Although economic fault lines of racial and economic injustice were exposed by COVID-19, their fissures have been laid bare by a long overdue reckoning on race that is challenging employers to move beyond old saws of diversity and inclusion toward the question of what it means to be anti-racist at every level of the enterprise.
With good reason. Even before the pandemic, the job picture for Blacks was bleak. Since 1972, the Black unemployment rate has been double the rate for whites. That gap has narrowed only slightly: The Black unemployment rate still stands at 12.1%, compared to a white unemployment rate of 7%.
The U.S. labor market is, in turn, in the throes of twin disasters. The first is the ongoing health and economic crisis. The second is systemic racism that has led to structural economic inequality, including inflated credential requirements for good jobs and biased corporate hiring practices, both of which have left many Black Americans stuck in low-wage work.
Unfortunately, our solution to the first may actually exacerbate the latter. Because in our haste to get Black Americans “back” to work, we may overlook the potential to create a more inclusive, equitable post-pandemic workforce.
Research suggests that short-term training programs now en vogue among policy elites may not yield the sort of sustainable wage gains that policymakers (and employers) expect. In a series of pre-COVID studies funded by the Institute for Education Sciences, researchers found that wage increases for those with credentials below a bachelor’s degree can be modest and vary by the type of credential.
In some cases, the initial bump in wages from earning a certificate actually decreases over time. It turns out that the overemphasis on short-term credentials to get Black Americans back to work is a shortsighted, temporary solution. For economic equity and justice, we need to make sure that short-term programs complement degrees rather than replace them, and that we increase access to longer-term credentials such as bachelor’s and graduate degrees.
The bar has to be set much higher.
The economic ceiling for Americans who have not completed college stems, in part, from college degree requirements that often slam the door on qualified Black and other minority job applicants. Before the pandemic, education researchers determined that “degree inflation”—requiring a bachelor’s degree for a position that is currently successfully occupied by an employee with a lower-level credential—has an outsize impact on low-income and nonwhite job seekers, who are less likely to have earned a college degree. A 2017 Harvard Business School analysis posited that degree inflation was responsible for as many as 6.2 million workers potentially missing out on job opportunities for which they were qualified.
Sadly, the problem may get worse before it gets better. During periods of economic recovery, when competition for jobs is more intense, employers often default to degree requirements to sort and filter prospective employees.
In fact, during the recovery that followed the last recession, employers actually tightened education requirements. Of the 7.1 million net jobs lost during the economic downturn that followed the financial crisis in 2007, nearly all were occupied by workers holding less than a bachelor’s degree. But only 3.2 million of the jobs added during the recovery went to that population—and the vast majority of those were people with an associate’s degree or at least some college education.
The research is now clear that millions of workers without degrees have the skills to thrive in higher-wage work. This means that—as some companies are starting to realize—employer reliance on bachelor’s degree requirements (and failure to recognize skills built on the job) actually exacerbated inequality during the last decade of economic growth. The middle class shrunk.
Opening doors on the demand side of the workforce ecosystem is necessary, but insufficient. Many jobs legitimately require a bachelor’s degree or even higher, which means eliminating degree inflation and increasing four-year college completion among these traditionally underrepresented groups are complementary, not competing, objectives. Bachelor’s degrees still command a 74% premium in median lifetime wages compared to high school diplomas. That’s the difference between earning $2.3 million and $1.3 million.
Bachelor’s degrees also open the door to graduate and professional school, which increases the wage premium even more. Moreover, workers with bachelor’s degrees are more resilient in economic downturns: The Federal Reserve reported employment had fallen 35% from February to May for workers who were previously in the bottom fourth of wage earners. Higher-wage earners saw employment fall between 5% and 15%.
Reconciling the seemingly paradoxical relationship between college and economic mobility for Black Americans requires that we embrace two opposing concepts simultaneously. It is true that degree requirements are closing the door on talent, but it is also true that too few low-income people and people of color have the requisite credentials for jobs with 401(k)s, paid time off, and the option to work remotely.
For Black Americans, fundamental changes in both hiring practices and bachelor’s degree attainment must be equal partners in an equitable economic recovery. Together, such changes hold the potential to disrupt the systemic and structural barriers to economic opportunity and advancement that are holding Black job seekers back.
Michael Collins is vice president of JFF (Jobs for the Future). He previously served as assistant commissioner for participation and success at the Texas Higher Education Coordinating Board.
