No Degree, No Problem for Growing Number of Employers

Google, Delta Air Lines and IBM are among many companies reducing education requirements for some positions in a tight labor market. Wall Street Journal economics reporter Austen Hufford explains how employers are rethinking their hiring, and what that means for job seekers. Daniella Cheslow hosts.

Wall Street Journal, “What’s News,” 12/2/2022 5:40:00 PM


Daniella Cheslow: New jobs numbers show the labor market is still tight even after recent layoffs, and no degree, no problem for a growing number of employers dropping college degree requirements.

Austen Hufford: All of the major airlines, including Delta, have essentially gotten rid of four year degree requirements for their pilots training programs. We're also seeing it in places like tech companies like IBM and Google for some of their tech support roles, and then we're also seeing it in the government sector.

Daniella Cheslow: Plus, some kids say all they want for Christmas is virtual cash. It's Friday, December 2nd. I'm Daniella Cheslow for The Wall Street Journal filling in for Annmarie Fertoli. This is the PM edition of What's News, the top headlines and business stories that move the world today. The US labor market remains tight, according to the latest jobs report. Employers in the US added 263,000 jobs in November. Job growth is stronger than before the pandemic. That's keeping the jobless rate at a historically low level of 3.7%. Hourly earnings rose 5.1% from a year earlier. We'll talk later about how companies and even state governments are trying something new to hire in this tight labor market, dropping the requirement for a college degree. The strong labor market and rising wages likely keep the Federal Reserve on track to raise Interest rates again when it meets in less than two weeks. WSJ chief economics correspondent Nick Timiraos says the US Central Bank is expected to boost rates by half a percentage point and may keep pushing them up next year to tame inflation.

Nick Timiraos: If wage growth stays strong and people are spending money on services which are labor intensive, then that's a recipe for inflation to come down a little bit, but not nearly enough of the way back to the Fed's 2% target. If we saw inflation slowing, but still running at 4% next year, that would be a green light for the Fed to keep raising Interest rates in the first half of the year and to hold them at a higher level for a longer period of time in order to bring inflation down.

Daniella Cheslow: Interest rates may be rising, but the cost of filling up is going down. The average price of regular unleaded gasoline in the US fell to $3.45 a gallon Friday, according to energy data provider OPIS. That's a drop of more than 30% from a record above five bucks a gallon in June. Increased US oil refinery output and lower demand are behind the drop, OPIS says. The European Union set a cap of $60 a barrel on the price of Russian oil. The US and its allies plan to launch the cap on Monday as a way to cut Russia's oil revenue while keeping Russian oil on the market. The Capitol banned Western companies from insuring, financing, or shipping Russian oil that costs more. The EU and UK are set to ban the import of Russian crude on Monday, so the cap will affect Russia's sales to the rest of the global market. We report exclusively that United Airlines is close to a deal to order dozens of Boeing 787 Dreamliners. People familiar with the deal said an agreement could be completed as soon as this month and would be worth billions. In other aviation news, the Pentagon alongside defense giant Northrop Grumman is set to reveal a new bomber later this evening. The $750 million B-21 Raider is the first new aircraft of its kind in more than 30 years. It's designed to fly thousands of miles and evade sophisticated air defenses. The bomber is part of the US overhaul to its nuclear capabilities, and it's intended to counter China's growing military strength. Coming up, do you really need a college degree? From airlines to big tech, companies are rethinking whether it's necessary. That's after this break. The job market has remained strong this year, as we heard earlier in the show, and that's pushing more employers to drop one of the biggest requirements for high paying jobs. A four year degree. In November, 41% of US job postings required at least a bachelors degree, and that's down from 46% at the start of 2019. Those numbers are from The Burning Glass Institute, which is a think tank studying the future of work. Here to talk about this change for employers and for workers is The Wall Street Journal's Austen Hufford. Hi.

Austen Hufford: Hey.

Daniella Cheslow: Austen, you've been reporting on jobs that used to require college degrees that no longer do. What are the areas where you're seeing that movement?

Austen Hufford: We're seeing it everywhere from airline pilots. Over the last several years, all of the major airlines, including Delta, have essentially gotten rid of four year degree requirements for their pilots training programs. We're also seeing it in places like tech companies like IBM and Google for some of their tech support roles, and then we're also seeing it in the government sector.

Daniella Cheslow: When you talk about the tech industry in particular, that's interesting because we're seeing layoffs there. Amazon, Meta, Twitter, DoorDash, they've all announced layoffs recently. What are you hearing from leaders in the tech industry about their hiring requirements?

Austen Hufford: IBM told me that they no longer have a four year degree requirement for most of their US roles. Nickle LaMoreaux, their chief human resources officer, explained to us how the company got to that milestone.

Nickle LaMoreaux: What we've done as a company is that we've gone through every job we've got. We've detailed what are the skills really required and does that degree limit or mean that candidates can't come in and take the job artificially, or is it something that's really required?

Austen Hufford: When they started that process, about one in 20 IBMers in the US didn't have a bachelors degree. Now it's about one in five, and these are demanding, high paying jobs.

Daniella Cheslow: Wow, that's astonishing. That's a really big change. Is IBM the flagship in the tech industry or are there others as well?

