More employers are cutting 4-year college degree job requirements, but who is getting hired?
The movement away from degree prerequisite is growing, but there's more to it than meets the eye.
Dren LaPhayne, 31, a junior data analyst apprentice for a nonprofit healthcare network, never completed her college degree.
“I tried college for eight years, but it ultimately wasn’t for me,” LaPhayne told Yahoo Finance. “I have always been interested in a tech career but struggled with the abstract math concepts, and I was the only person of color in high-level classes, which was daunting.”
LaPhayne, who lives in Tulsa, Okla., enrolled in a free boot camp through Multiverse, a tech startup that offers an apprentice program, which led to her position, which began in December.
“My current job is an actual dream,” she said. “I’m working in a flexible environment that allows me to learn things at a pace that is feasible for me. The company is ethnically diverse, and I’m earning a salary of $60,000 a year.”
Finding a job without a four-year college degree has been a tough slog for decades, but there are signs that it could be getting easier. Three new reports flag the surge in jobs being posted that don’t require four-year college degrees.
Fewer degree requirements — even in specialized fields
A third of employers said they have nixed degree requirements, according to a new survey from Payscale examining compensation across industries. And only about a fifth of organizations say they still require a college degree for all salaried positions this year.
That said, for half of the firms surveyed, education does matter when it comes to how much someone is paid. “Skills-based hiring is gaining momentum in light of ongoing skills shortages and a shrinking workforce,” Ruth Thomas, pay equity strategist at Payscale, told Yahoo Finance. “But this is really the beginning of that journey.”
The survey of more than 5,700 employers based primarily in the US is promising — “but that may not mean that they're actually hiring people without degrees just because they consider them,” Amy Stewart, Payscale associate director and the author of the report, said.
More evidence of the shift: A recent report from Indeed Hiring Lab revealed that more than half of the jobs posted on Indeed in January didn't list any formal education requirements. That's up from 48% in 2019. And the share of US job postings requiring at least a college degree has inched down in the last five years.
Formal educational requirements are declining in nearly every sector and occupational group analyzed by Indeed.
In the last five years, sectors with historically high educational requirements have seen the biggest changes, according to the research. Project management jobs, for example, showed the largest shift away from bachelor’s and graduate degree requirements — 58% of these postings required at least a bachelor’s degree this year, down from 67% in 2019.
“We've had a couple years of tighter labor markets, and that can explain some of the reason why we've seen employers trying to expand their pool of workers by removing some of those requirements,” Cory Stahle, a labor economist at Indeed Hiring Lab, told Yahoo Finance.
“But this is a trend that was happening before the pandemic and these tight labor markets that we had. We've seen a bigger push for these kinds of skills-focused hiring practices, especially for the purpose of hiring a more diverse workforce and expanding the type of workers that are being hired.”
Fraction of Americans have four-year degrees
The reality is that most US workers have had to battle educational hiring barriers for decades. Just over a third of Americans ages 25 and up had a bachelor’s degree in 2022. The unemployment rate for those 25 and older with a high school degree, but no college, is nearly twice as high as for college graduates.
The news that more employers are opening up the gates for those who don’t have a degree is a good thing for so many reasons, but the biggest one is purely economic.
The average in-state cost of tuition and fees to attend a ranked public college is nearly $10,662 this school year and $42,162 for a private university, U.S. News data shows. Those lofty prices don’t even consider what students must pay for housing, food, and books, which can easily run thousands of dollars.
Jettisoning degree requirements could also help close the pay gap.
“When we study racial pay gaps, a key driver is access to education, which limits the earning potential amongst people of color,” Thomas added.
Lip service or meaningful change?
But are non-college-graduates getting hired?
“I would just say that these trends vary significantly by job type,” Mona Mourshed, founder and CEO of Generation, a global employment nonprofit, told Yahoo Finance. “For example, our June 2023 research showed that more than half (61%) of employers of entry-level tech roles have raised requirements for education degree and work experience over the past three years.”
A further reason for skepticism: Nearly half of the firms seem to be making the change in the job requirement, with no meaningful difference in actual hiring, according to a recent report, a collaboration between the Harvard Business School's Managing the Future of Work project and the Burning Glass Institute, an independent nonprofit research center, examining 316 million online job postings since 2012.
The report details how the trend toward no degree prerequisites for job applicants has ramped up as state governments like Pennsylvania and Maryland, tech firms, and big industries have all publicly removed requirements for thousands of jobs. Some of the leaders include Koch Industries, Walmart, Apple, General Motors, Target, Cigna, Tyson Foods, ExxonMobil, and Yelp.
The number of roles that fall under the no-degree requirements almost quadrupled from 2014 to 2023, per the report. But when set against the backdrop of the millions of roles employers hire for annually, it has “made only modest inroads,” according to the researchers.
“The most important thing, though, is that simply removing a condition for applying for a job does not change the ultimate outcome of the hiring process,” Joseph Fuller, a professor at the Harvard Business School and a co-author of the report, told Yahoo Finance. “The job posting is only the first step in the hiring process.”
Only a little over a third of the firms in the analysis followed through and made a tangible change in the profile of those they hired after revising the job's educational prerequisite.
Education still wins out
Employers highly value job candidates with a college education, said Bradley Schurman, a workplace expert and founder and CEO of Human Change, a global strategic research and advisory firm.
“So, if it comes down to two applicants with equal abilities,” he said, “the one with the college degree is more likely to get the job.”
The future labor market may demand faster change.
“We are at near-record levels of labor market participation. At the same time, we also have an aging population,” Stahle said.
With the demographic pressures from the falling US birth rate — which will produce fewer workers to replace those retiring — being able as an employer to expand your hiring pool is going to be vital, he added.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on X @kerryhannon.
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