Can sourcing workers without degrees build a stronger labor market?
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In the wake of the pandemic, companies are reimagining how the skills of their existing workforce map to future talent needs. Others are finding talent to respond to new growth areas that have recently emerged. Most, if not all, large employers have spent the past six months navigating the continued impact of what has been called the Great Resignation and the Great Reshuffle. In all cases, this shift is occurring as businesses continue to grapple with their responsibilities to workers and communities; their priorities around diversity, equity, inclusion and belonging (DEIB); and fast-changing ways of getting work done.
All these business forces sit within the larger context of a labor market that has, for decades, largely ignored one of its largest and most diverse pools of talent: people who have the skills for in-demand work, but are not considered for these jobs because they do not have a bachelor’s degree. These workers represent 60% of today’s labor force. Now we have the data to prove the extent of the missed talent opportunity—and the evidence that can help us understand how to tap this talent pool.
Who Are STARs and What Do We Know About Them?
Two years ago, Opportunity@Work published first-of-its-kind research1 identifying the more than 70 million workers whom we call STARs: those who don’t have bachelor’s degrees but have instead been Skilled Through Alternative Routes, like community college, military service, training programs, skills bootcamps and on-the-job learning.
STARs make up the majority of the country’s workforce and fall into three categories:
STARs are disproportionately people of color (62% of Black workers are STARs; 55% of Hispanic workers are STARs)—and have, perhaps unsurprisingly, been disproportionately impacted by job displacement due to the pandemic.
The publication of that study, Reach for the STARs, as well as its companion paper published in the National Bureau of Economic Research2, was the first step in understanding the skills of these workers and how many have skills for higher- wage work—if employers just recognized those skills.
Our research sheds light on just how bad the impact of this collective failure has been. Our analysis of more than 130 million labor market transitions over time shows that it takes a STAR 30 years to reach the starting wages of a bachelor’s degree holder on day one of their career. In other words, our labor market equates four years of learning in college with three decades of work experience. What’s more, despite the fact that more than 30 million STARs have skills for roles with at least 50% higher salaries than their current jobs, their access to middle- and high-wage jobs has declined significantly over the past 20 years.
STARs Were Displaced from 7.4 Million Destination Jobs Since 2000
Overall, employers’ increased use of bachelor’s degree screens has contributed to the exclusion of STARs from 7.4 million jobs—such as HR managers, computer programmers and registered nurses—that historically offered pathways to economic mobility for workers without a four-year degree. For example, 84% of HR managers openings require a degree, which has increased over the last 20 years; however nearly one-in-four current HR managers are STARs. According to Opportunity@Work’s Senior Vice President of Insights, Papia Debroy, this is a self-imposed talent shortfall that can be reversed.
“Nearly half of the 7.4 million jobs lost to STARs since the turn of the century were in 30 occupations. STARs currently comprise at least 20% of workers in each of these occupations, suggesting that by sourcing STARs for these jobs, employers can make deliberate choices to reverse the decline in economic mobility for STARs while strengthening their talent pipelines. Continued screening out of this valuable talent will exacerbate their hiring needs and ultimately hurt their bottom line,” she says.
Twin Missions for HR: STARs as a Solution for Skilled Talent Needs and DEIB Objectives
Systematically recruiting STARs could be the single greatest way to address the talent shortage for middle-wage jobs that many businesses are experiencing. At the same time, outdated hiring practices have locked millions of people out of opportunities to earn more and to access more fulfilling, resilient careers. In short, the challenge facing the majority of the country’s workforce sits between two crucial and intertwined business goals: identifying new pools of talent and promoting racial and socioeconomic equity. In fact, by recognizing the potential of STARs, we can address two massive labor-market challenges at once: addressing persistent talent gaps, while also empowering businesses to fulfill their goals of inclusion and equity that have become increasingly important in an era of stakeholder capitalism.
STARs make up an overwhelming majority of the country’s Black, Hispanic, rural and veteran workforce. For instance, of the 17.1 million Black workers currently active in the labor market in 2019, over 11 million are STARs. Therefore, when companies require a bachelor’s degree, they screen out more than two-thirds of today’s Black workers for a wide range of jobs that pay a family-sustaining wage without even assessing the skills that could qualify them for those roles. This example demonstrates just one way in which intentionally sourcing STARs can help companies seeking to reverse persistent racial disparities in the labor market, opening up new pathways to mobility while also tapping the potential of new communities of skilled workers.
Opportunity@Work CEO Byron Auguste and Maurice Jones, CEO of OneTen, an initiative focused on helping Black STARs access career pathways, recently wrote, “Work is about solving problems, and if businesses want to be in a better position to compete, we need all talent off the sidelines and on the field.”
Our research also shows us that employers hold the keys to reversing this 30-year opportunity gap. Hiring and promoting STARs could shrink (if not eliminate) the perceived skilled labor shortage and provide more Black, Hispanic, rural, veteran and low-income workers with pathways for economic mobility. A labor market that works for STARs is one that works for everyone.
