The skills-first revolution is in full swing, as a growing number of states and big companies are dropping degree requirements and trying to hire based on skills.
The shift is about equity and the bottom line. Employers are struggling to retain and hire workers amid rapid technological changes. Policymakers want to boost economic development while opening doors for workers who have long been left behind. And schools and colleges are feeling more pressure to better prepare students for the evolving labor market.
Yet despite all the enthusiasm for skills-based systems, research shows that no progress has been made to increase job opportunities for Americans without college degrees. It’s a chicken-or-the-egg dilemma—moving beyond the four-year degree as a proxy for skills is hard if people can’t otherwise signal to employers what they know and can do. The best ways to do that remain bullet points on a PDF of a résumé and letter grades on a paper transcript.
Many efforts are underway to create the language and technology to capture skills. But that work so far has failed to really move the needle, in part because it’s largely happened in silos. Even the terms for these tools differ depending on who is using them. An educator might talk about a badge or comprehensive learner record while an employer refers to a digital wallet or learner-and-employment record (LER).
We’re nowhere near a world where a worker controls a verifiable, clear record of their skills, and can use this tool as they move between jobs, education, and training. Many experts are dubious this scenario will become a reality in the next decade or two. But ambitious projects to develop data infrastructures around skills are happening now. And the stakes are high.
The Learning Economy Foundation equates this challenge to the development of plumbing standards in the United States. A century ago, widely divergent plumbing practices and often conflicting codes among cities and states drove up construction costs and contributed to public health crises.
The arrival of polyvinyl chloride (PVC) piping revolutionized plumbing, says Taylor Kendall, president of the Learning Economy Foundation. And the technology’s rapid spread helped drive more coordination on plumbing standards.
The development and widespread adoption of some version of a programmable, verifiable credential, or PVC, could contribute to a similar sea change with skills, Kendall says. There is an urgency to make this a reality , thanks to employers feeling the pinch around the skills gaps and the severe enrollment crisis that’s buffeting higher education.
The work to watch most closely, according to many experts, may be efforts by states to create datasets and tools to help people to bridge education and employment. That’s partially because state policymakers see the skills conundrum from multiple angles, which creates bipartisan momentum for change.
“The social imperatives are aligned with the employment imperatives,” says Deborah Everhart, the chief strategy officer at Credential Engine, a nonprofit focused on mapping credentials.
If state agencies develop workable data that can help direct and drive investment in training programs in high-demand fields, the skills-based revolution could live up to the hype.
“We’re in an interesting era,” says Kendall. “The world’s changed a lot.”
Connecting Education and Training with the Labor Market
In the past two years, 12 states have dropped degree requirements for the majority of state government jobs. They’ve been struggling to fill key roles in cyber, IT, and administration—and to expand opportunities for residents in historically low-income ZIP codes. At the same time, K-12 school districts and daycares can’t hire or retain enough teachers, and hospitals, doctor’s offices, and other healthcare providers are desperate for more medical assistants and nurses. In states, like Alabama, where education levels have historically lagged and lots of new employers are moving in, skilled labor shortages are acute across the board.
Virtually every state is grappling with how to improve benefits and employment systems, which were exposed as severely lacking during the pandemic. States struggled to get unemployment money in the hands of millions of newly-laid off workers, and it was almost impossible to get real-time information on market conditions and to target job-search support and training to those who needed it most.
“We cannot afford to wait for the next crisis to improve our systems,” says Robert Asaro-Angelo, commissioner of the N.J. Department of Labor and Workforce Development.
Several states are betting that learning and employment records can be a key piece of the puzzle. They come at it in different ways, but all have made major investments in statewide longitudinal data systems, starting more than 20 years ago and with major grant support from the federal government. Those systems thus far have mostly been used to inform research, policy making, and agency actions—but could serve as the backbone for LERs.
About half the states are participating in Credential Engine’s registry, which aims to create a centralized repository of education credentials and the basic competencies they indicate. New Jersey, for example, is starting to take advantage of the major advances in big data, machine-learning, and AI to make connections between the training programs in the registry and the skills that are in demand in the state’s labor market.
