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This startup helps employers retain workers with free education incentives

Rachel Carlson, Guild CEO and Co-Founder joins the Yahoo Finance Live panel to discuss how Guild works w/ employers to give their employees incentives for adult education and offer free bachelor’s degrees.

Video Transcript

AKIKO FUJITA: Well, the tight labor market has forced companies to get a lot more creative in trying to get new talent through the door. We've talked a lot about higher wages, better benefits, but companies are also increasingly looking to a free college education not just to recruit, but also to retain talent. Guild is helping by connecting those universities with some of the largest firms. And let's bring in the Guild CEO and co-founder, Rachel Carlson joining us from Denver today.

Rachel, it's great to talk to you today. Give me a sense of how your phone's been ringing, essentially, since the labor market has gone a lot more competitive. I know you had companies like Disney and Chipotle offering these benefits pre-pandemic, but I imagine you've got a lot more companies that are interested in working with you now.

RACHEL CARLSON: Yes, you got it exactly right. The proverbial phones of Guild are ringing off the hook for our 1,000 employees that do our work. This war for talent is incredibly intense, but it's distinct from other labor market challenges that we've seen in similar-- 2015, you name it.

And that's because the employers are desperate to hire, but the employees are looking for something different. They're saying, "OK, I'll take a job for now, and that job probably pays $15 an hour, no matter where I work. But I want a career. I want opportunity." And so the companies that are investing in education, whether that's a college degree or reskilling or upskilling, are the ones that are winning the labor market right now.

AKIKO FUJITA: So what kind of programs are we talking about? We had a number of companies just on our screen here that you already partner with. Waste Management, one that you recently announced, not just offering free college education for their employees, but for their spouses, as well as their kids. How does Guild benefit on the back of that? What does that partnership look like?

RACHEL CARLSON: Yeah, so our goal is to offer everything that might be needed from an education and reskilling perspective for the employee and their families. That starts with high school completion and developmental college prep coursework. Even English as a Second Language is one of our most popular programs.

But it works all the way up through bachelor's and master's degrees, as well as innovative certificates that are for people who've already attended school, like a digital analytic certificate, data analytics, digital marketing, people management. Really, all those jobs that start with digital or end with management are also where lots of our students are going. So we've got the full skill stack.

ZACK GUZMAN: And you tabulate how much benefit there is for employees of these companies. You got about, what, $2,500 a year for employees at Lowe's. You got 5,250 a year for Chipotle workers for their programs. I mean, that's nice. That's a significant chunk.

But I always wondered about these programs in terms of how many employees actually take their employers up on some of those benefits. I know it might sound good to kind of attract labor in today's environment. But how many people are you seeing actually take them up on it? Because everybody's got a lot going on. I suppose it helps if spouses can get involved. But what are the numbers there?

RACHEL CARLSON: Yeah, so if you think about what optimal utilization might look like, it's probably about 20%. And that's because we're in an economy where the half life of a skill is five years. So every five years, all of us need to be reskilling or upskilling. But that need is really poignant if you're in a frontline job. You and I might get marginally better at our jobs every day. But if you're in the frontline world, you need to learn a new job-- cashier to people manager or pharmacy technologist to pharmacist.

And so for those folks, you see activation at a higher utilization. And where that averages out across the company, right now, average company is 5% to 10% at any one time and that's rolling at all times because people are going back at different years in different cadences. We found that we can really help companies drive that up. And the reason they're willing to do that and to make those large investments is that every single one of our partners sees a positive return on investment in the dollars they invest. So for every dollar they're funding in education, they're seeing $2 or greater in the return.

AKIKO FUJITA: Rachel, how did the university see all of this? I mean, this comes at a time when the demographics are shifting. There's been a number of forecasts that seem to point to a declining enrollment down the line, largely because there are fewer and fewer people who are going straight from high school to college. What kind of revenue stream does this offer to those universities who are sort of losing their traditional customers, students?

RACHEL CARLSON: This is a great question. There's 7,500 institutions of higher ed in America. It's way too many. And that's something we don't really say enough. And unfortunately, half of them have a negative ROI for the student. So we work with the 300 or so most innovative universities and learning providers, bootcamps, technical programs, skilled trades in the country. But we narrow it down to that 300 so that large employers don't have to work their way through the 7,500 and figure out what's up from down, what's good and bad, and what are schools that actually have a low cost and a high quality outcome for our workers.

AKIKO FUJITA: And moving forward, you know, what struck me a few years ago when I listened to a panel that you were on, you'd sort of mentioned that you think educational benefits are going to be on par with health benefits. In other words, while we're talking about this being an extra incentive to get new workers through the door, this is going to become the norm 10 years from now. And has that calculation shifted for you? How much of that has been accelerated?

RACHEL CARLSON: It's accelerating tremendously and I think for the same thing we saw a few years ago, but we didn't know how quick it would come. And it's this. In the industrial economy, your body was the unit of production. That's the case for my grandfathers and many of my parents' generation. Today, the mind is the unit of production. And so when the body was the unit of production, companies offered healthcare. And today, the mind is the unit of production, and companies have to offer reskilling. And so it makes sense when you think about it that way, why it's becoming inevitable.