Should employers pay for requiring employees to have bachelor’s degrees?

Note: this piece was co-authored with Amy Glynn.

In February of this year, the US education system hit an unflattering milestone when Credential Engine announced that the United States had nearly approached one million different types of education credentials.

Of course, not all credentials are created equal. Most everyone’s familiar with the well-known associates, bachelor’s and master’s degrees in traditional academic fields. We are also routinely made aware of some of the more esoteric degree programs out there like bagpiping (Carnegie Mellon), citrus (Florida Southern College), and puppet arts (University of Connecticut). The rest of the field though is stocked with everything from badges to industry certifications to an array of legitimate sounding, but hard-to-define credentials (how many people know what a Bachelor of Science in Comprehensive Design entails without looking?).

Ask practically anyone in a human resources office and they’ll surely tell you that so many like credentials makes it nearly impossible to rank one over another when evaluating candidates. Throw in the fact that “degrees earned” is typically just a one or two lines on a multi-page resume, and only one of the main six things recruiters scan for initially and it’s clear that today’s massive credential market exhibits way too much false precision.

One thing we do know is that millions of jobs increasingly require more advanced credentials for positions that only several years earlier didn’t require them. One Burning Glass study found, for example, that 67 percent of employers looking for a Supervisor of Production Workers were requesting a college degree in job postings when only 16 percent of current workers had one.

Pushing consumers to spend more money and time on degrees that aren’t necessary for jobs ultimately makes college more expensive for more people, even though employers benefit from skilled workers as much as individuals benefit from the training.

A better way

It is unclear whether credential creep in labor markets or credential expansion in college and universities drives the other, but the two are clearly in an arms race. One way to diffuse things, and at the same time, better balance the “who should pay for college” equation would be to have employers partly pay for the advanced degrees they require of staff.

The contribution amount is a debate for another column, but it could, for example, be limited to bachelor’s and graduate degrees. That, in turn, would lift the value of community college certificates and associates degrees in job markets. Employers that proactively contribute over some threshold to their employees advanced training — be it a traditional college degree or any short-form credential — could have the premium waived.

It could also be allocated in different ways based on policy makers’ preferences. Maybe it ends up subsidizing current employees’ student loan payments (the way lots of existing private sector models work). Maybe it ends up feeding a more general fund that helps defray education costs for low-income or at-risk students in general. There are lots of possibilities that could be considered.

An immediate and obvious benefit is fewer unnecessary credentials, which would immediately open up more job opportunities for more people with less education. It also would incentivize businesses to right-size training, which would bolster the emerging market for shorter, more targeted training and upskilling opportunities. Both of these would do much to level the playing field by giving students more career advancement opportunities without having to take on the time or dollar cost of a bachelor’s degree.

It would also just be a little fairer. Sure, employer contributions to student loan repayment are on the rise, as are tuition support programs. But “he who benefits, pays” matters, and today only about 8% of employers help offset the cost of student loans while nearly 100% of employers benefit from employees who hold advanced degrees. Shifting the cost burden away from students has a strong equity motive. It would help more students from lower-income backgrounds better compete for jobs that simply require larger educational investments.

At the least, policy along these lines should force businesses into more honest and frank conversations around how much training “really” is necessary and curb job requirement inflation. At a minimum, lowering job credential thresholds will open up more jobs to more people, which feels like a win for consumers in the form of less postsecondary training and lower training costs.

Executing policy like this would admittedly be complex. It would also likely meet strong resistance, especially from industries that draw heavily on STEM graduates, but perhaps there may be logical job carve-outs where it’s clear that a position requires at least a bachelor’s degree or higher. Retail chains and service industries operating on thinner profit margins would likely want to push back too. Then again, corporate giants like Starbucks and Chipotle have surprised everyone in recent years with generous “debt-free” college plans for rank-and-file employees.

Regardless, shifting part of the training cost to employers as direct beneficiaries makes good sense if more highly-educated workers primarily drive business growth. At the end of the day, consumers would clearly welcome the potential for more job opportunities and the potential for cost-sharing that helps make paying for college a little more manageable.

A new administration and a new Congress is the right time to put new ideas on the table to help make higher education better connect to the labor markets it is designed to ultimately serve.