How to Make the Labor Market Work for More Americans
In one of the richest nations on earth, the path to prosperity has narrowed significantly in recent decades — especially for those without a college education. More than 62 percent of Americans ages 25 and up do not hold bachelor’s degrees, and the earnings gap between those with a college education and those without one has never been wider. In 2021, the difference between the median earnings of younger workers with bachelor’s degrees and workers of the same age with high-school diplomas only was $22,000 — the largest since the Federal Reserve Bank of New York began tracking earnings in 1990. That’s happening even as the cost of college spirals upward, putting it out of reach for many. This has fueled anxiety, bitterness and a sense of alienation among the millions who see themselves as shut out of an economy that does not value them.
Making college more affordable is important, but there are other keys to the doors of opportunity as well. With an executive order issued on Jan. 18, his first full day as governor, Josh Shapiro of Pennsylvania used one of them: He eliminated the requirement of a four-year college degree for the vast majority of jobs in the state government, a change similar to one that Maryland and Utah made last year. This demonstrates both good policy and good leadership, representing a concrete change in hiring philosophy that stops reducing people to a credential and conveys that everyone — college-educated or not — has experience and worth that employers should consider. It is a step — and a mind-set — that other leaders should consider as well.
The decision was driven in part by the realities of a tight labor market. Unemployment in Pennsylvania is 3.9 percent — close to the national average of 3.5 percent — and lower than it was before the pandemic. Public and private employers have been struggling to find qualified applicants, prompting a re-evaluation of hiring criteria. As Mr. Shapiro’s order notes, “In the modern labor market, applicants gain knowledge, skills and abilities through a variety of means, including apprenticeships, on-the-job training, military training and trade schools.”
His move opens up 92 percent of state government jobs — approximately 65,000 positions — to anyone with “the relevant work experience and skills-based training, regardless of their educational attainment.” Job postings will emphasize experience over education.
The nonprofit organization Opportunity@Work has been promoting the idea of skills- and experience-based hiring since 2015. It estimates that 50 percent of the American work force comprises workers who have gained their skills through alternative routes such as apprenticeships, military service, trade schools, certificate programs and on-the-job training rather than acquiring bachelor’s degrees — a deep pool of underutilized and undercompensated talent. If employers don’t have a strategy for engaging this pool, said Byron Auguste, the group’s chief executive and co-founder, “they don’t have a talent strategy — they only have half a talent strategy.”
If the United States can’t find ways to tap into all of this talent, we will not be able to solve our most urgent problems, like climate change and pandemic preparedness, or build astronger and fairer country. Too many Americans see our society and economy as profoundly unfair, set up to serve the needs of well-connected elites and providing more benefits to people who went to college or know how to work the system. And too many feel that political leaders don’t care about them and that government and institutions don’t work for them. Opening up jobs may seem small-bore, but it shows that government is listening and helps build trust among those who may feel unseen or looked down upon by parts of the labor market.
The private sector has been moving gradually in this direction already. Major players to embrace skill-based hiring include General Motors, Bank of America, Google, Apple and Accenture. IBM is recognized as a particular leader; about half of its U.S. job openings no longer require a four-year degree.
This trend has been concentrated among what is termed “middle-skill jobs,” which call for some education or training beyond high school, according to a 2022 report by researchers from Harvard Business School and Emsi Burning Glass, a labor market data firm. These middle-skill jobs, the report notes, “have long served as an important steppingstone to the middle class.”
During the Great Recession, many of those steppingstones were removed. Unemployment was high, and many employers responded with “degree inflation” — larding college education requirements onto jobs that previously had not called for them — even though the work involved remained the same. As a result, the report notes, “key avenues for upward mobility were closed to roughly 80 million prime working age Americans at a time when income inequality was already widening.”
Over the last few years, this degree inflation has begun to recede. If this “degree reset” continues, an additional 1.4 million jobs would be opened to workers without college degrees over the next five years.
This could also help make the American work force more diverse and inclusive in several ways. Black and Hispanic job-seekers are less likely to have bachelor’s degrees than non-Hispanic whites and Asian Americans. Rural Americans would also benefit; only 25 percent of them hold a bachelor’s degree or higher. “No part of the country is more disadvantaged by degree screening than rural America,” Mr. Auguste said.
The public sector should join this reset more aggressively. In June 2020, President Donald Trump issued an executive order to make skills more important than degrees in federal hiring. The Biden administration has also taken a couple of steps in that direction.
Getting more states on board could provide a valuable boost; state governments are among the largest employers in many states, so their hiring criteria play a special role in validating workers without college degrees. Last March, Larry Hogan of Maryland became the first governor to announce that his state was doing away with college degree requirements for many jobs. In December, his fellow Republican, Spencer Cox of Utah, followed suit. “Degrees have become a blanketed barrier to entry in too many jobs,” Mr. Cox said. “Instead of focusing on demonstrated competence, the focus too often has been on a piece of paper.”
With Mr. Shapiro, a Democrat, weighing in for Pennsylvania, the nation’s fifth most populous state, the movement’s bipartisan credentials have been burnished. It is a move that Americans in every state should actively encourage.
Expanding the terms for who can get hired is a change that would reverberate far beyond individual jobs and job seekers. It would bring a greater degree of openness and fairness into the labor market and send a message about government’s ability to adapt and respond to the concerns of its citizens. In a country where a majority of people do not have bachelor’s degrees, policies that automatically close off jobs to so many people contribute to the perception that the system is rigged against them.
A healthy democracy recognizes and promotes opportunity for everyone. Americans need to hear that message.
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