Credential Economy and the Job Marketplace

Abstract

Possession of an advanced degree plays a major role in determining the nature and number of employment opportunities available to an individual. At the same time, the meaning of an education credential, and the way it is used and acquired, has changed drastically over the years. Understanding the role that credentials will play in the future requires a thorough analysis of the different roles credentials have come to play.

Overview

For many years, the possession of an advanced degree has been seen as a necessary condition for almost any form of security and prosperity in employment. This has meant that there has been an almost automatic assumption that young people will enter college immediately after completing high school, to earn a bachelor's degree at the very least. This has been the case even for those who are unclear about what field they would like to enter for their career; youth are encouraged to get a basic degree in business, liberal arts, or something similar, just to make themselves more marketable to employers. In this context, the degree or credential has functioned as a kind of key to the world of professional employment and advancement; without it, one is denied access to certain positions and benefits, but with it, all doors are open (Stark & Poppler, 2016).

Because the credential historically had this kind of power, the need for people to pursue higher education was considered self-evident, and applications to colleges and universities tended to far outnumber the quantity of slots available for new students, making higher education highly competitive. In the twenty-first century, however, the way that degrees are assessed by employers has changed, for a variety of reasons, and this in turn is changing prospective students' views about whether they need a degree.

Traditionally, the distribution of credentials in higher education was based on a scarcity model, meaning that only a relatively small group of academic elites were able to obtain credentials, and because people with these credentials were highly sought after by employers, their value rose as a consequence of their small numbers. Colleges and universities had a stake in maintaining this system, because the degrees they awarded were more valuable and prestigious as they became fewer in number. This dynamic began to change with the advent of for-profit colleges (Strohush & Wanner, 2015).

For-profit colleges are concerned primarily with producing profits rather than enhancing their own prestige and reputation. Because costs for these institutions are continuously growing, it becomes necessary to recruit sufficient new customers for profits to keep pace. This causes the number of credentialed individuals in the job market to increase, and this has a variety of consequences for the credential economy, which may be loosely defined as the way that students and employers view and value a college or university degree.

One factor that operates in favor of growth in the for-profit sector of the higher education economy is the shift that has occurred from a skill-based economy to one that is credential based. In a skill-based economy, a person who possesses the requisite skills for a job can find a position and have a successful career, whether or not that person also possesses the academic credentials customary for the position. This shift was particularly noticeable in the field of information technology, where jobs became available to anyone who possessed an understanding of the technology that the employer wished to use. Cases were frequently seen where a person might become a company's technology director or chief information officer, despite never having completed a bachelor's degree. This has gradually changed, to the point where it is no longer sufficient, in most cases, to possess the skills required by a position. One must also have the degree to obtain a position and/or advance in one's field (Moore & Rosenbloom, 2016).

The need for a credential to function as a means of validating the expertise one already possesses sometimes raises questions about the value of the credential itself. It is not uncommon to find technology professionals who are highly talented but have returned to school because they are unable to advance without a degree or post-graduate degree in their field. These students often sail through their classes, because their work experience has already made them intimately familiar with the subject matter, and eventually earn their degrees without having had to really study, since they had the knowledge to begin with.

Many workers balk at having to pay the tuition costs associated with a degree, only to have the knowledge they already possess validated by an external authority. Others are more put off by the amount of time the process requires, wondering what point there is to attending class for an entire semester when they could instead simply take the final examination and receive credit for having passed the course. In response, some colleges and universities have begun to move to a competency-based education system, where the academic credits earned by students are a measure of the skills they have mastered, rather than of the amount of time they have spent attending class. Under the competency-based approach, students are able to demonstrate their mastery of a body of material by passing an assessment, allowing them to avoid having to spend weeks or months studying a topic they already understand (Li, Malvin & Simonson, 2015).

Further Insights

Growing numbers of individuals in the job market who possess higher education credentials has led to growing numbers of questions about the quality of some of those credentials. To some observers, accustomed to limited numbers of credentials, the expansion of graduates with credentials would appear to be caused either by an increase in students' aptitude or by a decrease in the standards that students must meet in order to earn the credential. As there have been no reports of widespread increases in student aptitude, critics conclude that academic standards have been lowered by for-profit colleges and universities in an effort at increasing their own profits at the expense of academic integrity (Greer & Waight, 2017).

