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Kroger Keeps Benches Warm for Staff Seeking to Further Education

Tax Cuts and Jobs Act the 'catalyst' that enabled retailer to up employee benefit programs, CEO McMullen said

Kroger has implemented a new employee benefits program called Feed Your Future that, among other things, allows associates to take a leave of absence to continue their education, and promises that their jobs and seniority will be waiting for them when they are ready to return to work. 

The initiative, which company officials said was made possible by the lower federal taxes introduced under the Tax Cuts and Jobs Act, is part of a larger effort by the retailer to invest in its employees as part of the Restock Kroger plan. Additional new benefits include "accelerated investments in store associate wages, a more generous 401(k) benefit and enriched associate discount and support programs," according to company officials. 

Kroger Chairman and CEO Rodney McMullen called the Tax Cuts and Jobs Act a "catalyst" that is enabling the retailer to accelerate investments in its Restock Kroger, as well as its plan to "serve America through food inspiration and uplift.

"We intend to make significant investments in our associates, to continue redefining the customer experience, and to return value to our shareholders—sharing the benefit with all of our stakeholders in a balanced way," he said in a statement, adding that he is especially excited to introduce Feed Your Future.

"Many of our associates can attest to the life-changing power of education, and I'm proud to be one of them," he said. "Feed Your Future will support both full- and part-time associates, wherever they are on their personal education journey, whether they are pursuing GEDs, MBAs or professional certifications. In this way, we're offering more than a one-time award—we're offering an investment in our associates' future."

When the U.S. Senate was in votes to pass its tax overhaul bill in December, McMullen predicted the changes would allow Kroger to invest more heavily in its associates. 

“We believe it will also influence us to continue to invest in our business, which will grow jobs. And I think what will end up happening is you will see us do a balance of everything together—some of it our shareholders will benefit from, some of it our associates will benefit from, and our customers will benefit from it as well,” he said during the retailer’s earnings call in the days leading up to the vote, which passed in the bill's favor. "Because we really view that as what drives the sustainable business that continues improving overtime." 

Last week, officials revealed that the company would hire 11,000 new employees, including 2,000 management positions, across its divisions. 

As part of the Feed Your Future program, employees of Kroger and its subsidiaries will now be offered an education benefit of up to $,3,500 annually ($21,000 over the course of employment) toward continuing education and development opportunities, including a high school equivalency exam, professional certifications and advanced degrees. Kroger officials expect to increase the company's total annual investment in employee education five-fold under this new benefit. Additionally, Feed Your Future will now cover all full- and part-time associates following six months of employment.

"We care about our nearly half a million associates' growth and development, and we believe investing in education will support and encourage lifelong learning and reinforce our 'come for a job, stay for a career' opportunity culture," said McMullen. "We believe that making education benefits available to more associates and at more generous levels than ever before is the best way to support their future."

According to Kroger officials, the Tax Cuts and Jobs Act will also allow the retailer to "accelerate some of the previously announced incremental $500 million investment in associate wages, training and development over the next three years." 

The retailer is already making strides toward its wage goals, having ratified a labor agreement with UFCW Local 75 in Cincinnati last month that "set the stage for starting wage and overall wage increases in multiple markets across the country," officials said. The agreement raised starting wages to at least $10 per hour, and accelerated wage progressions to $11 an hour after one year of service, for store associates in the Cincinnati/Dayton area. 

Kroger will now also increase the company match in the 401(k) plan to 5% of pay, compared to a 4% match today, and will provide a 10% discount on its private label portfolio, expanding on the existing associate discount on these products, which allowed associates to save $53 million in 2017. New associate discounts on general merchandise, home, apparel and jewelry are being offered as well. These employee benefits were discussed in part in a call with investors in March, in which McMullen said "protecting associate and retiree pensions is one significant way that we take care of our associates." 

Kroger's longtime Helping Hands program, an "internal support fund that aids associates during hardships," will also receive an additional $5 million in funding and be more accessible to associates. 

Last fall, Kroger awarded $700,000 in financial grants to support 1,100 associates enduring hurricane-related hardships as part of the Helping Hands program.

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