Friday’s release of the jobs report from August shows that the U.S. labor market added another 142,000 jobs in August and the unemployment rate ticked down slightly to 4.2%. This jobs report shows a slight rebound in the job market from the previous month with an unemployment rate that remains near levels economists consider “full employment” – meaning that employers are facing a tight labor market for securing talent and where jobseekers are in a strong position to find employment. Thus, employers are likely to keep competing for workers and searching for strategies to attract and retain skilled workers for their positions. Skills-based hiring has been lauded as one such strategy with strong public support, but states and employers must enact a full suite of policies if skills-based hiring is to live up to its promise of filling talent needs and creating diverse talent pipelines in the process.
Many employers are looking to skills-based hiring because they’ve unnecessarily narrowed their talent pipelines. In recent decades, employers have used the bachelor’s degree as a proxy for specific skills, shutting workers without these degrees out of jobs that traditionally offered a pathway to economic mobility.
As a first step toward skills-based hiring, many companies and states have removed bachelor’s degree requirements from many job postings. Since 2014, there has been an almost four-fold increase in the annual number of roles from which employers dropped degree requirements.
Removing degree requirements from job postings, however, doesn’t necessarily result in increased hiring of people who have specialized skills without a bachelor’s degree. A recent analysis by Burning Glass Institute found that “for all its fanfare, the increased opportunity promised by skills-based hiring was borne out in not even 1 in 700 hires last year.”
Degrees can signal skills, to be sure, and the debate pitting skills vs. degrees is a false one. At the same time, if skills-based hiring is to expand the pool of candidates for in-demand positions and build a more diverse talent pipeline simultaneously, states should implement a more comprehensive set of policies.
As a plenary panel at NSC’s 2024 Skills Summit discussed, for skills-based hiring to meet its true potential, particularly for working people and small-to-mid sized-businesses, states can start by establishing:
First, for skills-based hiring to scale up and work, particularly for people and for small-and mid-size employers, they need a common and recognizable way to validate people’s skills and competencies. There are currently hundreds of thousands of non-degree credentials offered in the U.S. including certificates, industry-based certifications, apprenticeships, and occupational licenses. Quality assurance frameworks can help people and employers differentiate among these credentials and certify that people with a credential have a specific set of skills and competencies aligned with an occupation’s requirements and validated by industry leaders.
For the past five years, National Skills Coalition has worked with several states to define, measure, and track what makes a credential high quality. NSC and our state partners have determined that quality non-degree credentials should satisfy the following criteria:
Concurrently, for skills-based hiring to scale up and work, states should also invest in capable data systems. Good data are essential to determining the quality of non-degree credentials and, as Blair Corcoran de Castillo of Opportunity @ Work mentioned at NSC’s 2024 Skills Summit, make credential quality and skill needs more transparent to workers and learners, businesses, and policymakers.
Disaggregated data on outcomes like employment and earnings by race/ethnicity and gender is key to ensuring that non-degree credentials promote racial and gender equity instead of intensifying inequities.
There is strong public support for such data – 91 percent of voters support policies that ensure that people have access to data that tell them which training programs and credentials will help them reach their employment goals.
Beyond a framework for assessing quality and data to inform decision making, states also need to establish policies that enable people to attain quality credentials. As we all know, information and transparency can only go so far in helping people attain the quality credentials that certify their skills to employers. States should:
Because of many historical factors and current factors creating the racial wealth gap, people of color have been left with fewer resources to put toward educational attainment, making these policies especially important if skills-based hiring is truly going to build a more racially diverse talent pipeline. Moreover, students – both current and potential – can play a huge rule in designing effective policies that increase credential attainment, and states can support these efforts (NSC has suggested a similar role for workers’ voices in shaping the workforce development system.)
However, even if states establish frameworks and policies in these three key areas, there is still more work to do, particularly by employers. Removing degree requirements in job postings is a useful first step, but employers also need to think about and change equitable talent and recruiting practices, as my fellow Skills Summit panelist Michael Collins of Jobs for the Future’s Center for Racial Economic Equity has written. For example, by now, you’ve likely heard about research showing how names associated with Black people receive fewer callbacks than those associated with White people. Employers must collect data, evaluate and adjust their routines to avoid outcomes like these.
Employers – including public sector employers – should consider the resources available to aid in changing their hiring practices. Opportunity @ Work has created the STARs Public Sector Hub for public sector employers with data about STARs (workers Skilled Through Alternative Routes instead of a bachelor’s degree), narratives, support and best practices, and a community for government leaders to share experiences and crowdsource solutions. Business Roundtable also has example company actions, guides, principles, success stories, and working groups on skills-based talent practices as part of its Multiple Pathways Initiative.
Furthermore, once employees are hired, employers must take care to ensure that skills-based hiring is not letting more people of color in the door only to create a career ceiling for them because they do not have degrees. Employers should evaluate degree requirements for positions at all levels and promotion practices to ensure to help mitigate this ‘ceiling effect.’
At the center of all these employer changes should be an understanding of the humanity of employees and their learning styles as they seek to advance. Employers should, for example, engage their employees in shaping practices that allow for more employee participation and advancement, as my fellow Skills Summit panelist Michael O’Bryan of Humanature has championed.
State policy can also support these employee recruiting and advancement efforts. States can map and support the design of career pathways with onramps and off-ramps that enable people to attain stackable credentials and degrees to further their careers at their own pace. States can also support equitable employee recruiting and advancement through targeted investments and technical assistance in sector partnerships – regional collaboratives that bring together multiple employers within an industry to collaborate with community colleges, schools, labor, workforce agencies, community organizations, and other community stakeholders to align training with industry-needed skills. States can incentivize sector partnerships to engage in equity-advancing practices, like modifying recruiting processes to attract and engage specific populations of color.
Ultimately, for skills-based hiring to build a diverse talent pipeline and meet industry demand, state governments and employers need to implement a full suite of policies that remove barriers and promote inclusion in credentialing, hiring, and career advancement.
