In a tight labor market, employers are finding they can make do with workers who lack a sheepskin.
Some version of that mantra has persisted for decades, with everyone from high school counselors to parents and presidents nudging young people to get that four-year degree or face a life of economic struggle.
To be sure, for a majority of Americans a bachelor’s degree has always been out of reach. But striving for one seemed like sound advice for job-seekers in a post-industrial economy, particularly for people of color and from low-income backgrounds looking for a ticket to a middle-class life.
And for a while it worked: Between 2011 and 2021, the percentage of people aged 25 and older who completed a bachelor’s degree or higher increased by 7.5 percentage points from 30.4% to 37.9%, according to the latest data from the Census Bureau.
But the tight labor market, combined with the high cost of college and a pandemic-era re-assessment of work, has led both employers and job-seekers to question the conventional wisdom of higher education for everyone.
Employers are finding that the best workers may be skilled in other ways than a formal education – and that jobs are easier to fill without the default demand of a formal degree.
For most college graduates, the investment eventually pays off.
Georgetown University’s Center on Education and the Workforce published an assessment of return on investment with data compiled from more than 4,000 colleges and universities. It found that an average of 60% of college students across institutions earn more than a high school graduate after 10 years.
But some who’ve sought a college degree have found it to be an expensive investment that is never repaid through higher earnings. In a particularly painful irony, it is low-income and minority students who are most likely to be saddled with such heavy student debt that it prohibits them from buying a home, starting a family or saving for retirement. And the financial fates are far worse for those who start college, but never finish.
Fewer than two-thirds of students complete college within six years, according to the National Center for Education Statistics – that includes nearly 40% of people who took out college loans between 2012 and 2017 didn’t finish after six years. And the default rate among those borrowers is three times as high as the rate for borrowers who did earn a diploma.
Public and private sector employers are now changing their standards, broadening the meaning of “qualified” to include life experience, job history or certifications that don’t require a bachelor’s or associate’s degree.
The change of heart among employers also reflects the new reality that fewer people are going to college – largely a result of the pandemic, which resulted in 1 million fewer students enrolling in college. The latest data from the National Student Clearinghouse Research published this week shows that the bleed is slowing but not gone, with colleges and universities experiencing a 0.6% drop in student enrollment between the fall of 2021 and fall of 2022.
And experts are hoping the trend will persist even once the labor market cools.
“College is unaffordable and unattainable for so many people. There are alternative routes people can take to get to the same space.”
Employers long cast college degrees as a “drawbridge that pulls someone up” to a higher standard of living, says Bridgette Gray, chief customer officer for Opportunity@Work, which promotes workers who may not have attended college. The group calls them “STAR” workers – people “Skilled Through Alternative Routes.”
We believe college can’t be the only pathway to success or to the middle class,” she says. “College is so expensive – unaffordable and unattainable for so many people. There are alternative routes people can take to get to the same space.”
Degree requirements have locked out job-seekers with alternative qualifications from 7.4 million jobs, Gray says, citing internal data from Opportunity@Work. Those without degrees have to work for roughly 30 years to achieve the same wages college graduates earn from day one.
Moreover, the non-degreed but skilled worker definition haunts those who already disproportionately struggle to find good jobs, Gray says, including 61% of Black workers, 55% of Hispanic workers, 61% of veterans and 66% of rural workers.
Employers are paying attention.
On his first full day as governor of Pennsylvania, Gov. Josh Shapiro, a Democrat, issued an executive order removing the four-year degree requirement for 92% of state jobs – about 65,000 positions – and ordered all state agencies to take steps to emphasize work experience in their hiring. To promote the new policy, the Shapiro administration also launched a new website where applicants can search for jobs that don’t require a four-year diploma.
The Keystone State action follows a similar move by Utah Gov. Spencer Cox, a Republican, in December.
“Degrees have become a blanketed barrier-to-entry in too many jobs,” Cox said in announcing the new initiative, noting that job-seekers in rural areas are particularly held back by the requirement. “Instead of focusing on demonstrated competence, the focus too often has been on a piece of paper. We are changing that.”
Maryland also ditched degree requirements for many state jobs last summer, and some other states and cities are performing similar reevaluations. For example, Philadelphia and St. Paul,
Minnesota, have set up apprenticeship programs for municipal jobs, while Denver has partnered with Hertz to offer training and summer job opportunities to youth to install public electric car chargers, says Michael Bartlett, program manager at the National League of Cities.
The Biden administration has been paying attention too, and recently unveiled an aggressive three-department effort to overhaul the country’s public education system to more directly link it to local workforce needs – those that increasingly do not require a degree.
By exposing high school students to career and technology training programs, apprenticeships, micro credentials and dual-enrollment programs – those that allow high-schoolers to take college classes for credit – they hope to create a new corps of workers with the skills – not degrees – necessary to fill jobs made available through the CHIPS and Science Act, the infrastructure law and the climate provisions included in the Inflation and Reduction Act.
“We must challenge our myopic view that emphasizing the importance of career pathways is about limiting students, or the view that it’s four-year college or bust,” Education Secretary Miguel Cardona said last week in a speech outlining the administration’s education policy priorities for 2023. “Advancing career pathways in high school is about more options for students, not less.”
