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Employers Are Shifting from Degree-Based to Skills-Based Hiring, and It’s About Time
Requiring a college degree often screens out the best candidates and wastes available talent in the labor market
By Bruno V. Manno
“I tried for many years to get jobs in the tech sector, only to be told that I could not get a job because I did not finish a degree,” says LaShana Lewis of St. Louis, Missouri. “I was never tested on my technical skills or made it past the first interview.”
LaShana’s frustration is familiar to many individuals who lack a college degree but have knowledge and skills from their work experience. Fortunately, she discovered CoderGirl, a tech job-prep program from LaunchCode, a nonprofit that helps people like her find jobs in the technology field. That experience led to an apprenticeship with Mastercard and then a job as a systems engineer. In 2018, she started L.M. Lewis Consulting to improve diversity and inclusion in the workplace.
LaShana’s experience illustrates how employers are turning from degree-based hiring to skills-based hiring—that is, from using college degrees to using practical knowledge and experience to evaluate a job seeker’s qualifications. Skills-based hiring is increasingly used by major companies such as Google, Apple, IBM, Mastercard and Bank of America. This trend has big implications for how schools, colleges and other programs prepare people for jobs and careers. Hiring employees based on demonstrated skills, not just educational attainment, will lead to a more diverse workforce and provide opportunities for Americans with workforce skills but no college degree to obtain better-paying jobs.
The College Degree Bias
Using college degrees as the primary criterion for hiring has many negative consequences. First, “Resumes are a lightning rod for human bias,” says Khyati Sundaram, CEO of Applied, a behavioral science-backed tool for fair hiring. An Opportunity@Work study found that requiring degrees eliminates 83% of Latinos, 76% of African Americans and 81% of rural residents from jobs that they are otherwise qualified to fill with the skills they have.
Second, degree fixation creates degree inflation, as employers start to require degrees for jobs that didn’t previously require them. For example, a Harvard Business School report documents that in 2015, only 16% of production supervisors had college degrees. Yet today, 67% of job postings for production supervisor positions require degrees. The skills needed haven’t changed, but the degree requirements have.
Third, degree-based hiring shrinks the talent pipeline. According to the Census Bureau, 62% of Americans over 25 years of age have no bachelor’s degree. That number increases to 72% for Black individuals and 79% for Hispanics. “Employers have been sleepwalking into a system that screens out the majority of workers, including millions of people who possess sought-after skills. These three seemingly innocuous words—‘bachelor’s degree required’—are causing serious damage to our workers and economy,” says Byron Auguste of Opportunity@Work.
Finally, surveys of young people suggest that they view college differently from prior generations. “Over the past 20 months, we have seen a significant shift in teens’ thoughts about education beyond high school with more and more looking for options beyond a four-year degree as a path to a career,” says Jeremy Wheaton, president and CEO of ECMC Group, a nonprofit focused on helping students succeed. Less than half of Generation Z high schoolers want a four-year college degree, down 23 percentage points from May 2020. Nearly one-third want several educational experiences, each of one year or less, rather than a traditional college experience. To integrate these young people into the workforce, employers should stop viewing four-year college degrees as the norm.
Support for Skills-Based Hiring
Fortunately, U.S. employers are beginning to realize their error and seek out employees who don’t have a college degree but are skilled through alternative routes, dubbed “STARs.” Peter Q. Blair and colleagues from the National Bureau of Economic Research used U.S. Labor Department classifications to conduct research on STARs, calculating that STARs comprise around 70 million U.S. workers—a large untapped talent pool. Many earn low wages, but low wage does not mean low skilled. They also calculated the “skill distance” between workers’ current occupations and higher-wage occupations with similar skill requirements in their local labor markets.
Comparing skill sets for jobs across wage categories, they developed an “opportunity landscape” showing that many low-wage jobs required skills similar to middle-wage jobs, and many middle-wage jobs required skills similar to high-wage jobs. This skills overlap across wage categories suggests there are pathways for transitions to higher-wage jobs. But they also identified an “opportunity gap in access to higher wage work [which is] the result of an intrinsic preference for the bachelor’s degree . . . by employers [who] filter out qualified applicants [with] skills and work experience . . . when they do not meet the four-year degree requirement.”
