Raising The Bar

A new survey reveals employers have ramped up their educational requirements. Is this simply proof of "education inflation" or do today's jobs truly require a higher level of education?

Wednesday, March 30, 2016
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The recession of 2008 may now be fodder for the history books, but its impacts are still being felt throughout the workplace, and now one of the more interesting consequences of that period has come to light in a recent survey by Chicago-based CareerBuilder.

 According to the 2,338 hiring and HR managers surveyed, nearly one-third (32 percent) of private-sector employers have increased their educational requirements over the past five years. Twenty-five percent of respondents reported hiring people with master's degrees for positions previously held by those with bachelor's degrees, while 37 percent say they are now hiring people with college degrees for jobs previously held by those with high school diplomas.

Why have employers ramped up their educational requirements? Sixty percent of survey respondents say skill requirements have evolved, resulting in the need for more highly educated labor. Not surprisingly, the IT industry ranks first, with 49 percent saying they have increased educational requirements in IT over the past five years. Healthcare and sales were tied for second, at 36 percent, while financial services placed third, at 35 percent.

While these industries certainly require the latest, advanced technical skills, pointing to a legitimate need for more highly educated employees, the trend is primarily a matter of "education inflation," says Matthew Stevenson, a partner in Mercer's Washington office. That is, candidates don't necessarily need an advanced degree to perform the job duties, but employers have taken to requiring them, in part because an abundance of candidates has made it easier for them to raise the bar., 60 percent of survey respondents say the tight job market has given them the ability to hire college-educated people for jobs that had primarily been filled with high school graduates in the past. Stevenson cites instances of education inflation in relatively low-level jobs where it would be difficult to make the case that employees truly need the skills or knowledge attained from earning a college degree. He cites the example of a "major transit system in a large city" that's only considering bus-driver candidates with bachelor's degrees. In addition, he says, most people working in coffee shops possess college degrees; a trend so pervasive, in fact, that "the joke is that B.A. stands for barista," he says.

According to Stevenson, the practice serves as an effective screening tool. Generally speaking, he says, the process of earning a degree embeds in people the need to show up on time and meet deadlines – definite positives in any new employee. According to the CareerBuilder survey, 57 percent of employers have witnessed a positive impact in the quality of work done by employees, while 43 percent cite better productivity and 38 percent report greater communication.

There is a downside to hiring an overqualified candidate, however, particularly when it comes to what Stevenson calls the "meeting of expectations." People who've invested in a college education are unlikely to be satisfied with a low-level job that pays less than they anticipated and may offer little chance of advancement, he says.

"They will keep the job, but shop around until they find something better," Stevenson says. "It drives up the turnover rate and lowers the engagement level of the employee."

While Stevenson believes the trend toward heightened educational requirements will result in highly educated individuals getting paid less than what's usually considered commensurate with a college degree, Rosemary Haefner, chief human resources officer for CareerBuilder, says employers are willing to pay a premium for the "right education."

"As the level of education increases, from high school diplomas on up through various college degrees, earnings increase with it," she says. "Hiring more-educated talent means companies are going to have to pay more money to candidates, and they're going to have to compete for a smaller pool of candidates."

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With more employers seeking to recruit college-educated people for a wider array of jobs, they are likely to face longer "time-to-fill" and be forced to offer wage premiums, resulting in an overall higher labor cost, according to Ravin Jesuthasan, global leader and talent-management managing director in the Chicago office of Willis Towers Watson.

Stevenson adds that using educational attainment as a screening strategy results in an excellent pool of candidates, but there's often a mismatch between the skills and knowledge they have gained in college and the skills and knowledge required to do the job.

"If you hire [people who're] overqualified, they may be overqualified not for the job you are giving them, but for something else," says Stevenson. "In the technical world, we see a fair amount of apprenticeships where companies are bringing in people who have proven they can finish college, but now they have to train them on how to operate machinery."

Companies may be shooting themselves in the foot by placing too much emphasis on whether candidates have college degrees, he says. As employers begin to recognize how much it's costing them to train these individuals, he adds, they may start to rethink their recruiting strategy.

"It's easy to evaluate people just by looking at their resume and saying, 'The person with the B.A. degree beats the person with the high school diploma,' but the person with the high school diploma might actually be better at the job," says Stevenson. "We may see organizations involving more selection tests to hire people, rather than on some degree that may or may not be a very good measure of their ability."

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