For noncollege pathways to be viable, policymakers must reduce employers’ needless demand for college degrees.
Many critiques of American higher education focus on the “supply” side. Claims that colleges are unaffordable, or exclusive in ways unrelated to merit, or teach content irrelevant to the demands of adult life all concern higher education’s production. Fair enough. But a second problem, and one that fuels the first, is on the “demand” side. Despite supply-side problems, and despite the specter of decades-long debt and increasingly uncertain economic prospects for degree-holders, American demand for degrees remains strong. Economists call this “inelastic demand,” and it leaves the higher education industry largely unaccountable to its customers.
American demand for college education is driven in turn by excessive employer demand for degrees. In contrast to countries where a range of vocational credentials are respected in the labor market and a variety of pathways are available to earn them, both American culture and the American labor market places outsized value on the four-year degree. This carries serious negative consequences. Non-degreed workers are locked out of good jobs; degreed workers find themselves in oversupply; employers needlessly endure a self-imposed labor shortage; colleges and universities, confident in demand for their product regardless of its price or relevance, behave like a price-fixing cartel; and a society already profoundly fissured on educational lines only fractures itself further. Policy reforms that make college less desirable and less necessary are valuable on all these fronts.
Policymakers have several tools at their disposal for reducing demand for college, many of which are addressed elsewhere in this symposium. Perhaps the most important priority is the construction and expansion of attractive noncollege pathways that provide real alternatives to college. But also useful is directly addressing—and ending—employers’ widespread practice of posting signs that read: Workers Without Degrees Need Not Apply.
The Vicious Cycle
Whatever one thinks of a four-year college degree’s value, few jobs can be done only by those who have earned one. Yet employers place degree requirements on job descriptions in increasing numbers. A vicious cycle seems to have taken hold, in which employers use the degree requirement as a convenient mechanism to screen for who they expect to be the “right kind of people,” reinforcing the nationwide message that anyone capable of earning a degree should get one, leading to employers’ ever-greater conviction that they only want people who have gotten one.
The result has been what Harvard Business School’s Joseph Fuller and Manjari Raman call “degree inflation”: the “rising demand for a four-year college degree for jobs that previously did not require one.” They analyzed over 26 million job postings for the discrepancy between a given job posting’s degree requirements and the qualifications of workers currently in the job and found massive gaps in numerous occupations. In 2015, for instance, just 16% of currently employed production supervisors had a degree, yet 67% of job postings in the field required a degree.
The Burning Glass Institute analyzed almost 16 million “middle-skilled” jobs that occupy the space between professions with universal degree requirements (e.g., doctors, lawyers) and jobs with none (e.g., short-order cooks, retail workers). They concluded that degree inflation is not driven by significant changes in the skills required to perform particular jobs, but by changes in hiring practices. Employers looking to cut down on labor-intensive hiring processes use degrees as a proxy for relevant skills and an easy filter for screening applicants. “Jobs do not require four-year college degrees,” the report states. “Employers do.”
This widespread practice is often not the result of a carefully considered recruitment strategy, but a byproduct of laziness. It has consequences for employers. As Fuller puts it:
“…they don’t understand that the effort to make the [hiring] process very efficient is creating a significant amount of the [labor] shortage that they complain about. Most of them haven’t thought through the logic of the way they evaluate recruiters. Most are rewarded and recognized for minimizing the cost of hiring somebody and getting them fast. They are not evaluated on whether that hire becomes productive quickly, or stays with the company, [or] gets promoted.”
It also has enormous social costs, including needless labor-market friction. As many as 27 million Americans qualify as “hidden workers”—workers with unconventional backgrounds and credentials, like veterans, the formerly incarcerated, and those without degrees—who are qualified to fill job openings but fall outside hiring systems’ common screening criteria. Burning Glass estimates that degree requirements remove 15.7 million workers from eligible candidate pools.
This premium on hiring ease is expressed in the use of hiring technology. Three-quarters of American employers, and 99% of Fortune 500 companies, employ automated hiring technology. When such systems preemptively discard applicants without degrees, even getting an application in front of a human being becomes unachievable. This is not only economic foolishness, but an affront to the dignity of workers. As we have argued at American Compass, a “free and flourishing nation places its citizens in control of its technology, not the other way around… determinations affecting rights and livelihoods also require human judgment.”
Employers’ excessive demand for degrees also creates a backflow into higher education, by forcing the pursuit of unnecessary (and expensive) credentialing. This has led to an oversupply of college-educated workers and deepened the student debt crisis. Oren Cass and Richard Oyeniran have found that jobs requiring at least a bachelor’s degree accounted for only 27% of the market in 2019, but accrued 75% of total wage growth over the preceding two decades. Americans aren’t wrong to believe that, as things stand, a degree can be the best path to economic opportunity. But that path is not wide enough for everyone clamoring to take it: over the same period, universities minted 22 million new workers with at least a bachelor’s degree, but the labor market added only 10 million jobs requiring at least a bachelor’s degree. Today, two in five recent college graduates are underemployed—that is, employed in jobs that do not require a degree.
