Let’s End Degree Inflation

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A 2017 study by the Bureau of Labor Statistics found that occupations that typically require some type of post-secondary education made up nearly 37 percent of employment in 2016. A Georgetown Center for Education and the Workforce paper says that by 2020, 65 percent of all jobs in the economy will require post secondary education and training beyond high school. They break it down like this: 35 percent of the job openings will require at least a bachelor’s degree; 30 percent of the job openings will require some college or an associate’s degree; and 36 percent of the job openings will not require education beyond high school. That’s a big change in just one generation.

Jobs that used to be available to people without degrees are now requiring degrees – or at least preferring them. For example, in 1970, less than 5 percent of firefighters held a college degree, but by 2010, the share had jumped to 18 percent. When employers can choose to hire administrative assistants, firefighters, shipping clerks, or bartenders with a degree, they will. Eventually, candidates without college degrees will fall to the second tier, less likely to be hired.

Economists call this trend degree inflation, and it’s causing undesirable consequences for both employers and workers. One problem for companies is that degree inflation also leads to wage inflation. College graduates have debt, and they expect to make more money based on their credentials. And frankly, they seldom perform better than their high school graduate peers. That’s because a college degree doesn’t teach you much about how to perform a middle skills job; the college graduate will usually require the same amount of training and oversight as a high school graduate.

The other problem companies have is that college-educated workers tend to move on to better positions more quickly. They are less likely to stay in jobs that don’t challenge them or live up to their expectations. Turnover is expensive, and the company finds replacing workers difficult once the degree becomes a requirement. Workers from a different generation, who might have years of experience but no degree, are locked out of applying for jobs they used to hold and would presumably perform well.

For workers, the commoditization of the 4-year degree means that their (considerable) investment in education is losing its value. Soon, as more and more jobseekers obtain degrees simply to qualify for entry-level jobs, the college degree will not provide any advantage in the job market. The starter jobs that will be offered to college graduates will not pay enough to service their debt, creating a generation of workers who don’t earn enough to live independently or save for their future.

Joseph B. Fuller, a professor of management practice at Harvard Business School, published a report in partnership with consulting firm Accenture called  “Dismissed by Degrees: How degree inflation is undermining U.S. competitiveness and hurting America’s middle class.” The report finds that nearly 6 million jobs are at risk of degree inflation. The report cites specific requirements that will create severe qualified worker shortages if not corrected. For example: In an analysis of more than 26 million job postings, we found that the degree gap (the discrepancy between the demand for a college degree in job postings and the employees who are currently in that job who have a college degree) is significant. For example, in 2015, 67% of production supervisor job postings asked for a college degree, while only 16% of employed production supervisors had one.”

Fuller’s report says that degree inflation is fueled in part by employers’ use of degrees as “a proxy for a candidate’s range and depth of skills.” In other words, they use the degree to stand in for good verbal and written communication skills, critical thinking, and time management.

But the results don’t bear that out. The report says “While a majority of employers pay between 11% and 30% more for college graduates, many employers also report that non-graduates with experience perform nearly or equally well on critical dimensions like time to reach full productivity, time to promotion, level of productivity, or amount of oversight required.”

I’m not sure if we can stop the trend, since high schools (and parents) have been promoting college degrees for decades as the only path to career success – even for students who are not well suited to university-level work. When you see a janitorial job listed requiring a college degree, you’ll know we’ve reached peak crisis. And your floors won’t be any cleaner than they were in 1970.


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