“If we do this well, our graduates will be able to compete on a global stage,” he said. “And it’s my intention to raise the bar so that we can lead the world in advanced career and technical education.”
Cardona is no stranger to high school training programs, having graduated from a technical high school in Connecticut where he was part of an automotive studies program. The new White House effort, formally known as “Raise the Bar: Unlocking Career Success,” has him working alongside Commerce Secretary Gina Raimondo and Labor Secretary Marty Walsh to strengthen the connection between K-12 education, postsecondary education and workforce programs to fill in-demand jobs without placing a major financial burden on families.
“This means that dual enrollment courses for local colleges should start at the 11th grade and ambitious high schoolers can graduate with an associate’s degree or credential without paying a penny,” he said. “We have the students for the careers needed to build America. We just need to better align our system and clear the path for our students.”
Last fall, the Biden administration announced the “Apprenticeship Ambassador Initiative” to promote a debt-free “earn and learn” way for people to get on-the-job experience. And in January, the Office of Personnel Management issued a memo exhorting agencies to use “skills-based” evaluations for government internships, apprenticeships and fellowships.
Most recently, at virtually every event promoting his Bipartisan Infrastructure Act, Biden notes that 90% of the jobs created under the law – a “blue collar blueprint to rebuild America” – won’t require a college degree.
The strategy, which has as much to do with staggering student loan debt, plunging college enrollments and the pandemic’s impact on the economy as it does with in-demand workforce needs, represents a significant departure from previous Democratic administrations.
After all, it was former President Barack Obama who, in his first address to a joint session of Congress in 2009, urged every American to pursue some type of post-secondary degree, whether that was a four-year bachelor’s degree, community college, vocational training or an apprenticeship.
The ambitious goal, which came to be known as the administration’s “North Star,” aimed to increase by roughly 50% the proportion of Americans with a college degree and came alongside major increases to federal tuition assistance – a particularly aggressive effort to expand access to Americans historically locked out of higher education, including low-income students and students of color.
Now, the Biden administration’s focus on broadening access to good-paying jobs that don’t require a degree is in part a course correct on the decade-plus focus on college access that often overlooked the completion aspect.
“We need to continue to push for access and we need to think about completion rates for those populations of students,” says Wil Del Pilar, vice president of higher education policy and practice at The Education Trust, an education policy organization in Washington, D.C., that focuses on issues of equity in K-12 and higher education. “We need to think about pathways in a more critical way.”
“I agree, not everyone needs to go to a four-year college,” says Del Pilar, who previously worked in Pennsylvania’s department of education. “We need to do a better job at creating pathways into credentials that lead to a living wage.”
What he says he’s most concerned about, however, is whether all students are receiving the same message about higher education.
“If you are wealthier, are you receiving the same message [you’ve always received about college]? And if you’re poorer and a student of color, are you receiving a message that you don’t have to go to college,” he asks. “When we see fewer, especially low-income students and students of color, going to college, it is a huge concern because we have significant gaps in achievement for those populations already.”
Research shows that a degree is still worth it in the long run, even if it takes a while to get there.
Private employers such as Apple, Google, IBM and Accenture are dropping the four-year college degree requirement for some jobs. Smaller companies, too, are reevaluating the old standards.
Vladimir Gendelman, CEO of the Pontiac, Michigan firm Company Folders, says he adopted the no-degree-required policy after a young worker proved herself capable of doing several jobs despite not having a specialized degree.
Except for jobs that absolutely require professional certification, such as accountants, “you can learn on the job, and we don’t have to worry,” Gendelman says. “The way we operate now is, I’ll take someone with an amazing attitude, somebody who wants to be here, somebody who wants to do their best,” and train that person for the role, he adds.
According to an analysis in the Harvard Business Review, the “reset” toward more specific skills-based hiring is projected to open up an additional 1.4 million jobs to workers without college degrees in the next five years.
Advocates argue that the demand for a four-year degree has never made sense for lots of jobs. For example, about a third of administrative assistants have a bachelor’s degree, Gray says, and yet three-fourths of advertisements for administrative assistants call for a four-year degree. “That’s insane,” Gray says.
In part, the change reflects the new landscape of the job market. Since the coronavirus pandemic arrived in early 2020, demand for workers has outstripped supply. Retirements of baby boomers, disruptions from COVID and a downturn in immigration has left the economy more than 2 million workers short of what is needed. Most experts don’t expect the situation to improve anytime soon.
During the Great Recession recession of late 2007 to 2009, “employers went through ‘up-credentialing,’ adding degree requirements, says Layla O’Kane, senior economist at Lightcast, a labor market analytics firm. “Unemployment was high, and basically, they could” do it, O’Kane says.
Now, with unemployment at a 50-year-low, the degree requirement became a barrier not just for workers, but employers as well, says Cory Stahle, an economist with the Indeed Hiring Lab. That’s driven the new approach toward “skills-base hiring” and away from university degrees as a “kind of catchall for different skills they wanted for the job,” he says.
Some employers are softening their job ad language, too, he says – saying a bachelor’s degree is “preferred,” for example, instead of required.
Experts believe the trend will continue, even as unemployment increases and people return to pre-pandemic norms in the workplace. “As an employer, you can sit there with an empty chair on your team for months, or pull someone in you can start training today,” Stahle says. Very often, that employee won’t display a framed diploma on the wall.
