Skills-based hiring is the way of the future

In what is sure to be shocking news, college students feel differently about major issues than their parents did. The topic of the hour is college itself. According to many young people, the herculean four-year undertaking is no longer worth the trouble.

That’s from the point of view of Phillip Cohen, a sociology professor at the University of Maryland—College Park. The overarching attitude of today’s college students, Cohen tells Fortune in an interview, is that getting a college degree is no longer a ticket to a secure future, even if they themselves chose to enroll.

The parents of today’s college students often told them going to college would provide a path to job security, which would eventually blossom into a fruitful career. That comes with the generational benchmarks of home ownership, a vacation fund, and even the ability to provide for a family, and the next generation’s education, too. That’s what the American Dream purported to offer, at least, until Gen Z came along and upended it.

“Historically, we were told, ‘For 20 years you learn, for 30 years you lead, and maybe for 20 years, if you’re lucky, if you live this false American dream, then you get to live,’” Ziad Ahmed, the founder and CEO of Gen Z-focused consulting firm JUV Consulting, said at Fortune’s Impact Initiative conference last week. “Gen Z is taking the microphone back and saying, ‘Hell no. I want to learn, I want to lead, and I want to live simultaneously. And you’ll be damned if you tell me otherwise.’”

The idea of college ensuring success has eroded, Cohen tells Fortune. “To be sure, pursuing education and a career is still a safer bet for your future,” he says, noting that job outcomes and salary baselines are significantly improved with each advanced degree. But those material benefits are “just not a guarantee anymore.”

But while Cohen’s students expressed their disappointment and anxiety, college isn’t quite going out of style just yet. In a national Harris Poll survey of 2023 graduates, 90% said they’re glad they went to college and said they still believe a degree is their best shot at a strong future. Then again, more than half of adults—with the benefit of hindsight—told the Wall Street Journal in a survey last year that the economic benefits (or earning potential) of getting a bachelor’s degree doesn’t outweigh the cost. That’s a 40% jump from those who said the same in 2013.

The shift in attitude may partly be because college graduates have been desperately trying to pay off their hundreds of thousands of dollars of student loans for years or even decades. Indeed, college—whether or not it’s “necessary” on principle—has become an exorbitant expense that about half of the country incurs—to the point where the cost isn’t worth it for some. But college students may also be seeing that employers are more and more focused on what workers can actually do in a given role. In many major industries, skills are becoming more valuable than pedigree—and anyone can learn.

The skills-first mentality is edging out the college diploma

The move towards skills-based hiring has gained substantial steam throughout the pandemic as workers and bosses reconsidered their values and needs. But the shift has been underway for nearly a decade.

Under the tutelage of former CEO Ginni Rometty, consulting giant IBM coined the term “new collar jobs” to describe opportunities calling for a specific handful of skills rather than a certain major or undergrad degree. With a focus on new collar jobs, the percentage of IBM roles that required a four-year degree dropped from 95% in 2011 to less than 50% in January 2021.

In today’s job market, bosses need to be amenable to new approaches, LinkedIn CEO Ryan Roslansky told the Harvard Business Review last year. Hiring through a professional or alumni network was a fine approach when the market was bursting with talented applicants, he said. “But when the labor market is moving much quicker, we really need to figure out something to focus on,” he explained. “[And] that alternative, flexible, accessible path is really going to be based on skills.”

Indeed, companies that prioritize skills over “antiquated signals” like where (or whether) they earned a degree “will help ensure that the right people can be in the right roles, with the right skills, doing the best work,” Roslansky said, adding that it will lead to a more efficient and equitable workforce, “which then creates better opportunities for all.”

Even college itself is a means of honing soft skills that will serve students well in future jobs. “The people you want around are the people who know new things,” Cohen, the Maryland professor, says. “It’s hard to impart on today’s young people, but the idea is that what you get from college is not just skills, but the experience of thinking and learning for four years.”

This isn’t just good news for young people who are considering eschewing a degree (and all the subsequent loans) altogether. It’s also good news for employers. Companies that get on board and forgo degree requirements could stand to see “an explosion of talent,” with nineteen times the workers placed in suitable roles. Who could argue against that?

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