The Regional Job Credentials Gap

More and more employers are demanding college degrees -- but not all are created equal.
by | June 2016
Workers leave a steel mill outside Pittsburgh. (AP/Charles P. Saus)

Few American cities have experienced the kind of devastating economic blow Pittsburgh incurred when the steel industry collapsed in the 1980s. Tens of thousands of workers left town as the mills shuttered, and the city lost nearly a third of its population over the following two decades.

Today, the hollowing out of the workforce has left the region with a relatively small number of experienced older workers. Those just starting out are finding ample opportunities, but they need new sets of skills to land jobs in the Steel City.

Over the past 30 years, more jobs in Pittsburgh industries have come to require a postsecondary education. At the same time, one’s field of study is increasingly important in determining job prospects. This turns out to be true not just in Pittsburgh but in many places around the country that are seeking to retool their economies. The pace of the shift, though, varies greatly from region to region.

Nationally, the proportion of college-educated workers keeps going up. About a third of Americans age 25 and older have completed four or more years of college, up from only one-fifth in the late 1980s and 11 percent in 1970, according to U.S. Census Bureau estimates.

But while the attainment of a four-year degree is commonly held up as the most important predictor of future success, it isn’t always what best distinguishes higher income earners from everyone else. Anthony Carnevale, who directs the Georgetown University Center on Education and the Workforce, prefers to draw a line between those with a postsecondary education in better-paying subjects and those without one. “It’s getting to be more about your field of study and less about your education level,” he says. A bachelor’s degree doesn’t always guarantee a well-paying job in some fields.

Regional differences in education requirements are vast. A review of 2015 occupational employment data and Census estimates of educational attainment for each occupation sugests that smaller metro areas aligned with manufacturing or tourism in the Sun Belt and Midwest tend to have the fewest jobs needing postsecondary education. By comparison, jobs in tech-heavy areas such as North Carolina’s Research Triangle; San Jose, Calif.; or metropolitan Washington, D.C., are up to twice as likely to require at least a bachelor’s degree.

After recovering from the collapse of the steel industry, the Pittsburgh region has increasingly become a magnet for emerging industries. General Electric Co. recently opened up a new center incorporating 3-D manufacturing techniques, while Pittsburgh-based Aquion Energy has developed new battery technology.

Laura Fisher, who heads workforce development efforts at the Allegheny Conference on Community Development, says the core skillset required for many of today’s jobs spans multiple industries. Nearly 60 percent of open jobs in the Pittsburgh area have some information technology component. Even employees working on drilling rigs -- a job that once relied more on physical strength -- now must operate computers.

Every area has its share of “eds and meds” -- higher education and health-care jobs that tend to pay good wages. But the key defining characteristic often is whether regional economies also feature STEM, or educational opportunities in science, technology, engineering and mathematics. “Generally, everybody is chasing the same type of economies,” Carnevale says. “It’s this sort of Massachusetts, D.C., Northern California mix that they’re all trying to attain.”

When there’s a mismatch of jobs and education, the consequences can be detrimental for a region. Areas lose population and risk a “brain drain” of college graduates. “If you don’t have the workforce, you certainly won’t get the industry,” Carnevale says. “If you don’t have the industry, you don’t need the workforce. It’s a race to the bottom.”

As one would expect, regions with more stringent education requirements pay the best wages. Federal data indicates the San Jose and Washington, D.C., metro areas report the highest median wages, while smaller metro areas in Texas with a low cost of living pay the lowest area median wages in the country. A few outliers exist, such as Odessa, Texas, and other areas with large energy sectors or military bases.

While workers with bachelor’s degrees have always earned more than high school graduates, data compiled by the Federal Reserve Bank of New York suggests the wage gap has widened further in recent years. Last year, workers with bachelor’s degrees earned median wages about $18,000 higher than high school graduates of the same age.

Of course, all regions welcome high-paying jobs. But also failing to provide adequate opportunities for those without a college degree leaves whole segments of the workforce behind. So regions generally target more of a mix, particularly middle-skill jobs for workers such as electricians and truck drivers that pay well and don’t require four-year degrees, says Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University.

The problem is that these types of jobs are vanishing. A report published by three Federal Reserve banks last year found that jobs paying at or above the national median wage but typically not requiring four years of college dropped by 1.7 million between 2005 and 2014. Meanwhile, the number of better-paying occupations calling for at least a bachelor’s degree climbed by 4 million. Part of this is said to result from “upcredentialing,” or employers seeking college graduates for positions traditionally not requiring four-year degrees. It’s too early to say, though, whether this is only a temporary consequence of the recession or a more permanent shift.

To better align educational offerings with job opportunities, Van Horn recommends that schools maintain a constant dialogue with the business community.  “It doesn’t happen often enough,” he says. “We’ve tended to look at these as two separate worlds that don’t interact on a regular basis.”

It’s especially crucial given that some employers don’t invest much in training and development for new hires.

In the end, students must decide what to study. A handful of states have begun reporting data to make the decision easier, linking academic programs to job prospects and expected earnings. The information, however, isn’t well publicized. North Carolina and several other states have launched online data portals to make the data more readily available, and business leaders at the Allegheny Conference are exploring the option.

“People can still pursue whatever education and training pathway they want,” says Fisher of the Allegheny Conference, “but we want to make sure that they have the information about where the jobs will or won’t be.”

View estimated education requirements and occupational employment data for each metro area.