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The Demand for Degrees Is Screening Out Too Many Candidates
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A recruiter’s job has never been easy. And it’s getting harder with the economy producing jobs at a furious pace and lots of competition for available talent. But is it getting unnecessarily more difficult to fill jobs because of an increase in degree requirements that doesn’t match a change in the work?
Conventional wisdom has it that more and more jobs require candidates to have a four-year degree. Bill Gates predicts that by 2025 we’ll be short 11 million college grads. The need appears to be borne out by labor market statistics; about 55 percent of good jobs are held by people having a bachelor’s degree, and rising. A “good job” is defined as one that pays an annual wage of least $35,000 for workers under the age of 45 and $45,000 for workers over 45. High school graduates now hold just 18 percent of such jobs.
But is the requirement for candidates with degrees driven by an actual increase in skills needed, or is it a case of degree inflation? That is, asking for a degree for jobs that typically don’t need one. A major study at Harvard Business School suggests that degree inflation is on the rise. Job postings from production supervisors to childcare workers are listing a four-year degree as a requirement. In 2015, about 70 percent of postings for first-line supervisors asked for a bachelor’s degree, but only 34 percent of those holding the job have one. In the case of production supervisors, 67 percent of postings ask for a degree, while only 16 percent of those employed in the occupation are a college graduate. This kind of mismatch is a likely contributor to the much discussed skills-gap that exists today.
The authors of the HBS study attribute this situation to what followed after the last recession. From 2010-2016 barely 1 percent of jobs created required a high school diploma or less. With slow job growth, workers were willing to settle for jobs for which they were overqualified, creating a situation where for millions of jobs applicants are asked for much higher education credentials than those held by incumbents.
Higher education has value. Having a degree signals that the holder possesses traits that make for a good employee, such as intelligence, persistence, and critical-thinking skills. And education leads to higher income; college grads now earn, on average, over $17,000 more annually than those with only a high school diploma. Factors like these are causing increasing numbers of people to get a degree. The 4,600-plus colleges and universities in America will graduate about 1.9 million students this year. About 13 million people were enrolled in a four-year institution in 2017. Virtually anyone who wants a degree can find a major to study and a college willing to take their money.
While there’s no denying that there’s increasing need for people with four-year degrees in many occupations, especially those requiring STEM skills, the same is not equally true in other areas. In fact, the reverse may be the case; that in many job categories, automation and the proliferation of Internet technologies has reduced the need for cognitive skills that are gained by getting a four-year degree. There is evidence of this trend which is producing an oversupply of people with degrees in many fields. As with anything where the supply exceeds the demand, there’s a reduction in value of the item being supplied.
So an oversupply of people with degrees is causing high-skilled workers to move down the occupational ladder and perform jobs traditionally performed by lower-skilled workers. In response, employers are raising job requirements often where no increase is necessary. Or maybe it’s the other way around — rising job requirements are prompting more people to get degrees.
Regardless of the reason, the situation we have is not a desirable one. The belief that a degree confers desirable skills on the holder is not universally true, but this line of thinking suggests that even the most useless degree can certify employability.
The consequences of this are not insignificant. The HBS study claims that employers pay 11 percent – 30 percent more for college graduates to do jobs also filled by non-degree holders, without getting any material improvement in productivity. Degree inflation also disproportionately hurts the employment prospects of minorities — in particular African-Americans and Hispanics — because of lower college graduation rates.
One is tempted to think that requiring candidates to have a degree is just an easy way to screen out candidates. And it’s even easier when the screening is automated, as with an ATS. But that would be too simplistic since we have the tools and systems to do a better job of assessing skills. What’s needed is a shift in our approach to evaluating candidates, where the lack of a four-year degree is not an automatic barrier to getting employed. Some employers have already made the change, but many more will need to do so.