Lowering Degree Requirements in a Tight Labor Market

August 30, 2019
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Author: Tyran Saffold Jr

According to the Bureau of Labor Statistics, there are more job openings than job seekers—and it has been that way for 16 months straight. The employee favored labor market has forced small businesses to consider other options when seeking workers for their firms.

No Degree Needed

Shifting Expectations

LifePoint Health, a $6 billion company with 72 hospitals and 46,000 employees in more than 20 states, realized that there was an issue in their hiring process—degree requirements for some positions had become a deterrent to finding good employees.

While expanding their business, they found that there was a wide variety of degree requirements for the same positions among facilities. One hospital would post a job requiring a four-year college degree, while another would offer the same job without the requirement. Based on that information, LifePoint launched an organization-wide effort to address the problem by systematically reviewing all job descriptions to identify the specific skills associated with each position.

From there, its HR team decided to take another step—one that possibly resulted in giving them an edge in a tight labor market. They determined if the position truly needed a degree to perform the specified duties. Job descriptions were then updated to reflect needs and skills to attract competent candidates, regardless of educational status.

Other organizations such as Hasbro, CVS Health, Apple and Google have stripped the bachelor’s degree requirement from many of their positions. Could that be the key to bridging the gap in a tight labor market?

To A Lower Degree

In a report from the U.S. Census Bureau, it is stated that 33.4 percent of Americans 25 or older completed a bachelor’s degree. The result is that nearly three-quarters of the U.S. workforce is barred from some employment opportunities because they don’t have the required credentials.

According to a study by the Harvard Business School, 67 percent of the middle-skill job postings required a bachelor’s degree or higher, yet only 16 percent of workers already in that position held such a degree. But when hiring for middle-skill positions, are college degrees necessary?

Results from the study implied that college graduates filling middle-skill positions cost more to employ, have higher turnover rates, tend to be less engaged, and are no more productive than high-school graduates doing the same job. It could be that some employees find work at middle-skill positions just to bridge the gap until they can land a job in their field of study.

Joe Fuller, a Harvard Business School professor, found in the study that degree-holders command an 11 to 30 percent wage premium, yet fail to justify that premium in productivity and other outcomes. He encourages employers to push against the grain. “Once the logic of resisting (degree preference in middle-skill jobs) takes root in an organization, it soon permeates different aspects of the organization’s culture—and eventually embed itself at the heart of its strategy,” the report states.

“For decades, at many companies that I worked for, I wasn’t allowed to hire unless somebody had a four-year degree,” said Trish Torizzo, the chief information officer for Houghton Mifflin Harcourt, a learning materials company in Boston. “But today, supply is so low that people are almost being forced to think more creatively about how they operate.”