College Degrees Are Still Key – For Remote Work Especially
In the wake of a tight labor market, have educational requirements for jobs really loosened?
Over the past year and until very recently, the US labor market has been extremely tight: We saw record job switches and employers struggling to recruit talent. In such a tight market, we expect formal education requirements in job postings to decrease on average, as companies become more lenient towards the qualifications of their workers.
This is indeed what we observe in our job postings data: The share of all US job postings requiring at least a bachelor’s degree reached its peak at the start of the pandemic, when most job postings were for essential workers with higher qualifications. Since then, the share of education requirements has plummeted.
Meanwhile, the average number of skills listed as a requirement for each job has been on the rise – evidence of increasingly skills-based hiring. However, it seems that the labor market has been so tight in the last year that employers have started to reverse this trend.
Educational requirements differ strongly between jobs. Interestingly, however, they also differ remarkably when considering the same roles, depending on whether they are remote or non-remote. 55% of remote jobs require a bachelor’s degree, while only 40% of job postings for non-remote jobs in similar roles do. Since remote work arrangements increase the potential candidate pool that employers can consider, tougher screening for credentials is not only more feasible, but may also be necessary for quality control.
There have also been big differences in the extent to which companies have changed their education requirements. We identify the companies with the largest increases and decreases in the share of job openings requiring a bachelor's degree or higher, for the same set of jobs. Among the companies with the largest decreases in the share of job postings requiring at least a Bachelor's degree are large employers like IBM, Oracle or PwC. Many employers on top of that list have made public commitments to decreasing the paper ceiling.
- In the wake of a tight labor market over the last year, employers have been decreasing formal four year college requirements across the labor market.
- Education requirements for remote jobs are higher than for their non-remote counterparts within the same roles.
- Many employers who have made public commitments to decreasing the paper ceiling have indeed followed through in the past two years.