Rethinking Job Requirements: How Degree Deflation Is Breaking Down Barriers

Understanding degree deflation

Over the past few decades, there has been a consistent upward trend in the number of individuals obtaining degrees from postsecondary institutions. In 2022, across all OECD countries, 41% of individuals aged 25 to 64 possessed tertiary education qualifications. Amidst a growing number of graduates, many companies started to request degrees for positions that initially did not require one. This phenomenon is commonly referred to as “degree inflation”.

Now, a significant shift is underway in Western economies, where an increasing number of companies is dropping degree requirements in response to the growing shortage of skilled workers (“Degree Deflation”). IBM announced that it has removed the prerequisite of a bachelor’s degree for over half of its job openings in the United States. In spring 2023, the Governor of Virginia announced the elimination of degree requirements, preferences, or both for nearly 90% of state-classified positions. Just two weeks ago, Walmart started to revise job descriptions: To qualify for a position, applicants either have to possess a relevant college degree or demonstrate the requisite skills through prior experience or alternative forms of learning.

This shift in emphasis from degrees to skills is widespread. According to a report from the Burning Glass Institute, which analyzed over 51 million job postings, 46% of middle-skill and 31% of high-skill occupations experienced a down credentialing as a reduction in the BA+ share of over 5%.

How degree deflation affects job seekers and employers

The removal of unnecessary degree requirements in job listings can have a significant positive impact, particularly for individuals who face financial barriers to higher education. Degree deflation can therefore break up a system where job opportunities are largely determined by one’s parental wealth and enhance social mobility.

In a recent survey from The Stepstone Group (The State of Recruitment and Automation (2023)), 43% of individuals without degrees expressed dissatisfaction with their current workplace opportunities to apply their skills and competencies. Degree deflation can open doors to access positions that match people’s skills and expertise. This shift can be especially beneficial for highly experienced individuals who find themselves trapped in occupations where their abilities remain underutilized.

Why employers should reevaluate degree requirements

Dropping degree requirements will open the door to a more extensive and diverse talent pool with a broader range of skill sets and experiences.

Moreover, a Stepstone study on future skills and future learning has highlighted the importance of defining success based on relevant future competencies rather than traditional academic degrees. Companies that prioritized such competencies exhibited significantly higher levels of innovation and overall performance.

All in all, degree deflation encourages employers to look beyond the confines of formal education, particularly in fields like entrepreneurship, where qualities such as attitude, adaptability, and entrepreneurial mindset often surpass the value of a college degree.

Conclusion

In conclusion, dropping degree requirements for certain positions can increase social mobility and lead to greater equality of opportunity. However, just because companies are dropping requirements, that does not mean that those formerly excluded now actually get a chance. Degrees usually are a good measure for companies to quickly assess an applicant’s knowledge. Without degree requirements, companies will have to completely restructure their hiring practices, and define needed skills for each job profile. Companies will have to become more flexible and provide corporate learning. But in the end, those will benefit from a wider and more diverse talent pool.