The Evolving Value of a College Degree in the Job Market
For many years, a college degree was seen as an almost universal requirement for securing a good job and advancing one's career. However, recent shifts in the labor market, coupled with evolving attitudes toward skills-based hiring, are prompting a reevaluation of the necessity of a four-year degree for many positions.
The Changing Landscape of Educational Requirements
A high school diploma doesn’t go as far as it used to in the American workforce, and that trend is expected to continue. Fields that require more educated workers are growing at a faster rate than fields that require less-educated workers, says the report.
Analyzing educational requirements in job postings can be difficult, in part because employers often include multiple requirements in the same posting. Multiple requirements most commonly occur when an employer states a preference for a degree level (like a master’s degree) while expressing openness to a lower credential (i.e., a bachelor’s degree).
Fewer than 1-in-5 (17.8%) US job postings on Indeed required a four-year degree or more in January 2024, and a majority (52%) did not include any educational requirements at all, up from 48% in 2019. This indicates a significant shift towards employers being more open to candidates without a traditional four-year degree.
Skills-First Hiring: A Growing Trend
The shift toward focusing on skills has prompted several state governments and large companies to remove college degree requirements from hiring practices in recent years. Employers are loosening their formal education requirements as the labor market remains tight and attitudes towards skills-first hiring practices change. Determining which skills a job seeker has and how proficient they are at them has historically been difficult and expensive. So for many years, employers used the achievement of a formal degree as a proxy for judging a candidate’s ability to do the job at hand. However, developments in software as a service (SaaS) technologies and pre-employment testing have helped mitigate those challenges over the last decade. These technologies give employers the tools needed to adopt skills-first hiring approaches and expand their candidate pools beyond the limited number of Americans with college degrees, which is particularly vital in sectors where hiring challenges persist.
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Sectors with High and Declining Education Requirements
Engineering and other STEM fields including mathematics and software development were among the sectors requiring the highest levels of education in January 2024. Industrial engineering topped the list, with 65.1% of postings explicitly requiring or preferring a bachelor’s degree or higher.
In the last five years, sectors with historically high educational requirements have seen the biggest changes. Project management jobs experienced the largest shift away from bachelor’s/graduate degree requirements - 58.1% of these postings required at least a bachelor’s degree in January 2024, down from 67.3% in January 2019, a drop of 9.2 percentage points. Information design & documentation and software development - both industries highly associated with the tech sector - followed, with drops of 9.0 and 8.4 percentage points, respectively, over the same period.
The Impact of Automation and AI
Researchers are skeptical of claims that automation will kill jobs. More likely, they write, automation will reduce specific tasks within jobs, while the number of jobs continues to grow. It’s hard to talk about skill requirements and the future of work without looking at artificial intelligence and GenAI. Comparing GenAI exposure to the share of jobs requiring a bachelor’s degree (or more) tells a similar story. Knowledge workers in sectors with higher education requirements face the greatest potential impact from these budding technologies. For example, mathematics had the second-highest educational requirement, with 63.2% of jobs requiring at least a 4-year degree. It also has the second-highest potential exposure to GenAI-driven change (93.6% of skills in the typical mathematics job posting can be done in a “good” or “excellent” manner by GenAI).
It’s unclear at the moment whether comparatively high or low potential exposure to GenAI technologies is positive or negative for knowledge workers, and what impact it will have on educational requirements going forward. On one hand, these technologies may be a boon for workers, leading to greater productivity and stronger employer demand. But it is also possible that GenAI may transform skill requirements and hiring practices, thus feeding into the trend of declining educational requirements and potentially unlocking new opportunities for the majority of adults without a college degree.
The "Paper Ceiling" and Skills-Based Hiring Implementation
Companies and public sector employers have been eliminating college degree requirements, but a new Harvard study shows a gap between intent and impact. In short, a few companies that dropped degree requirements have hired more people without degrees.
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Eliminating the traditional credential of a college degree is not a new idea, but the concept became more popular during the COVID-19 pandemic when companies were facing a tight labor market and America was undergoing widespread protests over racial injustice. The idea that employees can be hired for skills and experience, rather than based on a credential, caught on.
However, a study by Harvard Business School in conjunction with the Burning Glass Institute shows that there is a difference between policy and practice. Firms from 2014 to 2023 and found that hiring of non-degree job candidates increased by just 3.5 percentage points. When researchers took into account the fact that the 3.5% applies only to the small number of jobs where the degree requirement was eliminated, it falls to less than a percentage point. Overall, fewer than 1 in 700 new hires benefited from the no-degree reforms.
“We found measurable but pretty modest changes, and that some companies have done better than others,” said Joseph Fuller, a professor at Harvard Business School who led the study. “But overall, removing the barrier that a post-secondary degree poses to hiring more broadly will take a lot of doing.”
If companies want to truly put skills-based hiring into practice, they need to do far more than rewrite job postings, Fuller said. They need to change the way hiring managers evaluate applicants, shake up a corporate culture that has for generations created a “paper ceiling,” and implement methods to support applicants from nontraditional educational backgrounds after they are hired.
Alternative Paths to Success
Enrollment has also notably increased in vocational programs. According to a report by the National Student Clearinghouse, from fall 2022 to fall 2023 enrollment increased 11.3% in mechanic and repair trade programs at two-year colleges, 3.6% in construction, 6.9% in precision and production, and 7.6% in culinary programs. Meanwhile, enrollment increased only 2.6% at public two-year colleges and 0.6% at public four-year institutions.
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Employers are increasingly leveraging in-house training and education. A recent survey by Multiverse, a startup that provides apprenticeship programs, found that 32% of business leaders expected degrees to matter less for entry-level candidates in the next five to 10 years.
State-by-State Projections
The report has a state-by-state projection of workforce needs, and California is in the middle of the pack. Of all jobs in California, 67 percent - or roughly 12.6 million - will require some postsecondary training beyond high school in 2031. Census. will require postsecondary education and/or training. However, the analysis also notes that only 42% of jobs in 2031 will require at least a bachelor’s degree.
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