Here are recommendations for talent leaders intent on building that better labor market together.
Hiring: Expand Sourcing and Selection of STARs
Despite STARs demonstrating skills for higher-wage work, employers have needlessly screened out candidates who don’t have bachelor’s degrees in the pursuit of hiring efficiency.
Dismissed by Degrees research from Accenture, Grads of Life and Harvard Business School3 shows that “degree inflation” in the hiring process is pervasive. As an example, 67% of postings for new production supervisors in 2015 included college-degree requirements, though only 16% of existing production supervisors had bachelor’s degrees. This overreliance on the degree results in STARs being locked out of opportunities that were once available to them.
Fortunately, it’s possible to reverse these trends by intentionally building hiring practices that recognize workers’ and candidates’ potential, rather than their pedigree. Here are three methods to translate these ideas into action:
1. Remove degree requirements and promote skills-first hiring practices, particularly in gateway jobs. We define gateway jobs as the intermediate step on a journey from a lower-wage origin job to a higher-paid destination job. They are accessible from origin jobs that employ high volumes of STARs. Our skills-similarity analysis (from our Navigating with the STARs report4) shows that gateway jobs enable skills-based transitions to higher-wage occupations.
Too often, though, default exclusionary modes, such as hiring algorithms, screen STARs out of roles in which they could succeed, simply because they lack a bachelor’s degree. As a result, many STARs fall into a category described as “hidden workers”: workers without degrees who aspire to higher-earning careers but are overlooked entirely due to algorithmic bias and other systemic challenges. New initiatives are beginning to examine those algorithms more closely and identify where they may be excluding untapped pools of talent.
Think of the career trajectory from cashier to customer service representative to a salesperson: each role builds on the skills needed for the previous role, and each offers higher wages and more opportunities for growth. We’ve identified 51 such gateway jobs, which branch out into nearly 300 potential destination jobs—but too often still require college degrees.
Removing degree requirements from gateway jobs can help streamline the path for STARs who already work in origin jobs. Some companies have already begun. At Wells Fargo, more than 90% of jobs do not require a bachelor’s degree, which Executive Vice President Carly Sanchez describes as “almost a total reversal for us” in the past five years.
As detailed above, 30 of those 51 gateway jobs account for more than half of those nearly 7.5 million jobs that STARs have lost access to since 2000.
2. Recognize STARs as a strategic talent imperative—that also enables achievement of DEIB objectives. In the same way that requiring college degrees has a disparate impact on Black and Hispanic workers, intentionally recruiting STARs can help employers address DEIB goals as well as address skilled talent needs. But DEIB and talent efforts too often remain siloed, with diversity initiatives often treated as a separate (sometimes competing) priority or under a corporate social responsibility umbrella, rather than the core talent function. Talent leaders should explicitly link these two goals and intentionally build pipelines of STARs as a core HR strategy.
3. Establish a dedicated STARs recruiting function and programmatically pursue STARs talent. The talent pool of STARs is large and merits its own focus. Just as many employers have campus recruiting programs, they should also develop recruiting strategies and approaches that focus specifically on STARs.
That could include, for instance, partnerships with organizations that specifically focus on training STARs. For example, national talent developer programs such as Generation, Merit America, Per Scholas and YearUp all work directly with employers to provide pipelines of STARs talent from sources they would not have otherwise tapped into.
It could also involve embracing new models of training and onboarding, like the apprenticeship networks launched by Aon and Accenture, or the work of organizations such as Multiverse that are dedicated to expanding apprenticeships to a broader group of employers. Accenture’s apprentices, as recently profiled in The New York Times, “have excelled in measures like productivity and retention. They often bring skills and traits nurtured in past jobs or in military service like teamwork, communication, persistence and curiosity—so-called soft skills that are important to clients in technology projects.” Accenture plans to expand to 800 apprentices over the coming year.
Newer models of contract-to-hire and “talent as a service” are focused explicitly on STARs, such as Revature’s Pace program that targets STARs with community college credentials; and organizations like the SkillUp Coalition that help STARs navigate the growing cadre of “learn and earn” employer-based training programs.
Once employers have decided to programmatically seek STARs, easily sourcing STARs talent and discovering the programs outlined above is often a challenge. Solutions are emerging to address this need, such as Opportunity@Work’s Stellarworx marketplace, which serves as a one-stop shop to connect employers with STARs and the talent developer ecosystem. Companies such as Russell Tobin and Live Nation, among many others, are finding programmatic ways to dedicate hiring resources for these types of STARs talent sources.
In addition, many STARs learn critical-thinking and complex problem-solving skills from work in overlooked sectors such as retail sales and the care economy. Companies should expand recruiting pipelines to include these sources, reassess referral processes to close what LinkedIn calls the “network gap,” and develop programs to deliberately bring STARs on board.
