Dismissed by Degrees: How Degree Inflation is Undermining U.S. Competitiveness

“Degree inflation…is a substantive and widespread phenomenon that is making the U.S. labor market more inefficient. Postings for many jobs traditionally viewed as middle-skills jobs…in the United States now stipulate a college degree as a minimum education requirement, while only a third of the adult population possesses this credential.

This phenomenon hampers companies from finding the talent they need to grow and prosper and hinders Americans from accessing jobs that provide the basis for a decent standard of living” (p.2). The authors “set out to understand ‘degree inflation,’ the practice of seeking a candidate with a four-year college degree for a position currently held by someone with a high school diploma or an associate’s degree….Just how prevalent is this phenomenon? What is truly behind the demand for a college degree? What role did the Great Recession play in degree inflation? Did opportunism drive the growth in employer requirements for middle-skills jobs, or was there an underlying shift…in middle-skills jobs? What alternatives exist for training and equipping middle-skills workers…beyond hiring graduates of four-year college programs? Are employers aware of the costs and benefits of those alternatives? Which companies have developed talent-management pipelines…and…best practices?” (p.5).

To answer these questions, the authors surveyed employers and analyzed the labor market based on “Burning Glass’s database of online job postings, the Bureau of Labor Statistics (BLS) Occupational Employment Statistics, and American Community Survey data from the U.S. Census Bureau” (p.39). “The 2016–2017 employer survey…investigated employer hiring practices for middle-skills jobs across the U.S. The survey also explored employer perceptions of the performance outcomes of middle-skills workers, relative to workers with college degrees….The survey’s 600 respondents represented businesses with operations in the United States from…20 major…sectors, with heavy representation from health care and social assistance, manufacturing, and finance and insurance. Respondents represented an even spread across the…United States. Of the respondents, 40% were Hiring Managers/Team Leads, 25% were HR Managers, and the remaining 35% were CEOs” and other leadership (p.41).

Full publication title: Dismissed by Degrees: How degree inflation is undermining U.S. competitiveness and hurting America’s middle class

(Abstractor: Author and Website Staff)

“In an analysis of more than 26 million job postings, [the authors] found that the degree gap (the discrepancy between the demand for a college degree in job postings and the employees who are currently in that job who have a…degree) is significant….[Their] analysis indicates that more than 6 million jobs are currently at risk of degree inflation. A survey of 600 business…leaders shows that degree inflation is driven by two key factors: the fast-changing nature of many middle-skills jobs and employers’ misperceptions of the economics of investing in quality talent at the non-graduate level. As more middle-skills jobs require mastery of one or more technologies, employers find it difficult to hire non-graduate talent with the requisite skills. While candidates often lack hard skills…they are equally likely to suffer from soft-skills deficits…” (p.2). “Key recommendations: •Companies can create a competitive advantage by investing in talent management pipelines that match jobs to workers with the right competencies and experience. Instead of seeking college graduates…such an approach allows companies to access middle-skills workers who are often just as productive…and who have a lower propensity to switch employers. “In an analysis of more than 26 million job postings, [the authors] found that the degree gap (the discrepancy between the demand for a college degree in job postings and the employees who are currently in that job who have a…degree) is significant….[Their] analysis indicates that more than 6 million jobs are currently at risk of degree inflation. A survey of 600 business…leaders shows that degree inflation is driven by two key factors: the fast-changing nature of many middle-skills jobs and employers’ misperceptions of the economics of investing in quality talent at the non-graduate level. As more middle-skills jobs require mastery of one or more technologies, employers find it difficult to hire non-graduate talent with the requisite skills. While candidates often lack hard skills…they are equally likely to suffer from soft-skills deficits…” (p.2). “Key recommendations: •Companies can create a competitive advantage by investing in talent management pipelines that match jobs to workers with the right competencies and experience. Instead of seeking college graduates…such an approach allows companies to access middle-skills workers who are often just as productive…and who have a lower propensity to switch employers. •When faced with a critical middle-skills gap, CEOs can encourage solutions that explore tapping into local and non-traditional talent pools, rather than investing in labor-displacing capital equipment or…outsourcing…business activities. •In critical hard-to-fill jobs…the organization [can] be more deliberate in its hiring practices for middle-skills jobs. That requires resolving a paradox…while employers recognize that candidates need to be vetted on…their competence, companies rely on…educational attainment to define the applicant pool. •Instead…companies can widen their search to include non-graduates with relevant work experience or consider partnering with local community-based organizations to tap populations…. •By revisiting specifications for critical middle-skills jobs and identifying the key competencies required to do the job, companies can match them to specific associate’s degrees, certificates, or internal training programs…for non-degree holders. •A strong case for investing…can be made when companies measure the all-in economics of degree inflation…[O]ften it is cost-effective to hire non-graduates and then provide…training that is customized to the company’s needs” (p.3). (Abstractor: Author and Website Staff)

• Last Updated:
• Created:
• Resource Publication Date: 2017
• Author(s): Fuller, Joseph B. and Raman, Manjari
• Organizational Author(s): Harvard Business School
• Funding Source: Self-funded
• Resource Availability: Publicly available
• Posted by: Wesley Peterson
• Posted in: Workforce System Strategies