This assessment is not entirely fair or accurate. While some for-profit universities have been shown to have behaved unethically, other factors are at work behind the increasing numbers of credentials being granted. Foremost among these other factors has been the growth of online higher education, making it possible for far greater numbers of people to pursue credentials than ever have in the past. People who do not live close enough to a college or university to attend classes, or who work full time and cannot leave during the day to go to class, are now able to enroll in online programs. In many cases, distance students can participate asynchronously, at whatever time of day they choose. In short, technology has made it possible for more people to pursue credentials, and as a result increasing numbers of credentials are being granted (Stork, Grant & Darmo, 2015).

Regardless of the reason for this shift, it has caused perceptions of credentials to change, particularly among employers as they evaluate candidates for hiring. When credentials were more scarce in the hiring pool, they were perceived as a reliable signal of a candidate's aptitude, because it was assumed that only those with exceptional intelligence and motivation would have obtained a higher education credential. As the numbers of candidates with such credentials has increased, employers have gradually begun to rely less and less on credentials as predictors of positive hiring outcomes. Put another way, credentials are trusted less as signs of candidates' quality (Dadgar & Trimble, 2015).

This shift in perception of credential value has, in turn, begun to impact the perceptions of potential students about the wisdom of obtaining a credential at all. In effect, a sort of feedback loop has been created: More individuals receive credentials, causing employers to view credentials as less valuable, which in turn causes those considering entry to higher education to think twice about whether a credential is likely enough to help them obtain a job to be worth the cost in time and money. The surplus and devaluing of credentialed applicants raises the doubts about the future direction of the credential economy. Will the greater skepticism about the value of credentials result in a long-term downward trend in the numbers of credentials being awarded? Further, will this reduction ultimately result in the restoration of the traditionally high value of credentials (Seaman, Bell & Trauntvein, 2017).

Some observers have noted that there is a similarity between variations in perceptions of credentials and the way that economic value fluctuates over time, and this phenomenon is sometimes referred to as educational inflation. The concept is fairly straightforward: According to the laws of supply and demand, as the supply of a resource goes up, demand will go down, and as demand goes down, prices will likewise fall. In the case of credentials, as more people obtain credentials, their value in the marketplace, and even the esteem in which they are held, will decline.

This phenomenon is similar to another concept found in academe, grade inflation. Grade inflation is the consequence of overly lenient grading by instructors, often due to social or institutional pressures (Di Stasio, 2017). Critics assert that grade inflation poses a challenge to educational quality in that, if everyone in a class is given an above average grade regardless of a student's mastery of the subject matter, then there is no objective measure to distinguish those who earned their grades through achievement from those who simply did the minimum to get by.

In each case, the marketplace value of the educational commodity—a grade or a credential—is decreased because of its greater availability. This is perhaps one of the greatest ironies of movements to broaden access to higher education, as well as one their greatest challenges, because the more success that these efforts achieve, the lower the regard of the public for the credentials attained. Nor is there much in the way of agreement on what may be done to remedy the problem; standards for credentials are often discussed, but are often rejected because they tend to have the effect of raising additional barriers to students and institutions alike, and of making it more difficult to update the curriculum.

Issues

Shifting perceptions of the value of credentials has not solely been the result of the increased numbers of credentials being awarded. Another factor is the growing deviation being perceived between the competencies incorporated within a given credential and those skills that are in demand in the contemporary workplace. This has resulted from the constantly increasing pace of change in the workplace; in almost every occupation, workers are frequently required (explicitly or implicitly) to acquire new skills or to apply existing skills in new ways or situations. In contrast, academic programs supporting the acquisition of a credential have traditionally been constructed through an elaborate process, and modified only infrequently. This results in a disconnect between what students are taught during their degree programs and what they will actually need to know when they are on the job.

This disconnect is apparent to the graduate with a credential, who experiences it as a profound feeling of unreadiness, but it is also obvious to the employer, who must provide more and more elaborate training to new hires in order to bring them up to speed on what they can expect from their career on a day-to-day basis. Hiring managers' perception that what is taught in credential programs is far out of date further erodes their confidence in the competence of those holding the credentials.

In response, colleges and universities have tried a number of methods intended to make their instruction more relevant to the contemporary workplace. New courses are frequently developed and offered as electives in credential programs, and these new courses tend to be centered on recent advances in the credential's field. Institutions also establish internship programs through which their students may earn academic credit while essentially volunteering with real world companies and organizations, giving those students exposure to the actual demands of the jobs they are training for (Jepsen, Troske & Coomes, 2014).

