New Report On The Harmful Effects Of Degree Inflation
Researchers from Harvard Business School, Accenture, and Grads of Life analyzed 26 million job postings, surveyed 600 business and HR leaders to document problem, propose solutions
Over 12 million Americans are unemployed and underemployed while 3 in 5 employers report difficulty in filling middle-skills jobs, those that require more education than a high-school diploma, but less than a four-year college degree. Too many jobs are taking too long to fill, while too many aspiring workers remain on the sidelines due to “degree inflation”—the practice of preferring or requiring a college degree for jobs that were traditionally held by middle-skills workers. According to new research released today, more than six million middle-skills jobs in the U.S. are now at risk of degree inflation.
The report, Dismissed by Degrees, from researchers at Harvard Business School, Accenture, and Grads of Life notes that the rising demand for a four-year degree for jobs that previously did not require one, not only harms U.S. businesses, but also closes off critical career pathways for millions of middle-skilled Americans. This phenomenon particularly affects Opportunity Youth – young adults between the ages of 16-24 years who are not working or in school – and further constrains their ability to enter and stay in the workforce.
The full report can be downloaded here.
Degree inflation reduces the prospects of Americans without a degree to get jobs, and thus limits their access to a decent standard of living. The trend impacts positions such as supervisors, support specialists, sales representatives, inspectors and testers, clerks, and secretaries and administrative assistants. Those jobs were traditionally held by many middle-class Americans without a college degree. But when the same job is posted today with the minimum education requirement of a college degree, it is placed beyond the reach of Americans who do not have a college degree—but have relevant experience. In 2015, for example, 67 percent of production supervisor job postings asked for a college degree, while only 16 percent of people employed in that role had one—a “degree gap” of 51 percent.
In one of the first efforts to understand the forces underlying degree inflation and its consequences, Dismissed by Degreessurveyed 600 business leaders. The survey findings shows that many employers began hiring college graduates in a search of higher quality of talent—in both “hard” skills such as specific technical credentials and “soft” skills such as the ability to communicate or negotiate. Over time, degree inflation has crept into more and more middle skills jobs. Many employers admit that they now pay a significant premium when they hire workers with college degrees compared with middle skills workers doing the same job.
The survey also reveals that many employers find middle skills workers with relevant experience equally or more productive than college graduates. Employers also report that hiring college graduates makes middle skills jobs harder to fill and results in higher turnover and that college graduates are less engaged in their work.
In addition to the survey, Dismissed by Degrees draws on an analysis of 26 million job postings to dissect the degree gap across occupations. The analysis shows that if the current pace of degree inflation continues, 6.2 million more middle-skills jobs will be at risk as they shift to a four-year college degree requirement.
The research also found that:
- Two-thirds of employers agree that requiring a bachelor’s degree for a middle-skills job makes the job more difficult to fill.
- Three in five employers reject qualified middle-skill candidates with relevant experience in favor of recent college graduates.
- Half of employers report paying higher compensation to recent college graduates than non-degree workers in the same job. Of those employers, 68 percent pay recent college graduates salaries 11 to 30 percent higher than middle-skills workers with experience, yet degreed workers are more likely to leave for a competitor.
- Employers generally perceive degreed and non-degreed workers in the same occupation are nearly or equally productive on many performance metrics.
“While talent may be equally distributed, opportunity in this country is not”, said Gerald Chertavian, CEO and Founder of Year Up and Principal of Grads of Life, a national talent pipeline development initiative for employers to work with Opportunity Youth. “This research demonstrates that by limiting themselves to hiring those with a four-year degree, not only are employers fishing in a small pond for talent, but they are paying a premium for that talent, when there are millions of young Americans for whom these jobs would offer a pathway to a career that they might not otherwise have access to.”
To address the skills gap and reverse degree inflation, the report recommends business leaders should:
- Identify which middle-skills occupations are prone to degree inflation within their organizations and industries.
- Explore alternative proxies to a college degree. Identify the specific hard and soft skills required for critical middle-skills jobs, and develop in-house or external training programs, apprenticeships, and internships to impart those skills.
- Evaluate the hidden costs of hiring degreed workers versus non-degreed workers.
- Invest in strategies that help the company attract and retain workers with the right competencies rather than depending on credentials alone.
- Seek partners in the community to build talent pipelines and attract non-traditional candidates, who are eager to learn and prove themselves.
HBS Managing the Future of Work Project Harvard Business School’s Project on Managing the Future of Work pursues research that business and policy leaders can put into action to navigate the complex, fast-changing nature of work. The Project’s current research areas focus on six forces that are redefining the nature of work in the United States as well as in many other advanced and emerging economies: Technology trends like automation and artificial intelligence; Contingent workforces and the gig economy; Workforce demographics and the “care economy”; The middle-skills gap and worker investments; Global talent access and utilization; Spatial tensions between leading urban centers and rural areas.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Find out more at www.accenture.com.
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