At first glance, this reality may seem to contradict the argument of this essay. Do we have too many employers needlessly requiring degrees? Or do we have too few jobs that actually require degrees for the millions of degree-holders whose educations we’ve subsidized? The distressing answer is: both. As employers demand degrees even when they don’t have to, Americans receive a strong culture-wide signal that degrees are the path to success, and thus pursue them in excessive numbers even beyond what the labor market can productively absorb—even while workers without degrees watch the cycle unfold, locked out of many good jobs entirely.
This cultural signal may itself be the greatest problem arising from our distorted demand for degrees. American society is highly segmented by education level; by attaching not merely job qualifications but social value to higher education, we further fray social bonds already worn thin. A child of a plumber who becomes a doctor is celebrated; a child of a doctor who becomes a plumber is not. This cultural dynamic does not have to be taken as given. Removing college education from its unmerited cultural pedestal and returning it to its appropriate social status as one legitimate option among many dignified paths to success is worthwhile in its own right.
Recent labor shortages have already prompted some employers to reconsider. The Business Roundtable’s Multiple Paths Initiative, for example, has convened 80 companies in an effort to reform hiring practices to emphasize skills rather than degrees. Among the principles participating companies subscribe to is the helpful recognition that “[e]mployers should send clear demand signals regarding the skills needed in their workforce.” Numerous tech companies have loudly touted their move away from degree requirements, as have trendsetters like Tesla.
But even among many companies dedicated to shifting away from degrees, progress is slow, and a massive gap remains between results of their reforms and the scale of the problem. Burning Glass finds that on the current trajectory, the voluntary shift away from degree requirements could open 1.4 million jobs to workers without degrees over the next five years—roughly 1% of all jobs in the American labor market and too few to reach the over 15 million workers currently excluded from “middle-skilled” jobs by degree requirements.
Some federal and state executives have also shifted the hiring practices under their direct control. In June 2020, President Trump issued an executive order aimed at “modernizing and reforming the assessment and hiring of federal job candidates.” Recognizing that “an overreliance on college degrees excludes capable candidates and undermines labor-market efficiencies,” the order requires the federal government—the country’s largest employer—to prioritize skills over degrees to the extent possible in its hiring practices.
Under the terms of the order, federal jobs descriptions must “be based on the specific skills and competencies required to perform those jobs,” and can prescribe a “minimum educational requirement” only if it is otherwise legally required for the performance of the relevant duties in the relevant state (e.g., a medical degree, which a physician must legally hold). Beyond that, federal hiring may only consider education insofar as the applicant’s education “directly reflects the competencies necessary to satisfy that qualification and perform the duties of the position.” The Trump administration explicitly described itself as following the best examples of what some private-sector employers have done. The Biden administration has left the measure in place, required agencies to be in full compliance by the end of 2022, and begun issuing guidance to agencies.
State governments have followed suit. In March 2022, Governor Larry Hogan of Maryland launched a new workforce initiative to drop college degree requirements from thousands of Maryland state government jobs. In addition to opening government jobs to more job seekers, such measures deliver a signal to rest of the country. Other state executives should follow President Trump’s and Governor Hogan’s example. Congress should also codify the Trump-era order, as the bipartisan Chance to Compete Act introduced by Senators Bill Hagerty (R-TN) and Kyrsten Sinema (D-AZ) would do.
End the BA Requirement
Government is not merely an employer, with influence only over its own workforce. It also sets rules for private employer practices where the market has proved incapable of protecting important national interests, the most prominent example being the prohibition of discrimination in hiring beginning with the Civil Rights Act of 1964. What options might be available for policymakers seeking to directly reduce employer demand for college degrees?
Some analysts have argued that reliance on degree requirements would decline if that practice were treated comparably to the use of other skills assessments. The current legal environment sets a high bar for the use of skills assessment and aptitude testing in hiring. This is chiefly the legacy of Griggs v. Duke Power (1971), in which the Supreme Court ruled unanimously that any use of aptitude testing or skills assessment must directly relate to the specific requirements of the job concerned. If assessment methods result in disproportionate exclusion of a protected class of individuals, and if an employer cannot demonstrate the strict relationship of the method to job requirements, the method is unlawful—a standard largely codified in the Civil Rights Act of 1991. While intended to protect vulnerable groups, the decision also raised the legal complexity of assessing skills.
Despite technically being subject to the same legal standard as skills testing, college degree requirements have not fallen under similar legal scrutiny. To the extent that this may partially explain the rise of the degree requirement, as employers abandoned alternative screening methods for the legally safer college degree, leveling the playing field might help reduce employer demand for degrees. The American Enterprise Institute’s Frederick Hess and J. Grant Addison, for example, suggest that lawmakers should make the use of skills assessments less legally risky, and empower employers to choose whichever assessment methods might be most useful. This is a reasonable argument, but merely leveling the playing field may be insufficient to the scale of the task.