Building on this research, Opportunity@Work analyzed 130 million job transitions over a decade that tracked the career pathways of STARs from where they start (origin jobs) to higher-wage (or destination) jobs. It sought to determine what gateway jobs were responsible for this upward mobility. For example, entry-level origin jobs such as cashier, teller or clerk can transition to a gateway job such as customer service representative, which can then open doors to a destination job such as sales representative. Opportunity@Work designated 51 gateway jobs and a subset of 30 jobs that are especially promising pathways to higher-paying jobs. Opportunity@Work then developed a software hiring platform called Stellarworx that matches STARs with employers that are ready to “hire people for their potential, not pedigree.”
Over the next five years, around 1.4 million jobs could open to workers without college degrees. President Joe Biden highlighted skills-based hiring in his 2022 State of the Union address, urging employers to “give workers a fair shot . . . hire them based on their skills not just their degrees.” The administration’s Office of Personnel Management issued hiring guidance on using skills-based hiring practices to fill federal jobs. “By focusing on what an applicant can do and not on where they learned to do it, skills-based hiring will expand talent pools by making it easier for applicants without a bachelor’s degree to demonstrate their skills,” says Kiran Ahuja, the office’s director, in the press release announcing the initiative.
On the state level, this approach has bipartisan support. Maryland Republican Governor Larry Hogan has announced a partnership with Opportunity@Work to implement a statewide hiring plan eliminating degree requirements for thousands of state jobs. Hogan said, “Through these efforts . . . we are ensuring that qualified, non-degree candidates are regularly being considered for these career-changing opportunities. This is exactly the kind of bold, bipartisan solution we need . . . giving . . . more Marylanders the opportunities they need to be successful.” Colorado Democratic Governor Jared Polis issued an executive order directing state agencies to embrace skill-based hiring. He said, “The State of Colorado employs more than 99,000 people and should lead this critical transformation toward skills-based hiring while benefiting from less attrition, a broader recruitment pool, and a sustainable, high quality talent pipeline.”
Seven in 10 Americans believe that employers should hire job candidates based on skills and experience rather than require a college degree, though fewer than half say that their employers do so, according to a recent Gallup survey supported by the Strada Education Network. Another Gallup survey of parents of 11- to 24-year-olds found that almost half (46%) the parents want post-high school pathways programs plus the college pathway. This result suggests that the American public is ready for skills-based hiring.
Multiple surveys by the Society for Human Resource Management of CEOs, supervisors, human resource professionals and workers found that more than half (56%) of employers use pre-hiring skill assessments to determine applicants abilities—and one in four plan to expand the use of skills assessments in the next five years. Nearly eight in 10 (79%) of human resource professionals said skill assessment scores are “just as or more important than traditional criteria” such as years of experience and degrees.
All that said, employers in the private and public sectors are reluctant to dispense entirely with degree requirements in hiring. Degrees remain a signal—a quick way to know if job applicants have basic knowledge and skills for many jobs. Ben Wildavsky, author of “The Great Brain Race” and a visiting scholar at the University of Virginia, says, “Companies like Google have not abandoned traditional credentials. But there’s considerable evidence that employers across industries . . . have loosened requirements for some high-skill jobs and even more middle-skill ones.”
Career Pathways Partnership Programs
New education and training programs are being created to meet this growing demand and support for skills-based hiring. Often called career-pathways programs, they weave together education, training, employment, support services and job placement, connecting learners with employers and labor market demands.
These partnership programs span K-12, postsecondary and workforce training, and they include employers. They deliver education and training through many different program models, such as apprenticeships and internships; career and technical education; dual enrollment in high school and postsecondary education; career academies; boot camps for acquiring specific knowledge or skills; and staffing, placement and other support services for job seekers. There is evidence these programs are working, including international studies from the 38-member Organisation for Economic Co-operation and Development.
Statewide partnership programs are supported by governors and legislators from both political parties: Delaware Pathways began in 2014 under Democratic Governor Jack Markell, and Tennessee’s Drive to 55 Alliance began in 2015 under Republican Governor Bill Haslam. Similar programs exist in such politically diverse states as California, Colorado, Indiana and Texas.
Partnership programs also exist at the local level with collaborations between K-12 educators, local employers and civic partners. Examples include 3-D Education in Atlanta, YouthForce NOLA in New Orleans, Washington, D.C.’s CityWorks DC and Cristo Rey, a network of 38 Catholic high schools in 24 states. Local partnerships may also straddle the district and charter sectors and include postsecondary education. One example is the Los Angeles County collaboration between the Wiseburn School District and Da Vinci Charter School that includes associate or bachelor’s degrees through UCLA Extension and El Camino College or College for America.
