As Employers Drop Degree Requirements, Having a Bachelor’s Remains Valuable: Report
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- Bachelor's degree-holders see higher pay at the same positions as non-degree-holders, according to a new report from Workday.
- Bachelor's degree-holders have better mobility within their careers, according to the report.
- A growing number of employers have dropped degree requirements and focused on skills training in recent years, contributing to waning interest in bachelor's degrees.
- Colleges should focus on skills training and certification as part of degree programs, according to the report.
With declining enrollment and dropped degree requirements for jobs, many young adults are eschewing a four-year degree — but having a bachelor's still leads to increased earnings, according to a new report.
An increasing number of states have dropped four-year degree requirements for many government jobs in recent years, BestColleges previously reported. Maryland was the first state to do so, and several other governors have since followed suit as part of a bipartisan trend.
At the same time, employers have emphasized short-term credentials and on-the-job training as they look to cut back on a nationwide skills gap. Google, Microsoft, and other major companies have looked to community colleges to train students for jobs that don't require a bachelor's degree in recent years.
But bachelor's degrees are still valuable, according to a new report from Workday: Bachelor's degree-holders get better bang for their buck than non-degree-holders in the same positions.
The report, co-authored by Burning Glass Institute President Matt Sigelman and higher education strategist Jeffrey Selingo, found that workers with bachelor's degrees earned 15% more than workers without a college diploma in the same positions.
Bachelor's degree-holders also have better prospects of landing a job and more mobility within a job once they get it, according to the report. In degree-optional jobs, bachelor's degree-holders "are more than twice as likely as those without a degree to move to a position with higher degree requirements."
Having a bachelor's degree means an "immediate 25% wage premium" within a year of graduation, according to the report. That premium held over the 12-year period Sigelman and Selingo studied, according to the report. Having a bachelor's degree gets workers a wage premium worth more than four years of experience for workers without one, according to the report.
But given ongoing enrollment declines, colleges need to do more to boost and communicate the value of a bachelor's degree, according to the report.
"Colleges and universities can no longer coast on the historical value of the four-year degree to enroll students going forward," the report reads. "The onus is on institutions to make the B.A. (bachelor of arts) more valuable in a marketplace where it faces competition from microcredentials, industry-based certificates, and increasingly well-paying jobs that don't require a four-year degree."
Specific Skills Are Key for Higher Pay
Bachelor's degrees that lead to the best wage premium, or earnings boost compared to the general population, have a mix of "foundational" and "specialized" skills.
Foundational skills include broad disciplines like leadership and negotiation, according to the report, meaning that liberal arts "could play a crucial role in every major" given their focus on those skills. Those foundational skills also deliver "outsized returns," according to the report.
Influencing skills, consulting, and program management were foundational skills with the highest average wage premium, according to the report.
Specialized skills are more concentrated in only a few fields, according to the report, although even one specialized skill in a degree program can boost wage premiums, according to the report.
"The wage premium for a specific skill can also differ across majors," the report reads.
"In a world where occupations are increasingly integrating skills from across domains, some of the most valuable skills are those that are emerging but still relatively scarce within a field. For
example, knowing SQL, a programming language, delivers a 11 percent wage premium to a Natural Resources and Conservation major (where SQL is a relatively scarce skill), but only a 4 percent return to a Math and Statistics major (where SQL is a relatively common skill)."
Colleges need to emphasize skills and career planning in undergraduate curriculum to better prepare students for navigating the workforce, according to the report. Colleges should also break the bachelor's degree program into "smaller, usable credentials" that lead to a degree rather than the traditional one-size-fits-all approach.
That skill-based approach means colleges should also certify students in skills to compete with the growing focus on microcredentials among employers.
Many large employers have looked to credential-based programs at community colleges to combat workforce shortages in recent years, BestColleges previously reported, like Google partnering with community colleges to offer its Career Certificates program for free.
"The bachelor's degree has evolved over centuries as the needs of society and the workforce have expanded and changed," the report reads. "But now the degree is facing perhaps its greatest threat. The public is increasingly questioning its price and usefulness. And the skills needed to keep up in any job are churning at a much faster rate than any B.A. curriculum can reasonability keep pace."
What's the Value of an Associate Degree?
Another significant finding in the Workday report is the bachelor's degree's value compared to an associate degree.
"We uncovered that the wage premium associated with the B.A. does not extend to the A.A. (associate of arts), and the A.A. offers little financial gain in the job market," the report reads. "Wages for those with no degree are nearly the same as those with an A.A."
Employers have increasingly partnered with community colleges to train workers in growing fields in recent years.
BestColleges previously reported that Intel is working closely with local community colleges to train workers for its new $20 billion semiconductor plants in Ohio. That investment is set to bring thousands of jobs to the state, many of which don't require a bachelor's degree.
Skills training is also key to that investment because community colleges are tapped into local workforce needs and able to quickly adjust their curriculum to give students relevant skills.
The Workday report notes that the vast majority of community college students start their education hoping to eventually transfer to a four-year school, but few do.
The earnings of graduates of two-year schools are less than those who graduate from four-year schools, according to a recent report from Third Way, but still generally well above the average high school graduate. Roughly 76% of four-year graduates earn more than the average high school graduate, compared to 59% of graduates from two-year institutions.
More community colleges have offered bachelor's degrees in recent years, BestColleges previously reported, with four-year degrees available at community colleges in more than 20 states. That system opens the door for historically underserved students to get a four-year degree, with programs largely career oriented and workforce focused.