Politics & Policy

Apple, Google, et al. Strike a Blow against the College Cartel

Job seekers at TechFair in Los Angeles, Calif., March 8, 2018. (Monica Almeida/Reuters)
Some of America’s biggest companies have stopped requiring college degrees for many entry- and mid-level jobs. Here’s hoping others follow suit.

Earlier this month, the job-search site Glassdoor compiled a list of 15 major companies that no longer require applicants for certain posts to have a college degree. The list included an array of entry- and mid-level jobs —everything from barista to “Apple Genius” to “senior manager of finance” — at such corporate giants as Apple, Google, Bank of America, Penguin Random House, Home Depot, Costco, Whole Foods, and Starbucks. Glassdoor lauded these firms for opening new pathways to success and recognizing “that book smarts don’t necessarily equal strong work ethic, grit and talent.” CNBC and Axios provided similar, approving coverage.

This is a praiseworthy development, to be sure. But it should also raise an obvious question: Why were firms requiring college degrees for such jobs in the first place? Is there good reason to believe that having a B.A. in sociology or women’s studies makes one more qualified to be a stocker at Costco or shift supervisor at Starbucks?

No, there isn’t.

In fact, there’s clear evidence that over-credentialing is bad for workers and for businesses. A comprehensive 2017 study by researchers at Harvard Business School found that college graduates filling middle-skill positions cost more to employ, have higher turnover rates, tend to be less engaged, and are no more productive than high-school graduates doing the same job. The long-term consequences of degree inflation look to be even worse, as employers continue to pay a premium for a college-educated workforce even when filling positions that non-credentialed workers could just as easily do, leading ever more students to incur the costs of pursuing a degree.

Today, thousands of employers use college degrees as a convenient way to screen and hire job applicants, even when postsecondary credentials bear no obvious connection to job duties or performance. In fact, last year’s Harvard study documented increasingdegree inflation,” as employers demand baccalaureate degrees for middle-skill jobs that previously did not require one. They estimated that this phenomenon encompassed 6.2 million jobs across dozens of industries. In fact, 61 percent of employers surveyed admitted to having rejected applicants with the requisite skills and experience simply because they lacked a college degree.

There are multiple factors to blame for degree inflation, but a big one is the unintended consequences of federal anti-discrimination law. Title VII of the Civil Rights Act of 1964 prohibited employers from discriminating against workers or job applicants on the basis of race, color, religion, sex, or national origin. It did, however, allow the use of “professionally developed” ability or employment tests, insofar as they were not “designed, intended or used” to discriminate. In Griggs v. Duke Power Company (1971), the Supreme Court unanimously interpreted this language to mean that when a selection process disproportionately affects minority groups (e.g. has a “disparate impact”) employers must show that any requirements are directly job-related and an accurate predictor of job performance.

Importantly, this “disparate impact” standard, which Congress would codify into law in 1991, applies to any test or selection procedure used for employment decisions, including educational requirements. But while it’s been scrupulously applied to other, non-educational types of employment tests, it hasn’t been tested in the case of the safe-passage papers issued by the college cartel.

Last year, for instance, the Equal Employment Opportunity Commission (EEOC) sued the railroad company CSX Transportation for sex discrimination, because male job applicants passed the company’s physical-fitness tests at a disproportionately higher rate than female applicants. Even though the test was “job-related” (since employees were required to move heavy things on the job) and “consistent with business necessity,” the EEOC still required CSX to adopt “alternative practices that have less adverse impact.” Similarly, if employers use aptitude tests to evaluate job applicants, they must use “professionally” approved tests and justify I.Q. thresholds or risk lawsuits.

College-degree requirements, on the other hand, have largely escaped scrutiny. Indeed, in the public discourse, employment and college degrees are almost inextricably linked: Calls for “college for all” and “college and career readiness” have helped sell the notion that college is essential to landing a lucrative position. Indeed, this zeitgeist almost invites degree inflation: Since everyone knows you go to college to get a good job, it only makes sense that employers would require applicants to have college degrees.

For employers, whatever the real costs, college-degree requirements represent an easy, risk-free way to screen applicants while sidestepping legal culpability. And colleges, of course, reap the outsize benefits of acting as the gatekeepers to employment. It’s an arrangement which allows campus bureaucrats to pull in six-figure salaries while tuition costs soar ever-higher and schools feast on billions in federal student loans and other taxpayer funds.

The big losers here are workers and would-be workers; after all, only a third of U.S. adults have a four-year degree. Requiring a college degree summarily disqualifies non-credentialed workers with relevant skills and experience from the applicant pool. It bars young people from taking entry-level jobs and building the skills and experience that open up new opportunities. And it holds families and would-be workers hostage, forcing them to devote time and money to collecting degrees, whether or not those credentials actually convey much in the way of relevant skills or knowledge.

As we have explained previously, there’s a strong argument that employers who indiscriminately require college degrees are violating federal law. Legality aside, however, the 15 major companies highlighted by Glassdoor show that corporate America can choose to break its addiction to degree inflation. While there are policy changes that could help, businesses have a chance to do well by doing good. They can take the initiative to cultivate new partnerships, expand apprenticeships, charge HR departments with reexamining outdated assumptions, and find ways to move beyond routines that close the door to qualified workers who lack the right piece of paper. Such a shift will be good for employers and for workers. If it’s bad for cash-hungry colleges, well, that’s just a price we’ll have to pay.

— Frederick M. Hess is the director of education-policy studies at the American Enterprise Institute (AEI). Grant Addison is the education-program manager at AEI.

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