Twenty-eight states have invested a collective $3.8 billion in short-term credentials that are focused on getting workers skills for in-demand jobs. Some of that investment dates back to the early 2000s, but the vast majority has come in the past five years. Louisiana’s M.J. Foster Promise Program, which is designed to target high-need residents, and Virginia’s New Economy Workforce Credential pay-for-performance grant, are standout examples, according to a recent analysis by HCM Strategists.
Minnesota sets the gold standard for tracking outcomes in short-term credentials—a key consideration if states are hoping to use skills data to make recommendations to workers about upskilling and reskilling programs.
Other states, Illinois and Alabama chief among them, have focused heavily on mapping employability skills and the competencies—knowledge, skills, and career-relevant behaviors—that underpin education programs and jobs. Illinois has encouraged colleges to move to competency-based education, which enables people to receive credit for knowledge learned on the job, in fields like early childhood education that face severe worker shortages and also have strict education and licensing requirements.
A few states, including Arkansas, have gone as far as testing out fully functional LERs and marketplaces for skills-based training and job matching.
Yet perhaps no state is further along than Alabama, which has launched a skills marketplace, starting with manufacturing and healthcare industries, and plans to expand to more industries this fall. Its experience is illustrative of the common thread in all these seemingly disparate efforts—connecting data systems, investing in short-term credentials, tracking outcomes, encouraging competency-based education and skills-based hiring. In fact, Gov. Kay Ivey’s mandate is that all of this has to connect.
Alabama is five years into its work, and expects at least four more of sustained work. Having a long-tenured governor and the political will to look beyond easy wins is key, says John Pallasch, a workforce consultant and former assistant secretary at the U.S. Department of Labor.
“It’s not as if the government for the past 200 years hasn’t been doing anything and there is a ton of low-hanging fruit just waiting there,” he says.
To start, Alabama brought together a host of state agencies and regional leadership to identify high-demand, high-pay roles across 16 different industry sectors and to begin breaking them down into core competencies. That ongoing work then informed a push for competency-based education in many college programs, especially in the community college sector. And the competency framework and accompanying data became the basis for the skills-based jobs marketplace that is now live.
As that marketplace grows, learning recommendations will be layered in, along with information on state and federal benefits. The marketplace, for example, plans to incorporate a new tool from the Atlanta Federal Reserve Board that models how wage gains might impact an individual’s eligibility for federal benefits.
In that way, the work reaches across education, labor, commerce, and health and human services.
“Bringing together a cross-sector of Alabama stakeholders to focus with intentionality on braiding their data systems is essential to understanding and responding to the needs of our workforce,” says Chandra Scott, CEO of Alabama Possible. “This is how gaps in services and supports can be identified to ensure a pathway for upward mobility is available to under-resourced students and workers across our state.”
After all, learning and employer records are a discrete tool, requiring investments in data, technology, and governance. But they really aren’t anything more than a digital artifact if the culture, employer practices, and funding and incentive systems around them don’t change. It’s the same way that a college diploma is just a piece of paper—if not for all the ways businesses and society have internalized and codified its meaning over generations.
Focus on Incentives for Colleges
A lot of energy in Texas has focused on changing college incentives. Gov. Greg Abbott just signed off on a new funding formula for community colleges that will for the first time give them regular funds for short-term programs.
Mike Flores, chancellor of Alamo Colleges, says having a dependable source of funding—not a one-time grant or a pilot program—will allow short-term credentials to reach the kind of scale that’s needed to have an impact in the labor market.
“This is a dedicated revenue source that Alamo and the 49 other community colleges within the state can rely on to really upskill our workers within our community,” he told Work Shift.
Even private sector efforts have focused heavily on college incentives. GreenLight Credentials, based in Dallas, was an early entrant into the LER market. When ITT Technical Institutes collapsed in 2016, Dallas College took on the management of many of its student records as part of the wind down. The chancellor at the time went looking for a technical solution that would allow the students to own their records directly, and GreenLight grew out of that effort.
Today, it operates a blockchain solution for 120 school districts and dozens of colleges in the Dallas area and across the state. A main selling point is easier transcripting processes for colleges and 24-hour access for students, says Shrikant Jannu, GreenLight’s chief platform officer.
