Worker shortage was supposed to give people with no college degree opportunity. But has it?
Pandemic-related worker shortages have led many employers to drop requirements for a four-year college degree and consider candidates based on their skills and experience.
So have they stepped up their hiring of non-degreed job applicants?
Not so much.
That, at least, is the finding of a recent study by the Upjohn Institute for Employment Research.
“On the surface, it looks like they’re being more open, but if you look at who’s actually getting hired, I’m not actually seeing it,” says Upjohn senior economist Brad Hershbein.
In March, the mix of occupations of newly hired workers with a high school degree or some college equated to average wages that were 1% higher than a similar group of hires at the start of the health crisis, according to an Upjohn pay index that uses occupations to estimate earnings.
By contrast, a similar occupation and wage index rose 2.2% for new hires with a bachelor’s degree and 5.4% for those with a graduate degree. If high school grads were leaving blue-collar jobs for higher-paying white-collar positions in large numbers, they should be reaping larger, not smaller, pay increases than college grads, Hershbein says.
The 1% rise shows that high school grads are seeing “some increased opportunities,” he says. “It’s just small. ... It’s not moving the needle all that much.”
Buckeye Innovation, a software company, had always required a four-year degree for positions such as software developers, designers and marketing writers and strategists, says company President Brad Griffith. He notes that his own college experience “taught me to think holistically.”
But a few years ago, based on concerns that the mandate was discriminatory, Griffith decided to do away with it and simply make a college degree a preference.
Now, he says about 20% of staffers in those roles don’t have bachelor’s degrees but do have relevant experience.
“We wanted to diversify the team more,” he says. The mix of backgrounds provides a variety of perspectives that enhances creativity, he says. And it has expanded the pool of candidates in an era of dire worker shortages.
But Griffith acknowledges that most of the applicants he hires are college graduates and most of the employees who have left the company the past few years don’t have bachelor's degrees.
“I do feel, especially with (software) engineers,” that college grads “have a high capacity to deal with the most complex issues that get thrown at them.”
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High school grads theoretically should be benefitting from a bonanza of new career pathways. Fifty-three percent of hiring managers said their companies scrapped the requirement for a bachelor’s degree for some positions over the past year. And 76% said they’re likely to favor experience over education, according to a January online survey by Intelligent.com, which helps students choose colleges and careers.
Most said they dropped the demand for a college degree to widen the pool of job applicants. Companies have grappled with historic labor shortages since millions of Americans left the workforce during COVID because of health concerns, childcare duties or early retirement. Several states – including Colorado, Maryland, Pennsylvania, and Utah – also have ditched college degree requirements for many public-sector jobs.
The labor crunch has eased in recent months, but there are still 1.6 jobs for each unemployed person, though that’s down from a record two jobs per unemployed person last year.
After the Great Recession of 2007-2009, when 9 million Americans lost their jobs, employers became pickier about whom they hired. They demanded a college degree for a variety of jobs that previously required only a high school diploma, such as sales representatives and store managers.
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Employers’ growing inclination to do away with such mandates began during worker shortages before the pandemic, according to a study last year by the Burning Glass Institute, which conducts research on the future of work. From 2017 to 2019, companies’ demand for bachelor’s and graduate degrees declined for 46% of middle-skill occupations and 31% of high-skill occupations, the study said. That trend intensified during COVID.
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A four-year degree was no longer a must-have for jobs such as financial adviser, loan officer, real estate broker, store manager, human resources assistant, recruiter and software programmer, according to the Burning Glass study and Michelle Fish, CEO of Integra Staffing, a recruiting firm.
But while many employers removed degree requirements from job descriptions, they ultimately have hired college grads in most instances, Hershbein says. They may retain a bias toward such applicants, and narrowing a pool of candidates to those with degrees can shorten hiring time frames and reduce costs, he says.
Fish says college grads are often viewed as having a stronger work ethic and being more committed, adaptable, and better at communication and problem-solving.
Many managers in information technology, human resources and health care are hiring workers with experience and skill certifications rather than a degree, Fish says, though she says the numbers are still small. Others, such as hiring managers for tech jobs in ecommerce and cybersecurity, typically still insist on a degree even while they broaden their candidate pools to include high school grads, Fish says.
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Hershbein worries that workers with no degrees may be losing their best opportunity to break into higher-paying positions. Now that the labor market is starting to cool as recession concerns grow and more Americans have returned to the workforce, employers may again put a premium on a college education.
Twenty-two percent of job postings on ZipRecruiter required a four-year degree in 2019, before the pandemic. That share fell to 17.5% in 2021 but now has climbed back to 22% as worker shortages have eased, says Julia Pollak, ZipRecruiter’s chief economist.
And since December, the share of high school graduates who have a job has held steady at 54.5% while the share of employed college grads has risen to 71.8% from 71.3%, Labor Department figures show.
For high school grads, “The window may be closing,” Hershbein says.