Why many employers have ditched 4-year degree requirements

John Williams heard about the apprenticeship through his former high school and decided to give it a shot.

At the time, Williams, now 22, was finishing up his associate degree in computer science at Wilbur Wright College in Chicago and working part-time at a restaurant.

He was accepted at that apprenticeship, which is run by the global professional services company Accenture, as part of its efforts to ramp up hiring based on skills rather than just higher education.

“I was an apprentice for one year starting in July 2019,” Williams told Yahoo Money. “After completing the program, I was hired as a full-time employee, and, last November was promoted to the position of information technology analyst.”

In recent years, major employers, including Accenture, AT&T, Dell, Google, Hilton Hotels, Ernst & Young, Oracle, IBM and Intel hired more workers, like Williams, without four-year college degrees, according to “The Emerging Degree Reset: How the Shift to Skills-Based Hiring Holds the Keys to Growing the U.S. Workforce at a Time of Talent Shortage,” a recent report by the Burning Glass Institute, an independent nonprofit research center, tapping data from Emsi Burning Glass, a labor-market data firm.

The movement away from the four-year degree prerequisite is growing. With close to two open jobs for each of the 6 million unemployed workers that the Labor Department counted in February, employers struggle to find skilled workers.

A degree requirement immediately jettisons from consideration the 62% of the U.S. adults over age 25 without a bachelor’s degree — including 71% of the Black population and 79% of the Hispanic population, according to recent Census Bureau findings.

Major implications for job seekers

The researchers analyzed more than 51 million job listings, looking for four-year college degree requirements. In 2017, 51% required the degree. By 2021, that share had declined to 44%.

At Accenture, for example, the researchers found the share of postings specifying a Bachelor of Arts degree or higher fell to 43% in 2021 from 54% in 2017.

When employers drop degrees, they become more meticulous about skills in job postings, seeking soft skills such as writing, communication, and being detail-oriented, the researchers added.

This reshuffle could have major implications for how employers open opportunities for an additional 1.4 million jobs for workers without college degrees over the next five years, according to the researchers.

The change is most visible for middle-skill positions — defined as those requiring some post-secondary education or training but less than a four-year degree.

But it's just a start. Of the middle-skill job descriptions the researchers reviewed, 37% showed no decrease in degree requirements, “which means that some 15.7 million people have effectively been walled out of the candidate pool, even as employers complain bitterly about the unavailability of workers,” they wrote.

The cost of four-year degrees has been a major hurdle

The average cost of tuition and fees for the 2021-2022 school year is $43,775 at private colleges, $28,238 for out-of-state students at public schools and $11,631 for state residents at public colleges, according to data reported to U.S. News & World Report.

“I didn’t go to a four-year college specifically due to how much it cost,” Williams said. “We just didn’t have the money for me to go. Being almost $100,000 in debt was not what I wanted to do. So, I went to a city college and worked and paid out of pocket for my time there.”

For many workers, a lack of a four-year degree can make it harder to find work. The U.S. unemployment rate for those 25 and older with a high school degree, but no college, is more than twice as high than those with a bachelor’s degree or higher, according to the U.S. Bureau of Labor Statistics.

For Williams, Accenture’s focus on skills-based hiring appears to be paying off with a path to a career with promising income potential. The average base salary for an information technology analyst at Accenture is $82,000 per year in the Chicago- area, according to Glassdoor.

“The biggest challenge was learning a new technology and middleware, a type of computer software,” he said. “At first it was a lot to process, but the training gave me the foundation to work in a team and the skills. And in meetings with our external clients, my communication skills improved.”

Accenture’s one-year apprenticeship, known as the learn-and-earn model, for example, focuses on digital economy jobs — without a four-year degree requirement, Pallavi Verma, Senior Managing Director, North America Lead, Apprenticeship Program at Accenture, told Yahoo Money.

The company aimed to fill 20% of its entry-level roles from its apprenticeship program for its fiscal year 2022, an increase from 15% from the last year.

Accenture apprentices, like Williams, receive paid training in areas including application development, cybersecurity, data engineering, cloud and platform engineering. These roles are among the nearly half of Accenture entry-level positions in the U.S. open to people without a four-year college degree.

“We recruit apprentices from community colleges, tech academies and nonprofits, such as NPower and Year Up,” Verma said. “The vast majority — 960 people, or 80% of our apprentices — joined Accenture without a four-year college degree. Part of the beauty of the apprenticeship program is that we get to teach the apprentices the skills they need.”

Google launches new initiative to boost the new world of hiring

More evidence of the movement toward skills-based hiring is Google’s new $100 million fund to sponsor an initiative to find, train and build lanes to good jobs in fields like data analytics, IT support, project management, and UX design for workers without a four-year college degree.

Dell Technologies has also developed a program focused on hiring from community colleges. Positions cover the gambit from cybersecurity to engineering, tech support, tech sales, and marketing.

“There’s a talent shortage all technology companies are facing and it will only increase as time goes on, if action isn’t taken today to step out of the traditional recruiting model and open up opportunities for individuals without advanced degrees,” Jennifer Newbill, Dell’s director of university recruitment, told Yahoo Money.

At Bank of America, a four-year degree has rarely closed doors for job-seekers, John Jordan, head of The Academy, Bank of America’s onboarding, education and professional development division, told Yahoo Money.

“We’re often asked if we worked to eliminate degree requirements from our job requirements, but notably most of our jobs do not require a four-year college degree,” he said. “We take a skills-based approach to both hiring and learning, and a majority of our entry level roles do not require degrees."

New research by SHRM (the Society for Human Resource Management) shows that nearly 1 in 4 human resource professionals surveyed report using artificial intelligence (AI) in their recruitment and hiring process. And AI can automatically eliminate those without a four-year degree.

“Employers and hiring managers are missing out on possibly great employees by using AI-driven screening tools that filter out people without college degrees,” Ramona Schindelheim, editor-in-chief of WorkingNation, a nonprofit news organization, told Yahoo Money. “A degree is not the same thing as a skill. Your experience as a problem-solver or a leader isn't determined by a piece of paper.”

These are qualities you can only demonstrate in an interview by talking about your work and how you creatively solved a problem or mentored someone to help them succeed, she said.

Still on long way to go

Joseph Fuller, a professor at the Harvard Business School and a co-author of the Burning Glass report, is encouraged by his research with some caveats. “We have a very distinct abatement movement in the United States for employers to say they are removing the degree requirement as a corporate policy, but that doesn't mean it disappears from all job postings made by that company,” Fuller told Yahoo Money.

“But I do think skills-based hiring is going to be increasingly common for a couple of reasons. The first is workforce demographics in the U.S. are pretty perilous,” he said. “We don't have a growing workforce. Companies are going to have to get used to searching the pool of eager beavers that show up at their doors and the widespread commitment by particularly larger companies to improve their performance on diversity hiring in terms of ethnicity African Americans or Hispanics, they will need to reduce inequity on some levels.”

The payback for employers will likely be positive. “By opening the aperture on your recruiting, you'll get more people that not only have the relevant skills and experience, but they're excited to get your job, not the job they're settling for, or not a job that they're ambivalent about,” Fuller said.

Kerry is a Senior Columnist and Senior Reporter at Yahoo Money. Follow her on Twitter @kerryhannon

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