Other partnership models are forming outside traditional K-12 and postsecondary education. Building Futures is a Rhode Island Registered Apprenticeship Program with 29 public, private and nonprofit organizations that awards industry credentials in fields such as construction, healthcare, manufacturing, commercial fisheries and marine trades.
Existing institutions like community colleges are reinventing themselves by partnering with four-year institutions. One such partnership is the Come to Believe Network, a new community college hosted by a four-year institution that provides facilities and other student support services such as meals and tutoring, eventually leading to associate degrees and employment.
Finally, there are national career-pathways networks that partner with regional, state and local affiliates. The Pathways to Prosperity Network, P-Tech schools and the Linked Learning Alliance provide support to those wanting to create new programs.
While program specifics vary, they have several common features: an academic curriculum linked with labor market needs, leading to a recognized credential and decent income; career exposure and work, including engagement with and supervision by mentor-advisers who help participants make informed choices and ensuring they complete the program; a written civic compact between employers, trade associations and community partners; and supportive local, state and federal policies that make these programs possible.
A New Pluralistic Opportunity Agenda
This shift from degree-based to skills-based hiring is fueling a new opportunity agenda. Its essential elements are knowledge and relationships—what students know and whom they know. Beyond acquiring academic and technical skills and habits of mind, students need to cultivate habits of association. These habits together are the building blocks of individual opportunity. They are learned and internalized through practice and are also character strengths that lead to the building of democratic civic communities. Together, they enable the pursuit of opportunity.
More specifically, habits of association cultivate relationships that provide individuals with two kinds of complementary social capital. “Bonding” social capital grows when we’re with those like us, while “bridging” social capital grows when we develop relationships with individuals different from ourselves. Social scientist Xavier de Souza Briggs notes that binding social capital is for “getting by” and bridging social capital is for “getting ahead,” with the latter important to pursuing opportunity.
These forms of social capital create strong and weak ties. Bonding social capital creates strong ties with those who are mostly like us and know the same places, information networks and opportunities we do. Bridging social capital creates weak ties with those who are different from us and likely to connect us to new networks and opportunities. These weak ties are especially valuable when we’re looking for a new job since they provide us with connections and information we wouldn’t get through our usual networks.
When companies use skills-based rather than degree-based hiring, they’re going to hire a more diverse workforce and generate more bridging social capital and weak ties that create new opportunities for workers. Brown University economist Glenn C. Loury suggests that social capital may be an essential prerequisite for creating human capital—the experiences, skills, training, education and acquired social aptitudes that determine individuals’ earning power and thus their ability to generate and accumulate wealth.
Ultimately, skill-based hiring and pathways programs don’t supplant the college-degree option but enhance it with what Joseph Fishkin calls opportunity pluralism. This approach offers individuals “a variety of paths one might pursue, or enterprises in which one might engage [because] people hold diverse views about what constitutes a good life, and they have different preferences about which social roles and jobs they would prefer to hold. These different roles and jobs genuinely offer . . . different . . . forms of human flourishing.”
This new opportunity agenda differs sharply from vocational education of old that placed students into different tracks and occupational destinations based mostly on family background. That sorting process often carried with it racial, ethnic and class biases: Immigrant students, low-income students and students of color typically enrolled in low-level academic and vocational training while middle- and upper-class white students took academic, college-preparatory classes. Educators often described vocational programs as dumping grounds for students thought incapable of doing serious academic work, as Jeannie Oakes and her colleagues at the RAND Corporation found in their seminal 1992 report, “Educational Matchmaking.”
By contrast, the pathways approach goes beyond a narrow understanding of upward mobility to include the relational aspects of success, helping individuals develop an occupational identity and vocational self. Choosing an occupation and developing a broader vocational sense of one’s values, abilities and personality is important for adult success, one that can yield faster and cheaper pathways to jobs and careers.
“Our education and workforce system is set up to screen out anyone who doesn’t fit the image of the traditionally educated worker,” LaShana Lewis says. “Employers’ reliance on the college degree is leading them to overlook millions of people with the skills to get the job done.” It seems the time is right to embrace opportunity pluralism that makes room for both degree-based and skills-based hiring for the good of current and future workers—and American society as a whole.