The concept of needing a college degree in order to build a career in the modern workforce has long remained deeply ingrained in the American psyche. However, since labor force participation has steadily declined since 1997, businesses across the U.S. began to struggle with finding qualified candidates to fill essential positions. This skills gap has led to a phenomenon called “degree inflation,” where many employers have begun requiring at least a 4-year degree for many jobs that were once accessible to high school graduates or individuals with the relevant skillset.
Unfortunately, this talent acquisition model has largely only worked to further restrict the number of candidates available for companies to choose from, making it harder than ever to find and retain the right employees for the job. Read on to learn more about why degree requirements have negatively impacted recruiting efforts and how businesses are responding to this challenge to increase their talent pool going forward.
Degrees may be Helpful to Jobseekers, but They Limit Options for Employers
Over the past few decades, individuals with college degrees maintained a clear edge in the workforce over candidates with little to no secondary education. After all, individuals who hold a bachelor’s stand to earn (per the median) $900,000 more per year than high school graduates.2 This substantial increase in potential earnings makes pursuing a degree an attractive prospect for future job seekers, but for many employers today, degree requirements may only work to stifle talent acquisition.
According to the U.S. Bureau of Labor Statistics, at least 33% of the nation’s labor force possess only a high school diploma.3 This means that requiring a degree for a particular position at a company immediately eliminates a significant number of potential candidates who are willing and potentially experienced enough to perform the job.
During a time when active job openings in the U.S. exceeds 11.4 million, many businesses have started to look at alternatives to degree requirements to remedy this labor supply-and-demand gap.4
Trends Influencing Why Companies are Reducing Degree Requirements
A variety of interconnected circumstances have led to a reduction in degree requirements for jobs today across many industries. To understand why employers are reevaluating the importance of education prerequisites for open positions, it’s essential to examine some contributing causes to this change. Here are some of the reasons why employers are starting to look beyond educational attainment when considering new candidates.
Covid-19
Due to the lockdowns imposed during the start of the Covid-19 pandemic, the state of employment in America began to rapidly change. By April of 2020, the unemployment rate in America reached over 14% as many workers were either let go or voluntarily chose to stay at home due to concerns over the virus.5 Throughout 2020 and 2021, unemployment began to decline as companies started to implement remote work options for employees. This shift to remote work created numerous opportunities for workers who otherwise would not be able to accept positions due to geographic location or health concerns.
With that said, finding skilled employees post-pandemic has remained a major challenge, especially considering how the great resignation continues to impact job markets across the country. This forced many companies to loosen degree requirements for mid to high-level positions to broaden the pool of potential candidates available to them.
In short, the labor shortage initially created by Covid-19 created a highly competitive recruiting environment for employers that continues to persist to this day. As businesses vie for attention from a diminished talent pool, lower education standards allow employers to explore a different set of criteria for selecting the right person for the job.
Too Many Jobs, Not Enough Workers
The growing disparity between available positions and workers to fill roles is a major reason for companies dropping degree requirements. Currently, there are 1.7 unfilled jobs for every unemployed person in America.6 In addition, workers have begun leaving their jobs voluntarily in unusually high numbers over the past several years. While the number of workers quitting their jobs at the end of 2020 hovered just above 3 million, the number rose to over 4.5 million by March of 2022.7
Reasons cited for not returning to work vary widely and include rising childcare costs, low entry-level pay, and a lack of accommodation for employees who would prefer to work from home. Meanwhile, a recent CNBC study revealed that at least half of workers surveyed feel that their company does not have enough employees.8
An Emphasis on Demonstrable Skills, Not Education
To overcome the challenges presented by a tight labor market, several major companies are already leading the way in dropping degree requirements for certain positions. The technology giant IBM, for instance, recently announced plans to drop bachelor’s degree requirements for at least half of their active job openings in America.9 The shift from degree-based hiring to skills-based hiring is rapidly gaining momentum as employers seek alternative methods to vetting the abilities of candidates. This trend is even occurring within state governments, with the governor of Maryland launching plans to eliminate degree requirements from several thousand positions in customer service, information technology, and administration.10
In place of degrees, many employers are starting to look for specific skill sets that can prove useful for their businesses. Data gathered by Emsi Burning Glass revealed that many companies have started to let go of requiring bachelor’s degrees and are instead starting to focus on specific abilities like communication skills, organization skills, multitasking, and the ability to work with a team.11
Diversity and Inclusion Initiatives
Efforts to create more equitable, diverse workplaces are also part of the reason why companies are beginning to leave behind degree requirements for their open positions. Although over 41% of Caucasian U.S. citizens aged 25 years old and up currently hold at least a bachelor’s degree, only 20.6% of Hispanics and 28.1% of African Americans have acquired the same level of education.12
For companies seeking to create a more inclusive workplace, degree requirements can create major barriers to diversity efforts by overlooking minorities who have the skills to perform the job but lack college credentials. For this reason, businesses have started to put higher premiums on previous job experience and soft skills to expand opportunities to a larger pool of underrepresented ethnicities.
Businesses Are Investing in Workers Directly in place of Degree Requirements
Become more and more common for companies to provide employees with the training, they need to take on more technical, high-level roles in the workplace. For example, IBM is now offering a 4-year bachelor’s degree apprenticeship program that pays students as they learn the skills they need to navigate today’s job market.13 Google is another company paving the way for a growing cohort of “new-collar” workers, offering career certificate programs in everything from digital marketing to IT support.14 By providing employees with in-house training and educational support, companies can improve employee retention while simultaneously attracting new talent to their workforce.
At Resourcing Edge, we help our clients’ companies grow by providing them with the resources, knowledge, and expertise they need to thrive in the modern global marketplace. Our experienced associates know how to deliver HR solutions for every challenge, from navigating changing job requirements to developing more effective recruitment strategies to keep operations running smoothly. With skilled workers in such short supply, our team at Resourcing Edge can save you time by screening and hiring the experienced employees you need, when you need them.
To learn more about how to get started, contact us today for your free quote.
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