We Need Supply-Side Education Policy
On Wednesday night, in a speech in Pennsylvania, Kamala Harris announced that, if elected, she would “eliminate degree requirements” for hundreds of thousands of federal jobs. And, she added, she would challenge “the private sector to make a similar commitment.”
This policy—often called “skills-based hiring”—is very popular with voters, which explains why Harris made a similar promise earlier this month. The Trump administration also tried to loosen degree requirements in federal hiring with an executive order, making it the rare policy that draws bipartisan support. (Little seems to have come of that order, which was issued right before the 2020 election.) Nearly 60 percent of adults ages 25 to 29 do not have a bachelor’s degree. If they have the skills to do a certain job, why should they be denied the chance solely because they lack a somewhat arbitrary paper credential?
And yet, despite its popularity, skills-based hiring is a dead-end policy. If every employer in America formally stopped requiring a four-year college degree for every available position as of tomorrow, nothing much would change. Indeed, companies such as Walmart, Apple, and many others have proudly touted their removal of degree requirements in job postings, but the net effect on hiring has been very small. A recent Harvard Business School study found that when companies remove degree requirements, the share of hires with a bachelor’s degree declines by only two percentage points. Employers may not insist on a college degree, but they still prefer it.
So even if a degree isn’t formally required, applicants who have one will still usually beat out applicants who don’t, because employers need some way to differentiate between them. The real issue, in other words, is not the existence of degree requirements, but the lack of alternative ways for workers to prove their qualifications. If political leaders really want to expand opportunities for non-college-educated Americans, that’s the problem they need to solve. Doing so is not particularly complicated—but it will require the government to take a markedly different approach to higher education than it is accustomed to.
The proposal to remove degree requirements fits into a larger historical pattern of higher-education and workforce-development policy, particularly within the Democratic Party. Both the Obama and Biden administrations increased the generosity of the Pell Grant for low-income students, forgave some student loans, and increased transparency in reporting college graduates’ outcomes. The Bipartisan Workforce Pell Act working its way through Congress would expand students’ ability to use federal financial aid for nondegree training programs. These are all demand-side policies, meaning they seek to change incentives through prices, subsidies, and regulations.
[Kevin Carey: The problem with “in demand” jobs]
What we’re missing is supply-side policy for career and technical education. The U.S. spends a paltry 0.03 percent of GDP on job training, compared with an average of 0.11 percent across other advanced economies. The absence of credible nondegree pathways leads to a lack of interest in the skilled trades among young people, which in turn creates shortages in necessary professions, such as plumbing. Adjusting the knobs on the demand-side dials won’t work, because what we really need doesn’t yet exist.
Why do employers hire college graduates for entry-level jobs in the first place? Recent grads don’t typically have much practical knowledge, but being admitted to college and finishing a four-year program of study at least signals that a graduate has some measure of talent and grit. This helps explain why the college wage premium starts small but grows quickly as workers gain experience. Companies hire untested college graduates in the hopes that their investment will pay off over time.
Most employers would prefer a worker who can be productive right away, which explains the theoretical appeal of skills-based hiring. The problem is that skills are hard to verify. Companies know their employees’ capabilities but have no incentive to share that knowledge with rivals, who would use it to steal the good workers away. (The Harvard economist Amanda Pallais has shown that entry-level workers benefit from having information about their capabilities shared publicly with the labor market.) Sub-baccalaureate credentials unfortunately do not send a very clear signal, either, because they vary widely and present a confusing patchwork of options to employers. Fixing that problem would expand opportunities for Americans without a college diploma much more than eliminating degree requirements would.
To give just one example, consider credentialing for cardiovascular technicians. At Bunker Hill Community College, in Boston, for instance, you can enroll in a full-time, two-year program to earn your associate’s degree in cardiac sonography. At Hudson Valley Community College, in Troy, New York, you can obtain a one-year certificate in cardiac sonography—but only after you’ve completed either an associate’s degree in another health-related field or a bachelor’s degree in an unrelated discipline. Meanwhile, many other community colleges in both states don’t even offer specific cardiovascular-tech programs, opting instead to provide general “allied health” degrees and leaving the specific training to employers.
The variation across colleges means employers don’t know what they are getting. A cardiovascular technician with a certificate from HVCC might be able to get a job in Troy, where local employers understand her qualifications. But if she wants to get a better job at a hospital in Boston, she has no way of demonstrating that her certificate has any value. This limits her mobility and, in turn, her career prospects: Switching employers is a crucial part of wage growth. A big advantage of a bachelor’s degree is that you can take it anywhere.
[David Deming: The college backlash is going too far]
Vice President Harris has spoken favorably about expanding apprenticeship programs, which combine paid on-the-job training with classroom instruction. Apprenticeships work—a careful evaluation of the federally funded registered-apprenticeship program found that it produced substantial earnings gains—but they are bespoke and expensive. In 2021, the most recent year for which data were available, more than 25,000 active programs served an average of fewer than 10 apprentices each.
A more scalable model is the FastForward Program, which has funded career-oriented training for almost 45,000 learners in 23 community colleges across Virginia. As part of the program, the state community-college system has created career maps in fields such as manufacturing and health sciences, with a common curriculum that allows people to obtain advanced credentials that build on one another, or “stack,” and opens doors to better-paying jobs. An early evaluation of FastForward found that enrolled students who received an industry-recognized credential saw increased earnings of about $4,000 a year.
Congress could do something similar on a national scale by creating and funding a federal certification program for career pathways in fields with high job demand and good prospects for upward mobility, such as advanced manufacturing and cardiovascular technology. Federal standards would create common quality benchmarks and a shared language around the skills required for career success in each field. This would make factories and hospitals across the country more willing to hire graduates from out-of-state programs, because they would know what they are getting. It would also be easier to stack credentials across different sectors, which would give workers greater career mobility.
Building better pathways for career and technical education in the U.S. requires institution-building rather than market-based reforms—much like the Biden administration’s approach in areas such as infrastructure investment and clean energy. Cities and states should be able to tailor career and technical education to the strengths of the local economy, but only the federal government can provide the nationwide credibility and the funding to create more good jobs for the majority of Americans who do not have a four-year degree.