American employers' mindless obsession with college degrees
America doesn't need more highly skilled workers. It needs less picky employers.
Conventional wisdom holds that good-paying jobs that don't require a college degree are disappearing. Indeed, projections suggest most coming growth will be in jobs requiring advanced degrees. Commentators worry that U.S. policymakers, President Trump chief among them, are lionizing diminishing industries like steel and manufacturing. Talk of a "skills gap" is rampant in reporting on the economy. There's a broadly held attitude that we all need to face reality and get Americans properly educated for the jobs of the future.
But does it actually have to be that way?
When we talk about what education level jobs require, we rely on what education levels employers demand in their job postings. Often, people assume employers decide this in a cold, economically rational fashion: Surely they wouldn't ask for a bachelor's degree if a bachelor's degree wasn't really necessary for the job!
This gives most employers way too much credit.
Take this 2014 study by the labor market analysis firm Burning Glass, for instance. It found remarkable gaps in many occupations between the number of workers who have a certain education level and the number of job listings for the occupation that call for that education level. Among management positions, job postings that demand a bachelor's degree outpace actual workers with that degree by 26 percentage points. For computer and mathematical specialists, the gap is 21 percentage points. When you drill down into distinct occupations, things get even more dramatic: Only 19 percent of of executive secretaries and assistants have bachelor's degrees, but 65 percent of postings for those jobs demand them. Twenty-five percent of insurance clerks have college degrees, but 49 percent of job postings demand them.
You clearly do not need a bachelor's degree to do these jobs.
In 2012, Burning Glass also looked at how job postings themselves have changed over time. From 2007 to 2012, medical equipment operators saw their college degree requirements in job postings grow 55 percent, and chemical equipment operators saw them grow 83 percent. For dental lab technicians, the increase was a whopping 175 percent.
Some of this shift is undoubtedly due to real changes. New technologies are developed and brought into businesses, which changes the nature and necessary skills of the same job over time. But lots of other occupations are just caught up in the trend of requiring a degree that isn't really necessary.
In many cases, employers are just becoming a lot more picky — and in a clearly class-biased way.
For instance, Catherine Rampell, who's reported extensively on this phenomenon of "degree inflation," spoke a few years ago to the Atlanta law firm Busch, Slipakoff, and Schuh — where everyone, right down to the receptionists and paralegals, all have bachelor's degrees. "College graduates are just more career-oriented," Adam Slipakoff, the firm’s managing partner, told Rampell. "Going to college means they are making a real commitment to their futures. They're not just looking for a paycheck." Amusingly, later in the piece, Slipakoff seems to realize what he's saying: "You know, if we had someone here with just a G.E.D. or something, I can see how they might feel slighted by the social atmosphere here."
In the modern labor market, college degrees often function as a form of intra-class social signaling. "Regardless of what you actually learn in college, graduating from a four-year institution may broadcast that you have discipline, drive, and stick-to-it-iveness," Rampell wrote. The assumption among many employers seems to be that "if you couldn’t be bothered to get a degree in this day and age, you must be lazy, unreliable, or dumb."
Competition in capitalism is supposed to weed out this kind of prejudice: If you irrationally limit your prospective hires, you'll suffer relative to your competitors. So how did American employers get to be so picky?
As Rampell observed, when it comes to labor, it's a buyer's market.
This was especially true in the aftermath of the Great Recession, when most of this data was gathered. The economic collapse drove the number of people without jobs looking for work all he way up to 6.7 per every job opening, and took years to fall back down. "When you get 800 résumés for every job ad, you need to weed them out somehow,” explained Suzanne Manzagol, a recruiter for Atlanta law firms.
That ratio was finally down to 1.1 job seekers per opening in September of this year. But that's the first time it's gotten that low since 2001. And given how government statistics define people who are unemployed but looking for work, even that 1.1 ratio significantly understates how bad the situation still is, and how much leverage employers still have to be picky.
Here's the truth: Labor shortages are good. When employers have a really hard time finding all the workers they need, they're forced to be less picky. And no, it doesn't mean they get worse people. It just means they put more effort into finding people and training new hires. Unfortunately, during the last few decades, the U.S. economy has suffered a chronic failure to create enough jobs and tighten labor markets enough to drive employers to this point. The Great Recession horribly exacerbated the problem, but it was a big deal even before the crisis.