Austen Hufford: They're definitely a leader in this space and they actually are publicly advocating for more changes, but I've spoken to other organizations that are doing something similar. Google has launched the certificate program that provides training in high paying, high growth career areas, think about product management, IT support, even user experience designing iPhone apps and that sort of thing. It's online only. It's a nominal cost, like less than $100. They have partnered with 150 major companies like Deloitte and Verizon to hire workers that have completed this alternative to college career path. They say that there's been more than 100,000 people in the US who have completed this program.

Daniella Cheslow: We spoke to Monique Harley. She's 31 and lives in Upper Marlboro, Maryland. She has a high school diploma. She went to Google certificate program. She told us at first, she worried she wouldn't find a job, but then she was hired by a tech contractor called Peraton.

Monique Harley: It makes me really happy, to be honest, that I'm able to get all these opportunities without a college degree. I feel successful.

Daniella Cheslow: You can hear her relief there. Austen, that's the private sector. What about the public sector? The governor of Maryland, Larry Hogan, he said in March his administration would review College requirements for every state job. How's that working out?

Austen Hufford: Maryland worked with a nonprofit that wants to cut degree requirements. It's called Opportunity@Work. I spoke to Bridgette Gray, who is their chief customer officer, and basically their program is focused on the 70 million Americans who are in the workforce, but don't have a four year degree. They call them STARs.

Bridgette Gray: It stands for Skilled Through Alternative Routes. STARs are developing these valuable skills through their community colleges, through military service, through boot camps, workforce training organizations, but most importantly, it's how they develop skills on the job.

Austen Hufford: The state saw a 41% increase year over year in these non-college degree holders being hired by the state. It's really interesting because typically government jobs are less flexible than the private sector. They have these sheets that for every job they list very specifically, this job requires a four year degree, this job requires a four year degree and 10 years of experience, that sort of thing. Those types of rules were implemented essentially to avoid allegations of corruption and nepotism, which has been a problem historically in many government jobs, but it also means there's less flexibility. I spoke to hiring agencies at the state and they say that they in the past would get great candidates, people they wanted to hire, but they couldn't because they couldn't meet those minimum requirements.

Daniella Cheslow: Can you talk about who those traditional minimum requirements affect the most?

Austen Hufford: Economists and employers told me that the concern here is that historically, we might have viewed a college degree as a bridge to opportunity, but they've said it almost become a drawbridge. The need to have a college degree has closed off opportunities for some people. When you look at statistics in the US, basically Black and Hispanic people are less likely to have a college degree compared to white and Asian people, and men are less likely to have a degree than women. What that means is that these college degree requirements have a disproportionate impact on some parts of the economy and for some types of workers, in particular.

Daniella Cheslow: A four year college degree holder has more lifetime earnings than one without. The lifetime earnings of a worker with a high school diploma, that's 1.6 million compared to a person with a bachelor degree, that's 2.8 million. That's according to a 2021 report by the Center on Education and the Workforce at Georgetown University. Are people taking a pay hit for skipping that milestone and going straight into the job market?

Austen Hufford: We don't fully know if College is the cause of this higher earnings, or if there's another factor that might mean people are more likely to go to College and more likely to have higher earnings. Especially in the US right now, the student loan issues are in the news and a big concern, because we do know that College not only takes you out of the workforce for four years, but it also leaves many people in debt. There's also people who go into debt who don't even finish College. I think right now that there's a big debate happening on whether we should continue to be pushing more and more people into four year colleges, or whether we should be encouraging more people to explore alternative route like the Google certificate program, our technical schools and community colleges. The big question is whether this change is temporary or permanent. Does this change reflect merely the tight labor market in the last year or two, or is this part of a broader trend? It really right now depends on the industry and the specific type of work.

Daniella Cheslow: Austen, thank you so much for joining us.

Austen Hufford: Thanks so much for having me.

Daniella Cheslow: Finally, cash definitely isn't king for a growing number of youngsters. This Holiday season, you may get requests from the children in your life who prefer Virtual Currency. Tech savvy kids are asking for virtual money they can spend on virtual stuff in online worlds like Roblox. Last year, young people between 12 and 17 spent an average of $92 a month online. That's more than double the average from two years before, according to market research firm Forrester. Most of that money was spent on video games and virtual goods. Our tech reporter, Sarah Needleman, says some kids are learning how to earn and spend in real life by practicing online.

Sarah Needleman: One of the parents I spoke to said that his kids were initially upset after their Roblox allowances ran out before they could buy all the virtual goods that they wanted. He showed them that one of his daughters had paid the equivalent of $9, which is almost double her weekly chore money, for a single pair of virtual boots on the platform. It's really getting in their heads that money, as they say, does not grow in trees. You have a limited amount and you have to think about whether something is good value or not.

Daniella Cheslow: And that's What's News for this week. Our hosts are me, Daniella Cheslow, sitting in for Annmarie Fertoli, Peter Granites and Luke Vargas. The show was produced by Pierre Bienaimé and Kate Bullivant, with help from Anthony Banksy, Julie Chang, Zoe Thomas, and JR Whelan, and editorial support from Michael Kosmides, Chris Zinsli, and Philana Patterson. If you like what you hear, please rate and review us. We'll be back on Monday morning. Thanks for listening.