Skills vs. Degrees: Are the Tides Turning?

As you look around, it’s not difficult to see that there’s a dire need for employees, and it’s not just in restaurants. Entire industries are facing labor shortages, and one emerging strategy to address talent scarcity is to emphasize skills rather than degrees. Could the tides be turning?  

Today’s job market is shifting and changing with significant implications on opportunity and equity.  

Research on Evolving Skills 

According to a report from Boston Consulting Group, Lightcast, and The Burning Glass Institute (May 23, 2022), company needs are changing so much that new skills are required. Here’s a sampling of the stats:  

• More than one-third of the top 20 skills requested in postings for the average US job have changed since 2016, and one in five skills is an entirely new requirement for that job. 
• In reviewing the five-year data through a Skill Disruption Index, the study detected an acceleration in the pace of change as nearly three-quarters of jobs changed more from 2019 through 2021 than they did from 2016 through 2018. 
• Sectors showing greatest change: finance; design, media and writing; business management and operations; HR; and IT.  
• Roles seeing the greatest change: accounting supervisors, advertising managers, marketing associates, software developers, and solar engineers. In these jobs, 80% of the top 20 skills are either new or have changed significantly in importance. 
• Physical occupations — such as warehouse workers, packagers, janitors, tractor trailer truck drivers, and shipping and receiving clerks — have changed 15% or less. 

President Joe Biden called on employers during his State of the Union address to consider “skills not degrees.” The administration is committed to create pathways for middle-class Americans to get better jobs based on the skills and knowledge that employers need, including potentially using federal and procurement funding so employer hiring decisions are not based solely on educational qualifications.  

Maryland also dropped degree requirements from thousands of state jobs in March. The state estimates that approximately 1.3 million or 47% of workers in Maryland are skilled through alternative routes. According to experts, one such program – the state’s STAR program, or those who are “Skilled Through Alternative Routes” – is part of an initiative to help the state recruit and hire job seekers who may not have a traditional degree. To qualify, job seekers who are 25 or older with a high school diploma or equivalent and “vigorous experience” such as through community college education, apprenticeships, military service and boot camps, as well as on-the-job training are eligible to participate in this initiative.  

But leaders from the U.S. Equal Employment Opportunity Commission and the U.S. Department of Labor’s Office of Federal Contract Compliance Programs noted in a recent virtual panel that employers are still overlooking applicants with nontraditional backgrounds and qualifications. To approach hiring with a skills-first perspective may require employers to change how they hire in the first place, panelists said, including redesigning job descriptions and honing-in on potential barriers. 

Adoption of a Skill-based Approach to Recruiting  

Recruiters realize that they would be able to find new candidates if the requirements for a degree were removed, particularly in entry-level jobs. In a survey conducted by Cengage in 2022, they found:  

• Two in three of those surveyed said that removing a degree requirement would help them find qualified talent; however, 26% of respondents said they use such a requirement to filter talent pools or because “that’s the way it’s always been done.” 
• Despite employers deeming skills training credentials and real-world experience more important than degrees, a majority of employers said they require degrees for entry-level jobs. 
• Nearly half of employers surveyed said they believe it is difficult to measure the worth of credentials due to a lack of familiarity as well as credibility concerns.  

nextSource Insights 

• Reconsider criteria for talent selection, where and how work gets done, and approaches to sourcing talent. 
• Add skills assessments to hiring and build more structure into interviews to better reflect skill competency. 
• Consider certificates of competency in needed skills areas, starting with industry-recognized certification programs.  This will enable companies to target candidates with needed skills from other professions.  
• The average worker is going to have to learn new skills just to keep the job they have, much less get ahead in their careers. Hire for potential as well as existing capabilities. 
• Consider establishing a talent community of pre-qualified individuals with skills needed for high volume positions.  Include individuals in underutilized groups (e.g., retired seniors, individuals with a gap in service, individuals in economically challenged areas) to source talent that will bring diversity of thought and experience to your organization. 
• Determine if the role enables a flexible work environment (e.g., remote work, non-standard hours).