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A growing number of U.S. employers are requiring bachelor's degrees for jobs that have long been performed by workers without them, contributing to a rise in income inequality, according to a report published today.

Why it matters: The report, by Harvard Business School, Accenture, and Grads of Life estimates that 6 million American jobs are at risk of "degree inflation," a result of employers increasingly using a bachelor's degree "as a proxy for a candidate's range and depth of skills."

Expand chart
Data: Harvard Business School and Accenture analysis; Note: 2015 Burning Glass data, BLS' Occupational Employment Statistics, and American Community Survey data for 2010–2015; Chart: Andrew Witherspoon, Chris Canipe / Axios

"This phenomenon is a major driver of income inequality," Joe Fuller of Harvard Business School tells Axios. "We're hollowing out middle-class jobs and driving everyone to the extremes of the income spectrum."

The number of U.S. job openings has reached an all-time high, but more than 13 million Americans — the vast majority with less than a four-year college degree — are unemployed or working part-time when they want full-time positions.

When businesses require a college degree for jobs that have until now been filled by non-college graduates, it increases the salary by as much 30% and the length of time it takes to fill the position by an average 12 days, depending on the position, the report says. This means that employers are spending more money and time than they need to fill their empty positions.

  • Still, employers are struggling to find talent that have the "soft" social skills necessary to thrive in a modern, diverse work environment as well as workers who can adapt quickly to new technologies and processes.
  • J.J. McCormick of recruiting company Veredus tells the researchers, "For many companies, a bachelor's degree signals that the person has put themselves through four years of college, so they have certain life experiences, commitment levels, and organization levels."
  • But other H.R. officials said the inflated requirement simply reflects laziness. "It's just easy to slap on a B.A. requirement on a job posting," according to Pam Belcher, senior vice president of human resources at LifePoint Health.

The costs of the shift are "profound" for the two-thirds of American adults who lack a college degree, Fuller says.

  • 90% of companies use screening software to weed out applicants lacking the education requirement. That means, even with the right experience, an applicant won't even be considered by a human.
  • "This puts significant pressure for people with certain aspirations to get a degree even when it's not directly relevant to their career."
  • When the 6-year graduation rate for 4-year schools in America is just 59%, that means Americans lacking the aptitude to excel in college take on debt for degrees they'll never receive.
  • Hispanics and African Americans are disproportionately hurt by the phenomenon, because they have lower college graduation rates than the population at large.

What government can do: Fuller says that the federal government should change student loan and grant requirements so they can be used for a wider range of vocational programs. It should also force institutions of higher education to publish clear data on average reported compensation, employment rates, mean time to degree completion, average loans outstanding, and loan default rates.

  • If government policy encourages students to credential themselves with more efficient vocational programs, employers will take notice, Fuller says.
  • State government can direct money toward community colleges and apprenticeship programs that are designed in partnership with the private sector.

Bottom line: Most of the responsibility, and the rewards, for solving this problem will fall on the private sector. Fuller says that private companies don't measure the "all-in cost" of their role in degree inflation. By investing up front in training programs that identify and develop promising working-class talent, they can create a long-run competitive advantage.

Editor's Note: Sign up for our Future of Work newsletter for a weekly update on robots, AI, and labor economics.

Go deeper

Former D.C. Guard alleges Army Generals lied about Jan. 6 response

Members of the National Guard and Capitol police keep a small group of pro-Trump demonstrators away from the Capitol following the insurrection on Jan. 6. Photo: Spencer Platt/Getty Images

A former D.C. National Guard official has alleged that top Army generals "lied" to Congress in their testimony on the U.S. Capitol riot, Politico first reported Monday.

The big picture: Col. Earl Matthews, who was serving on Jan. 6, alleges in a memo that the official version on the military response is "worthy of the best Stalinist or North Korea propagandist" and that the Pentagon inspector general's November report on it features "myriad inaccuracies, false or misleading statements, or examples of faulty analysis."

Toyota to build $1.3 billion U.S. battery plant in North Carolina

The all-electric Toyota bZ4X, the company's first battery-electric vehicle, at the Los Angeles Auto Show in Los Angeles, California on Nov. 17. Photo: Frederic J. Brown/AFP via Getty Images

Toyota announced Monday it's investing $1.3 billion to construct an electric vehicle battery "megasite" near Greensboro, North Carolina, set to open in 2025.

Why it matters: Toyota's Prius hybrid won environmental plaudits when it launched in 1997, but it has since lost ground to electric vehicle world leader Tesla, per Axios' Joann Muller. This battery plant will be the first to produce automotive batteries for Toyota in North America.

6 hours ago - Politics & Policy

Congress hunts for shortcut to pass defense funding, debt limit combo

Senate Majority Leader Chuck Schumer returned to his office Monday. Photo: Anna Moneymaker/Getty Images

The scramble in Congress to pass the National Defense Authorization Act is being complicated by an effort to tie it to a needed hike in the federal debt limit.

Why it matters: The House and Senate are rapidly coming up against a series of deadlines they must address before the end of the year — or risk disrupting crucial military funding and upending the economy. Congressional leaders are now hoping they can knock out both "must-pass" priorities in one, complex swoop.

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