But colleges increasingly are using it as an enrollment tool—targeting students for admissions offers and scholarships based on the information they’ve shared through their digital wallets, or “lockers.” That could be a major incentive for colleges to welcome LERs, as they look to widen their applicant pool and combat declining enrollment.
“It’s interesting that a school can apply for a student,” says Sheri Thoman, head of digital marketing at GreenLight. “It just flips the whole script.”
Signal in the Noise
A strong consensus among many experts holds that employers are the key to whether a broad shift to skills-based systems happens in the next decade. In a market-based economy, the demand side of the equation is the driver of change.
As it stands, most corporate HR departments are not equipped to collect good data about the skills of jobseekers, or even to accept digital credentials, according to a recent analysis conducted by Northeastern University’s Center for the Future of Higher Education and Talent Strategy. Instead, researchers at the center and 1EdTech found that HR systems still primarily record basic information about degrees and resumes.
“The skills infrastructure and architecture isn’t there yet,” says Sean Gallagher, the center’s executive director.
The top reason HR tech providers say they aren’t doing more to capture digital credentials or structured skills data is that most of their customers aren’t calling for it. Yet this may be changing, slowly. More employers will accept digital credentials and see digital wallets among consumers over the next 5-10 years, predicts an executive at an HR tech firm. “It’ll be a hockey stick adoption curve,” he told researchers from the center. “But we’re on the bottom of the stick right now.”
In the meantime, a growing number of big companies appear to be getting serious about skills as they try to operationalize their pledges to drop degree requirements.
Medtronic, for example, has replaced requirements for bachelor’s degrees with skills across fully half of its IT job roles. The medical device company, which employs 95K workers, has tapped its education benefit program partner, InStride, to help “recredential” or map out the skills for 65 roles across 17 job families, from entry-level to senior roles.
For new hires, this means Medtronic can do skills-based recruiting and hiring. And the skills mapping can help open doors for the company’s frontline workers who are interested in promotions to midlevel roles where degrees may not be necessary. “We’re still early on, with some significant progress,” says Amy Wilson, the company’s director of global talent acquisition programs and employment brand.
Businesses collect plenty of data on jobs and employment, and are required to report much of it to state and federal agencies. Yet that information fails to give a clear picture of what’s going on in the labor market, or about the skills of workers.
The U.S. Chamber of Commerce Foundation has been working for more than five years to find a signal in the noise with better, standardized data. The Foundation’s Jobs and Employment Data Exchange (JEDx) promotes the creation and widespread adoption of standards for jobs and employment records. JEDx includes incentives for businesses to participate voluntarily, in part by making it easier for them to securely organize, share, and report data that’s already required under government regulations.
“Everybody benefits if we can make the labor market more efficient and effective and easier to navigate,” says Jason A. Tyszko, vice president of the Center for Education and Workforce at the U.S. Chamber Foundation.
Some version of skills mapping is crucial for companies to make good on their pledges to diversify and to open doors for more Americans, including those without college degrees. Any attempt to move toward skills-first talent management is a major internal lift for businesses, and lots of organizations are trying to help them do it, says Elyse Rosenblum, managing director and co-founder of Grads of Life, which advises large employers on this work.
“For any of this to get to scale, companies have to understand, is it good for business?” says Rosenblum.
As employers and states develop skills-based infrastructures, some vendors in the LER space are counting on the emergence of a bottom-up data standard—one not developed by a big company or imposed by the federal government—to allow for interoperability across industries and state borders.
Territorium, for example, is banking on the Comprehensive Learner Record Standard from 1EdTech. The standard draws from previous work around open badges, is compatible with the Credential Engine registry, and has been endorsed by the American Association of Collegiate Registrars and Admissions Officers.
“We’re going to build to the standard,” says Jonell Sanchez, who until recently was chief growth officer for Territorium, a skills platform which has had broad success with LERs in Latin America and is seeking to expand in the U.S. He says the solution from 1EdTech may have the best odds of creating an alternative currency for skills “that will have some street cred.”
A more prescriptive set of standards won’t work in this country, Sanchez predicts. And that’s not a bad thing.
“We’re never going to have a national answer,” he says. “It’s going to be different in Minnesota than in Pennsylvania.”