Mobility: Cultivate Internal Pathways for STARs
Of course, sourcing STARs externally is just one way to improve talent outcomes. It’s also critical to establish a workplace culture that values STARs, and the range of skills and experiences they bring to the workplace. Many businesses that employ STARs in low-wage roles think of those roles as separate from higher-earning positions, even though the skill profiles of those roles are often similar. In short, many employers have access to significant numbers of STARs who are already in origin or gateway jobs for a company, either in direct employment or under contract.
The workplace is where STARs have the chance to develop, expand, demonstrate and leverage their skills for increased opportunity. Based on a survey we conducted of both workers and managers to understand how employers support their STARs, it’s clear that many STARs don’t feel supported in their current roles. We found, for instance, that managers with bachelor’s degrees overestimate what portion of the workforce has a degree, and this perception is associated with talent behaviors that adversely impact STARs.
How can employers better recognize the talent they already have and build internal mobility pathways that create new opportunities for STARs?
1. Make job pathways explicit. The language of origin, gateway and destination jobs provides a framework for HR and talent leaders to develop professional development and skill-building programs along internal pathways. That should begin by standardizing upward mobility pathways for low-wage to middle- and high-wage jobs, i.e., making clear to incumbent workers that their current role will help them master skills they can put to use in future roles. Employers such as Walmart and Chipotle have already begun making those pathways available, through partnerships with Guild Education designed to make a range of upskilling programs accessible and affordable for workers. That level of explicit focus on job pathways, so often lacking in many businesses’ current talent structures, will enable employers to more effectively cultivate STAR talent and support their career goals, strengthening their employee value proposition (while also creating opportunities to streamline recruitment costs).
2. Track and measure STARs’ progress. After the job pathways themselves are defined, talent leaders should use their HR information systems to deliberately monitor and measure STARs’ advancement along these pathways and proactively engage STARs on opportunities for internal mobility. Doing so will create a positive feedback loop as more STARs advance to new roles and pave the way for others to chart similar career trajectories. It will also identify missed opportunities where a STAR did not advance despite having the skills to do so. Some organizations have already begun this work, leveraging a growing set of solutions such as Workday’s Talent Marketplace for internal mobility and Skills Cloud ontology, which enables employers to support workers’ skills-based journeys over time.
3. Build a STARs-inclusive culture. Building a labor market that works for STARs will take a cultural shift as well as a strategic one. The idea of STARs should not be limited to a term used in research contexts. It’s incumbent on employers themselves (not to mention advocates, journalists and policymakers) to help employees understand the range and scope of STARs themselves (who represent more than half of the U.S. workforce), as well as the extent of their skills and potential in the labor market. That must include explicit—and urgent—efforts to build a culture of belonging that enables STARs to thrive now; that sense of recognition, engagement and support is an inseparable part of any effort to help STARs advance in their careers.
Creating space for STARs belonging aligns strongly with DEIB initiatives and when fueled with the skills-focused STARs narrative, has the potential to power widespread DEIB impact. Organizations such as Grads of Life have developed significant track records in supporting companies on this journey. The first simple step is to begin talking about STARs. If more companies feature the stories of STARs and their skills, and champion hiring managers who lead or develop programs seeking STARs, these initiatives will be recognized for the strategic priority they are and will begin turn the tide at your organization around a faulty narrative that has plagued STARs—and indeed American society—for years.
What’s Next? Building a Better Labor Market Together
Companies have overlooked millions of skilled workers and built pointless barriers while opportunity gaps have widened to chasms. These trends are not forces of nature beyond our control. They are the sum of institutional and individual choices, choosing exclusionary “default” modes over a more inclusive consideration of skills, no matter where a worker has developed them.
A four-year degree is and always will be an important pathway to obtaining skills and accessing higher paying work. However, it cannot be the only pathway since the majority of the workforce develops in-demand skills through many routes outside a university setting.
As the country navigates the road to economic recovery, now is our opportunity to build a world of work that truly values the skills of all workers and is more equitable than the one we had before the pandemic. Fortunately, we don’t have to do it alone.
In fact, an ever-larger ecosystem of organizations is beginning to highlight promising solutions, scale effective training and hiring models, and support employers on their journey to integrate STARs. Nonprofit coalitions like OneTen have partnered with employers to prioritize expanding career opportunities for Black STARs. In late 2020, the Business Roundtable launched an initiative explicitly focused on “[reforming] companies’ hiring and talent management practices to emphasize the value of skills, rather than just degrees, and to improve equity, diversity and workplace culture.”
Opportunity@Work’s research points the path forward for employers to recognize the potential of STARs and to reimagine their hiring, training and recruiting practices. It’s incumbent upon all of us—business leaders, researchers and policymakers—to begin the hard work of translating these findings into action.
A labor market that works for STARs is one that works for everyone. We can build a more resilient, adaptive, diverse and skilled country together, on purpose. That work starts with the actions of individual talent leaders and hiring managers—those who are ready to act more expansively to source and advance workers with the skills they are looking for.
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