Interested parties could also turn to the judiciary or federal regulators like the EEOC. Preemptively screening out applicants without degrees has a clear and demonstrable disparate impact on racial and ethnic minority groups—indeed, companies concerned with diversifying their workforce frequently cite this as motivation to move away from degree requirements. Litigation arguing that using degrees to screen out qualified candidates should be considered illegal under current civil rights law might prove an effective approach—especially given the tenuous relationship of degrees to specific job requirements, which is currently the relevant standard. But reliance on the judiciary or regulatory apparatus can be an unstable way to govern; what judges and agencies interpret one way, they can later interpret another.
A more straightforward and durable fix is available, and the executive actions by President Trump and Governor Hogan provide a model. Congress should extend the logic to the private sector and prohibit college degree requirements in job descriptions and hiring criteria, exempting only those situations where an educational credential is legally mandated for the role, or “directly reflects the competencies necessary”—for example when formally required by an external accreditor or professional body (e.g., a religious denomination requiring a theological degree for ordination). The prohibition would foreclose recruitment processes and HR policies that preemptively dismiss applicants without a degree—including hiring algorithms and AI tools that discard applications from applicants without degrees. That is not to say employers could not consider educational achievement when evaluating an application. Once in front of a recruiter or hiring officer, any candidate should always be able to present whatever qualifications they have, and employers should be free to take them into account. But job applicants cannot make their case at all if their applications are never considered in the first place.
The typical concern with this sort of blunt, public prohibition is the burden it might place on employers. Overhauling hiring practices can be difficult, expensive, and time-consuming; best not to impose yet another government mandate on job creators. But as the firms already moving in this direction have shown, doing so is entirely feasible. And as both common sense and in-depth analyses suggest, degree requirements are often the product of hiring practices optimized simply for short-term ease, or the mitigation of (mistakenly) perceived risk, rather than long-term value. Fuller’s research, for example, finds that 40% of surveyed employers feel like hiring “hidden workers” risked reducing their competitiveness. His research also indicates that these fears are largely misplaced. Firms that do hire hidden workers find that, far from placing productivity and profits at risk, such workers materially outperform more traditionally sourced employees in attitude and work ethic, productivity, quality of work, engagement, attendance, and innovation. These positive results increase with the volume of hidden workers hired. Pushing employers away from shortsighted reliance on degree requirements stands to benefit employers, not just workers. In Fuller’s words, “[t]his is not feel-good capitalism; this is hard-nosed capitalism.”
But if employers are denied the use of degrees as convenient proxies for the qualities they seek, what are they to use instead?
Experience suggests that employers sometimes respond by circumventing a prohibition or devolving to something worse. This appears to have happened, at least to some extent, with the “Ban the Box” campaign to prohibit employers from requiring an applicant to indicate criminal history in the initial stages of the hiring process. Despite wide agreement on the economic and social value of giving the 70 million Americans with a criminal record a fair chance to present their qualifications—hence the broad enactment of such policies in both red and blue states—many employers simply ignore the rules. Other employers turn to more damaging and flatly immoral proxies in an attempt to screen out applicants with criminal history—race is the commonly cited example.
A prohibition on degree requirements is a different case in important respects. Banning the Box seeks to prevent employers from screening out a specific group about whom they have a very strong negative preference. Banning the bachelor’s degree requirement, by contrast, would prevent employers from screening out broad swathes of the labor market on the basis of a screening mechanism for which they have a much weaker preference. It is reasonable to expect less avoidance and lower use of worse proxies in the case of a degree requirement ban. This proposal is also significantly more modest than Banning the Box. It would not forbid an applicant from listing their degree on a resume, nor prevent an employer from asking what credentials an applicant holds, even in the initial application. It would simply prohibit employers from prematurely refusing to even consider applications from non-degree holders.
Well-functioning labor markets require credentials that reliably indicate the skills and qualities employers need. Such credentials are a public good, and their availability a public responsibility. Our current credentialing model, warped by its dysfunctional obsession with the college degree and poorly served by a largely broken secondary education system, is failing that responsibility and needs serious reform. As argued above, that will require offering viable noncollege pathways that provide credentials employers can trust. In the long run, good alternatives will result in college degrees also becoming more useful credentials, as employer demand for them decreases, and students and employers alike pursue them only in those cases where they are most genuinely useful. But as policymakers pursue that long-term goal, in the immediate term they should prevent employers from further contributing to the degree demand spiral that is already unnecessarily distorting our labor market.
A broad ban on private-sector degree requirements is an admittedly blunt instrument. It will certainly not be perfect. It will be most salutary only as part of a constellation of complementary reforms, many of which will need to be even more ambitious. It is nevertheless worth trying. Interrupting a vicious cycle sometimes requires drastic intervention, and where a problem is partly one of deeply rooted cultural signals, an equally strong message can be necessary to correct it. Until America’s distorted demand for degrees is disrupted and a healthier national relationship with college established, both American employers and American workers—those with and without degrees alike—will continue to bear the consequences.