh all-time highs.

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