How Kroger Co. is boosting employee benefits with tax-reform proceeds

Education perk crafted to be 'best in class'
Posted at 2:35 PM, Apr 16, 2018
and last updated 2018-04-16 14:40:43-04

CINCINNATI -- The Kroger Co. will invest about $130 million more per year on a package of expanded employee benefits announced Monday, including an education-assistance perk worth up to $21,000 for any employee with more than six months on the job.

“We want our associates to grow personally and professionally during their time at Kroger,” said CEO Rodney McMullen told reporters at a Corryville press conference. “We believe that encouraging life-long learning and extending educational benefits to more associates … is the best way to support our associates and Kroger’s future.”

The educational benefit, known as Feed Your Future, is one several benefit enhancements that will be funded from $400 million in annual savings that Kroger expects from the Tax Cuts and Jobs Act, signed by President Donald Trump in December. McMullen said a third of those savings will be invested in reduced prices and improved service, while another third will benefit shareholders through improved profits and share-repurchase programs.

“I hope this’ll be an example for other companies,” said Ohio Senator Rob Portman. “The idea behind the tax reform proposal was to make America’s businesses more competitive and to help individuals and families.”

Portman said he’s heard from dozens of companies that plan to use tax savings to increase wages and invest in new equipment.

"What’s unusual about Kroger is they’re doing it all,” Portman said. “They’re investing in their business and their facilities. They’re investing in people in terms of education and retirement savings and wages. I hope this’ll be an example for other companies.”

Here is a summary of the expanded benefits:

  • Kroger is expanding the reach of an education benefit it launched in 2010 by increasing the annual benefit available to part-timers from $1,500 to $3,500 and applying the benefit to training certificates, online degrees and other kinds of continuing education that weren’t previously covered. The company expects a five-fold increase in spending on education assistance. It wouldn’t say what Kroger spends now.
  • Kroger is increasing its 401(k) match to 5 percent, up a percentage point, starting June 1.
  • Kroger is expanding the use of a 10 percent employee discount on it offers on its private-label products, known as Our Brands. Last year, the discount saved employees a combined $53 million. It will now be offered in all stores and apply to an expanded list of products.
  • Kroger is expanding its internal support program, Helping Hands, which provided $700,000 last year to 1,100 employees impacted by hurricanes. Kroger is boosting its annual allotment for the program to $5 million, up from $2 million in prior years.

Kroger compared its new educational program, “Feed Your Future,” to those at Starbucks, McDonald’s and the grocery-chain Wegmans, with the goal of developing the best educational benefit in the country, said Tim Massa, group vice president of human resources and labor management.

Wegmans spends $4.5 million on tuition assistance annually and spent $110 million on scholarships for 35,000 employees since 1984, according to its website. McDonald’s last month announced a tripling of its education benefits, saying it will invest $150 million in Tax Act savings over five years.

“I’m sure there’s others out there doing great things in education, but we think this is industry-leading in terms of the amount we’re offering to all associates,” Massa said. “I feel pretty strongly it’s an industry-leading program.”