Skills, Credentials, and Local Labor Markets

The American labor market has an obsession with the four-year college degree. Over the last two decades, employers have engaged in “degree inflation,” requiring a bachelor’s degree for jobs that previously did not need one, and that still do not require college-level skills to perform.

This creates a “paper ceiling.” Millions of workers—often called STARs (Skilled Through Alternative Routes)—have the actual skills to do the job, gained through community college, military service, or on-the-job experience, but are automatically filtered out by Applicant Tracking Systems (ATS) that require a degree.

This dynamic artificially restricts the labor supply, driving up wages for degree-holders while suppressing wages and blocking mobility for skilled non-degree workers. It also exacerbates racial and economic inequality, as degree attainment is heavily correlated with family wealth.

The structural fix is a shift toward skills-based hiring. This means defining the actual competencies required for a role and assessing candidates on those skills, rather than using a degree as a lazy proxy for competence and soft skills.

Some of the largest employers in the U.S. have begun dropping degree requirements for certain roles, but the practice is not yet systemic. The local workforce system often reinforces the problem by pushing workers toward expensive, long-term degree programs rather than short-term, industry-recognized credentials that actually lead to jobs.

When looking at job postings or local training programs, look at the actual requirements. Are they demanding a degree for a job that only requires specific technical skills? If you are an employer, audit your hiring process to see if you are accidentally filtering out your best candidates. If you are a worker, look for companies that explicitly state “skills-based hiring” or “degree not required.”