Removing the Four-Year Degree Requirements: States Have Entered the Chat
For about a decade now, we’ve seen a slow drip of companies removing bachelor’s degree requirements for varying jobs. There was Accenture in 2016, Bank of America in 2018, IBM in 2020, and many more in between. These actions were intended to fight “degree inflation,” which set in during the years following the Great Recession when jobs were scarce, and unemployment was high.
We live in a different world today. With low unemployment and plenty of job opportunities, state governments are now feeling the squeeze. In 2023 alone, four states have removed four-year degree requirements for government jobs, following three states in 2022. This begs the question: What is the implication for colleges and universities?
The State of Play
These actions are driven by an intense labor crunch – the likes of which we haven’t seen in decades. The April 2023 BLS Employment Situation report cited an unemployment rate of 3.7%, which means it has remained below 4% since November 2021.
More critically, the labor force participation rate stands at 62.6% – a level still below the pre-pandemic marker (63.3%). This means there are 2.5 million fewer workers in the labor force today than February 2020, just three years ago.
As of March 2023, there were 10.8 million open jobs and only 5.9 million unemployed workers. This equates to about 0.6 unemployed persons per job opening. Figure 1 charts the number of unemployed persons per job opening over the past 15 years, placing the current labor shortage in greater context.
Where have all the workers gone? The U.S. Chamber of Commerce attributes the current situation to several factors including early retirement, less immigration, and padded family finances from the pandemic (a combination of stimulus, increased child tax credits, and potentially boosted unemployment benefits). The longer the period of high inflation goes, the more padded finances will erode. But for now, the labor market is tight, and the economy is strong.
With states feeling the labor crunch, seven in total have announced a rollback of four-year degree requirements for certain government jobs – all since March 2022! Figure 2 provides a timeline of these announcements.
These rollbacks reflect just how dire the worker shortage has become for state governments. For example, Colorado’s announcement came at a time when nearly one in five state government positions was vacant, while some state agencies in North Carolina have vacancies reaching 10-year highs.
Other examples show just how far-reaching these new policies can be. For example, Maryland employed close to 38,000 people in March 2022 and nearly half of those jobs could be performed by qualified candidates without four-year degrees across IT, administrative work, and customer service positions. In another example, Pennsylvania has about 65,000 state jobs – the four-year degree requirement was removed from 90% of them.
And while the labor shortage is the main driver, these decisions include another element: broadening access. For example, Utah’s Governor, Spencer Cox, stressed that such a move would broaden the state’s talent pool and open positions up to underrepresented groups.
Nearly every state that has removed the four-year degree requirement now touts an increased focus on skills-based hiring – a concept that has received increased attention in recent years and has some bipartisan agreement. Skills-based hiring is a practice where employers focus on developed skills, as opposed to degrees or credentials, when selecting candidates for jobs. Research has shown many positive outcomes of skills-based hiring including hiring better quality candidates and improved employee retention rates.
The Bottom Line
While these moves are driven by an extremely tight labor crunch, they coincide with a time when the worth of a college education is being scrutinized. New data released by the Wall Street Journal and NORC in March found that 56% of survey respondents agreed that a four-year degree “is not worth the cost” due to a lack of specific job skills and the burden of mounting debt—up from 47% in 2017.
This perception decline is fueled by concerns over inadequate skills development and soaring debt. As companies and states place increasing emphasis on specific skills—apart from any degree—this could erode even further. This plays into the hands of the alternative credential boom, where offerings typically boast job-specific skill sets and much lower costs.
Of course, value perception data must be taken with a grain of salt. Fall 2022 National Student Clearinghouse data suggests a potential enrollment recovery coming out of the pandemic (publics are up 4%, privates up 1%, and for-profits up 6%)
But schools shouldn’t rest on their laurels. Refinement of their value propositions, with career skill development as a critical component, is needed. This will better position schools within an increasingly skills-focused hiring environment and speak directly to what prospective students want.
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