The Bachelor’s Degree: A Requirement For A Decent-Paying Job?

New research out of the Federal Reserve Banks of Philadelphia and Atlanta indicates that — for the same job — employers in certain types of labor markets are more likely to ask for a bachelor’s degree than are employers in others.

The new research has its roots in a fall 2015 report from the Federal Reserve Banks of Philadelphia, Cleveland, and Atlanta on “opportunity occupations,” or jobs that have not generally required a four-year college degree and that pay at least the national annual median wage (around $35,500 in 2014), adjusted for cost of living differences. Registered nurses, truck drivers, and retail sales supervisors are just a few examples of the most prevalent opportunity occupations identified in the initial report.

In this early work, an analysis of a database representing tens of millions of online job advertisements posted between 2011 and 2014 (acquired from Burning Glass Technologies) showed that the share of employers seeking college-educated candidates to fill some of these opportunity occupations varied dramatically from metro area to metro area.

resume

What might explain this phenomenon? Was it something about the types of jobs being filled in some metro areas that led employers to ask for a higher level of education? Or was there something about the metro areas themselves that led to this finding?

The answer: All of the above. In our latest report, in which we focus on four prevalent opportunity occupations (computer user support specialists, registered nurses, retail sales supervisors, and executive secretaries), we find that certain job characteristics are associated with a greater likelihood of an employer asking for a bachelor’s degree. For example, job ads requesting more experience are also much more likely to ask for a four-year college degree, all else equal. This is true overall and for three of the four opportunity occupations analyzed.

But even after controlling for experience, the industry of the employer, the number and types of skills requested, and the year the job was advertised, the research finds that employers with open positions in certain types of metro areas are more likely to ask for a bachelor’s degree than are employers in others. More selective labor markets include those
  • with a relatively larger pool of recent college graduates,
  • with higher wages,
  • with a population over 2.5 million, and
  • that are located in the Northeast.
Unfortunately, the research is not able to determine why this is the case, and the explanation surely varies from job to job, employer to employer, and metro to metro. In some cases, it is likely that less-educated workers in more selective economies lack certain hard skills that the research cannot account for and that are best attained at a four-year institution. In others, employers may be using a college diploma as a proxy for certain soft skills or other intangibles. In some highly educated labor markets, employers may request a higher level of education than is necessary simply because they can expect an ample number of applicants to meet this criterion.

Regardless of the rationale, if the educational hurdle is set at different heights in different metro areas, workers without a four-year college degree encounter varying levels of opportunity depending on where they live. For example, an executive secretary without a bachelor’s degree would not possess the minimum level of education listed in only 12 percent of the job ads posted in the least selective market but would not qualify for 82 percent of the postings in the most selective.

Chart

Further, less than one-third of adults 25 years old and over has finished a four-year academic program. Restricting the pool of eligible candidates to this narrow slice of the workforce has been shown to lengthen the time needed to fill the position. And given the dramatic disparities in educational attainment by race and ethnicity, doing so can also limit an employer’s ability to create a diverse and inclusive workplace.

chart

Loosening educational requirements, where possible and practicable, and exploring alternative ways to place less-educated workers into middle-skills jobs can be beneficial to employers and workers alike. Within labor markets, businesses, educators, and training providers can work together to clarify — and deliver — essential, in-demand hard and soft skills. Some employers are even making a shift to hiring practices that focus on skills and competencies rather than on degrees and diplomas. Strong regional partnerships, progressive employers, and a greater adoption of work-based learning opportunities such as apprenticeships could, in combination, significantly expand access to meaningful work for millions.


Keith Wardrip is the community development research manager at the Federal Reserve Bank of Philadelphia.

This post summarizes research published in “Uneven Opportunity: Exploring Employers’ Educational Preferences for Middle-Skills Jobs,” written by Keith Wardrip, Stuart Andreason, and Mels de Zeeuw, and published by the Federal Reserve Banks of Philadelphia and Atlanta, January 2017. This post also includes information from Joseph B. Fuller, Jennifer Burrowes, Manjari Raman, Dan Restuccia, and Alexis Young. “Bridge the Gap: Rebuilding America’s Middle Skills,” Report, U.S. Competitiveness Project, Accenture, Burning Glass Technologies, and Harvard Business School, November 2014. The views expressed in this post are not necessarily the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.

The GradsofLifeVoice Forbes team provides thought leadership, research and expert commentary on innovative talent pipelines and related issues such as the skills gap, income inequality, workforce diversity, and the business case for employment pathways. We seek to change employers’ perceptions of young adults with atypical resumes from social liabilities to economic assets. This post was originally featured here.


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