Some institutions respond to the need to keep their credentials relevant by periodically creating new credentials, as a way of adapting higher education to the marketplace. An example of this has been seen in the emergence of dozens of programs in the forensic sciences, a subject area innovated in response to high levels of public interest in television programs and movies incorporating forensic evidence into crime dramas. Developing new programs to meet social trends is something of a double-edged sword, however. The advantage of a new program is that it appears current, highly relevant, and engaging to its target market. The disadvantage is that a new program may seem less established and often less prestigious than one that has been around for years or even decades. Students may therefore be dissuaded from considering a trendy sounding course of study that may last only a few years before being dropped.

Terms & Concepts

Competency-Based Education: A method of instruction that measures not time spent receiving instruction, but mastery of specific sets of skills.

Degree Signal: The use of a job applicant's earned academic credentials as a predictor of how well the person would perform in the position he or she is being considered for.

Educational Inflation: The tendency of the value of an educational product to decrease as its numbers increase, according to the law of supply and demand.

Gainful Employment: Colleges' and universities' success is measured by the numbers of their graduates who are able to secure gainful employment (i.e., paid positions) within their field of study after a specified period of time, such as six months or one year.

Professionalization Shift: A trend in a workplace or in a field of employment, in which increasing numbers of people pursue a professional credential as a means of increasing their chances of advancement.

Target Market: A demographic segment of the overall marketplace of consumers, which is the primary focus of an advertising campaign. Colleges and universities have particular target markets in mind when they develop or update academic programs.

Bibliography

Dadgar, M., & Trimble, M. J. (2015). Labor market returns to sub-baccalaureate credentials: How much does a community college degree or certificate pay? Educational Evaluation and Policy Analysis, 37(4), 399–418.

Di Stasio, V. (2017). Who is ahead in the labor queue? Institutions' and employers' perspective on overeducation, undereducation, and horizontal mismatches. Sociology of Education, 90(2), 109–126.

Greer, T. W., & Waight, C. L. (2017). The value of an undergraduate HRD degree: An exploratory investigation of perceived employability and career success. Advances in Developing Human Resources, 19(2), 190–206. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=122523105&site=ehost-live

Jepsen, C., Troske, K., & Coomes, P. (2014). The labor-market returns to community college degrees, diplomas, and certificates. Journal of Labor Economics, 32(1), 95–121. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=92987150&site=ehost-live

Li, I., Malvin, M., & Simonson, R. D. (2015). Overeducation and employment mismatch: Wage penalties for college degrees in business. Journal of Education for Business, 90(3), 119-125. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=101557262&site=ehost-live

Moore, S., & Rosenbloom, T. (2016). Overeducation and educational-occupational mismatch: A distinguishing integration. Journal of Career Development, 43(6), 467–482. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=eue&AN=119342948&site=ehost-live

Seaman, J., Bell, B. J., & Trauntvein, N. (2017). Assessing the value of a college degree in outdoor education or recreation: Institutional comparisons using the college scorecard and surveys of faculty and employers. Journal of Outdoor Recreation, Education & Leadership, 9(1), 26–41.

Stark, E., & Poppler, P. (2016). What are they thinking? Employers requiring college degrees for low-skilled jobs. SAM Advanced Management Journal, 81(3), 17–26. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=118506736&site=ehost-live

Stork, E., Grant, A. J., & Darmo, L. (2015). Leadership graduate degree programs: A comparative review and analysis of value propositions. Journal of Leadership Studies, 9(2), 19–38. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=109462824&site=ehost-live

Strohush, V., & Wanner, J. (2015). College degree for everyone? International Advances in Economic Research, 21(3), 261–273. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=108742488&site=ehost-live

Suggested Reading

Fontaine, S. I., & Mexal, S. J. (2014). Closing deals with Hamlet's help: Assessing the instrumental value of an English degree. College English, 76(4), 357–378. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=eue&AN=94910411&site=ehost-live

Harrison, C., & Heinrich Joerdens, S. (2017). The combined bachelor of education early childhood and primary degree: Student perceptions of value. Australasian Journal of Early Childhood, 42(1), 4–13. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=eue&AN=122632154&site=ehost-live

Humphreys, D. (2014). Employment outcomes in the four-year sector: The value of liberal arts degrees. Change, 46(3), 64–66. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=eue&AN=96086984&site=ehost-live

Maršíková, K. (2015). The value of a university degree in the European context: The case of part-time students in the Czech Republic. Economics & Sociology, 8(3), 260–271. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=sxi&AN=110967889&site=ehost-live

Vuolo, M., Mortimer, J. T., & Staff, J. (2016). The value of educational degrees in turbulent economic times: Evidence from the Youth Development Study. Social Science Research, 57233–252. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=sxi&AN=113668473&site=ehost-live