This article originally appeared in the Globe and Mail.
By Linda Nazareth, June 3, 2022
You see it in job postings all the time: the requirement that an applicant have a postsecondary degree. Not that the applicant will need to use anything they learned at college or university in the job they are applying for – the point is that the degree serves as a shorthand for the kind of person they are.
This has seemed like a reasonable minimum requirement for decades, but in the midst of a shortage of workers spanning industries, it suddenly seems a little less reasonable. Indeed, as organizations struggle to fill positions, the need to have a postsecondary degree is being rethought.
Some jobs (such as physicians, lawyers, engineers) have and will always have specific educational requirements, while others, including many in the retail sector or in manual labour, never have. In the middle are those where organizations have sometimes found it beneficial to use the possession of a degree as way to sort through the available workers. Human capital theory in economics sometimes refer to having a degree as a “signal” of a worker’s characteristics that helps a company screen through candidates.
Using degrees in this way has ebbed and flowed over time. At one point, workers could start at some organizations such as banks or manufacturing companies and ascend through the ranks without degrees. While standards have become increasingly tight over the past several decades, especially since the recession of 2008-2009, they are once again changing.
In recent years, there has been a flurry of announcements from companies saying they were loosening up the educational requirement for jobs. Tech firms, which have been finding it difficult to recruit talent for years, have led the list of sectors making changes. According to a report from CompTIA, a non-profit U.S. association for the IT industry, companies including Accenture, Apple, Google and IBM have made substantial changes in their job requirements, eliminating the need for a four-year degree.
A study from the Burning Glass Institute has produced some further numbers as to what is happening in the U.S. By their calculations, between 2017 and 2019 – before the pandemic shook up the labour market – roughly 46 per cent of middle-skill occupations and 31 per cent of high-skill occupations experienced what they call “degree resets.”
Since then, this trend has continued and intensified, although the institute believes that only about 27 per cent of the changing requirements are owing to short term, cyclical responses to the lack of workers; most of the adjustments are “structural,” or part of a deeper rethinking of what skills workers really need.
Comparable numbers for Canada are not available, but anecdotally we know that tech workers, among others, are hard to find, and that companies are getting more thoughtful in terms of what they require from them.
Not requiring a degree does not necessarily mean foregoing standards. In fact, once the generic requirement of a degree is ditched, companies tend to get increasingly specific as to what it is that they are actually looking for in terms of skills. This is particularly true in the case of soft skills: in the past, having a degree might have been taken as a proxy for being a good written or oral communicator.
The Burning Degree study found that job requirements for many occupations that have done away with a degree as a necessity have also become much more specific about the need for such skills. For example, between 2017 and 2019, the degree requirement for Insurance Agents fell by 33 per cent, but there was a five percentage point increase in the need for communications skills.
With the shift in degree requirements, some believe that organizations will become more equitable, which would be a worthy goal. The Burning institute calculates that U.S. organizations will open up 1.4 million jobs to workers who in the past would not have been able to compete for them.
That said, in the days when degrees were not necessarily required, plenty of other biases came into play. As mentioned, once upon a time, a bright young man could start at a bank or a department store or a manufacturing company and advance through the ranks. The catch though was that an equally bright young woman was likely to get left behind.
Using degrees as a way to sort workers, although not a perfect system, has therefore had some advantages in terms of securing a minimum standard. Moving to using skills as a requirement risks replacing one set of biases with another.
For workers, it is not clear how the shift in job requirements will play out in terms of the choices they make. To some extent, there seems to be a move away from the necessity of getting a postsecondary degree. But we know that in any job market the lowest unemployment rates go to those with the most education, and it is hard to see that changing very quickly.
What may be changing is the idea that you can tick a box and assume you have an edge over a candidate with a different educational profile but superior skills. If that forces all workers to sharpen their skills, it would be a win for them and for the economy as a whole.
Linda Nazareth is host of the Work and the Future podcast and Senior Fellow for economics and population change at the Macdonald-Laurier Institute.