More employers are shifting to skills-based hiring, moving away from the notion that a four-year degree is the best qualification for employment.
The House Committee on Education and the Workforce held a hearing Thursday about transitioning to a skills-based economy, which could “unlock the potential of millions of Americans who gain skills through multiple routes,” said Rep. Virginia Foxx, who chairs the committee.
Skills-based hiring can widen the talent pipeline and has proven to be more effective in hiring and retaining a high-performing workforce, Foxx added.
Witnesses at the hearing discussed the momentum toward skills-based hiring and opportunities to support job seekers through community college certificate programs and apprenticeships and needed improvements to the Workforce Innovation and Opportunity Act (WIOA).
Changing the mindset
Fourteen states have removed the bachelor’s degree requirement for many state roles. On LinkedIn, about 20% of jobs listed don’t require a college degree. Just a few years ago, that number was less than 10%.
“That’s an encouraging trend,” said Karin Kimbrough, chief economist for LinkedIn Corporation. She said that when employers hire based on degrees, they miss out on half the workforce, particularly rural Americans, Black and Hispanic people, women and veterans. A “skills-first approach” increases the pool of eligible workers by 20 times, Kimbrough added.
Research from SHRM found that 56% of employers use pre-employment assessments to gauge job applicants’ knowledge, skills and abilities, said Mark Smith, SHRM director of HR thought leadership. Of these organizations, one in four plan to expand their use of these assessments in the next five years.
At Opportunity@Work, people with no degree but with skills gained through, for example, military service, certificate programs or prior work are called STARs (Skilled Through Alternative Routes). They often are locked out of “gateway and destination jobs” – jobs with higher earning potential, such as computer support specialist or medical diagnostic technician, said Papia Debroy, Opportunity@Work’s senior vice president of insights.
So, what prevents employers from hiring based on skills? It requires different processes and thinking to objectively validate skills, which requires more time and planning, said Dan Healey, head of people for customer success at SAP.
But that shouldn’t deter companies from looking at candidates’ skills. Skills-based hiring is “a business imperative,” Healey said.
A change in mindset also will have to come from higher education, Healey said.
Gaining the skills for employment
“Colleges and universities all need to evolve their curriculum, approach and incorporate practical-based skills training into coursework,” Healey said.
Committee members and witnesses also talked about the benefits of apprenticeships. Nearly 40% of workers entering new Registered Apprenticeship programs are going into high-wage jobs that historically required a bachelor’s degree.
They are a “critical lever” available to employers to bring a skills-based approach to their hiring, said Debroy, and growing. Both Registered Apprenticeships and more informal apprenticeships have expanded beyond the traditional “blue collar” jobs to include jobs in healthcare, tech and more, which also is helping to diversify the workforce, according to Debroy.
Despite that, 70% of apprenticeships only offer pathways to 8% of the jobs, she said, so there’s a need to expand opportunities.
Several committee members called for the passage of the National Apprenticeship Act of 2023, which would invest more than $3.85 billion over five years to increase access to Registered Apprenticeships, youth apprenticeships and pre-apprenticeships.
Investments through WIOA
Improving WIOA could be key to providing pathways to skills training and elevate skills-based hiring, witnesses said.
Under WIOA, funds should support the provision of business services, or technical assistance, to employers to support the identification and use of skills assessments and strategies for implementing a skills-based hiring system, said Smith from SHRM. He added that WIOA also should support external credentialing organizations to create and validate skills tests used to earn credentials by individuals participating in workforce development programs supported under WIOA.
For Kimbrough and LinkedIn, “promoting a skills-first approach should be a central tenet of WIOA.”
There are now roles on the LinkedIn platform that didn’t exist a decade ago, Kimbrough said. “Employers are creating roles where they’re not even sure what skills are required.” That means businesses need more support, which can be provided through WIOA funding.
Debroy added that, through WIOA, there are opportunities to invest in a better national data system, too, to collect and distribute timely and accurate information on the workforce.
“All labor market participants need trustworthy, granular, timely and accurate data on occupations, vacancies, unemployment, wages and skill needs longitudinally and across geographies,” Debroy said.
