A new report by the Philadelphia Federal Reserve seeks to explain how changes in labor demand will impact workers without college degrees. The report focuses on the periods immediately preceding and following the pandemic. While it’s not clear that the pandemic caused these changes in the labor market, the report raises questions the need for college degrees.
According to the report, about 75% of workers who lost their jobs in the first months of the pandemic did not have bachelor’s degrees. The dividing line for employers is clearly a bachelor’s degree. A four-year degree appears to have a protective effect against unemployment. The corollary is lower levels of educational attainment don’t. Workers with bachelor’s degrees may be more prepared to work from home long-term. That is, a common physical workplace is not central to job performance.
The report also notes that in periods of labor oversupply, employers use educational attainment as a gatekeeping tool. When labor is plentiful, employers may only consider applicants with a 4-year college degree. This overstatement of the requirements of a position may help to explain the low unemployment among workers with bachelor’s degrees during the first months of the pandemic. For these workers, the workplace may have been more central to work performance. This is a key characteristic of workers with lower educational attainment.
Fewer opportunity jobs require college degrees
Beginning in April 2020, the number of unemployed workers with less than a bachelor’s degree began to decline. At this point, the labor market started to absorb workers with lower levels of educational attainment. Between October 2020 and December 2020, unemployment among these workers rose again as a second wave of coronavirus cases hit. (This period was also prior to the approval of COVID-19 vaccines.) Between December 2020 and June 2021, the workforce absorbed workers with low educational attainment faster than it absorbed more educated workers.
Another interesting thing occurred. The Philadelphia Federal Reserve looked at what it terms “opportunity jobs.” An opportunity job is one whose wages maintain a middle class lifestyle but do not require a bachelor’s degree. Prior to the pandemic, the Philadelphia Fed identified 700,000 opportunity jobs. According to the post-pandemic job descriptions the Philadelphia Fed examined, they included more than 2.3M new opportunity jobs.
The report author speculates that some of the jobs that disappeared in the opening months of the pandemic will never return. Those jobs are likely low-wage jobs in service and hospitality industries. Last week, the National Restaurant Association released the results of a member survey. It showed that more than 100,000 restaurants have closed permanently since the pandemic began. Nearly 40% of restaurants currently operating say they will need to close their doors within 6 months without federal aid. Further, about 3 million restaurant workers have disappeared from restaurant payrolls. While some of these may be workers whose employers will never re-open, others may be workers who have abandoned the hospitality industry for better opportunities.
Retooling academic program will add value universally
That may explain the emergence of millions of new opportunity jobs. Beginning in the third quarter of 2020, the educational attainment employers required to fill an open position dropped sharply. While it rose slightly in subsequent quarters, required educational attainment is nowhere near where it was prior to the pandemic.
Lower educational attainment requirements don’t help community colleges. In fact, they have the opposite effect. Also working against community colleges is the increase in the on-the-job training that many employers are willing to provide for hires that lack the experience needed to perform specific work. These two factors may combine to reduce enrollments at the community college level. After all, if an employer is willing to hire and train their own workers, why should someone enroll in community college courses?
If lowered educational requirements in the workforce are more than a temporary accommodation for the pandemic, lower enrollments at community colleges will be the norm. That’s the best possible reason to prioritize the development of academic programs to pump workers into high-wage, high demand industries. It’s also another reason to dump academic programs that lead to low-wage work. Employers are already dumping educational requirements for these positions. There’s not much reason to continue programs designed to support them.)
The only way the community college will survive is by developing programs to support high wage, high demand jobs. Eliminating the overlap between opportunity jobs in the workforce and low-value college degrees at the community college will better align our community resources and needs.
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