The Intersection of Higher Ed and Hiring: Q&A with Sean Gallagher

Dr Sean Gallagher is the Chief Strategy Officer for Northeastern University's Global Network. Sean's first book, "The Future of University Credentials: New Developments at the Intersection of Higher Education and Hiring," was published in 2016.

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KH: If you publish a book in 2016 that deals with the relationship between higher ed and hiring, I would imagine that you find yourself invariably wading into the headline that’s been bouncing around for the past couple of years: that higher ed is no longer the great return on the investment it was once - at least in terms of employability. What does the research tell us?

SG: On average, college is absolutely worth the investment. In fact, of any investment one can make, it has one of the highest rates of return - incidentally that’s even more true in today’s low–rate world. Yet it’s key to remember any calculation of “return" depends on the inputs – and it matters tremendously what you study, which school you earn a credential from, and how much you spend or borrow. Historically I don’t think students, families, politicians, etc. thought critically enough about that, because the train that is our existing system just keeps moving. What people have increasingly been asking is, are we reaching a breaking point. There are certainly hundreds of mediocre institutions and programs out there, many of them charging too much, and it’s appropriate to get serious about outcomes and costs. But on the whole, the economic data – tens of millions of data points, too – is irrefutable. Employers continue to demand and hire more people with college degrees, and they pay them substantially higher wages. 

At the core of my research is interviewing actual employers. Given the headlines that have dominated the higher education media – and even the global business media – you would think employers would say that degrees are useless, that they’re doing away with them in hiring, investing in microcredentials, and only hiring from coding bootcamps. Indeed, degrees are not perfect and are not always the answer, and there’s plenty of inequity in how our system, our marketplace works – but it’s the very rare employer that is not demanding more college graduates, escalating its hiring requirements, or trying to skill up its existing workforce. 

KH: That sounds about right. But at the same time, the nature of work is undergoing substantial modifications. And education has always followed the demands of labour, albeit imperfectly. 

SG: We’re at an inflection point in a structural economic evolution and a series of fundamental changes in society that have been playing out over many decades. I’ll focus on the U.S., but it’s a similar situation worldwide. 30 or 40 years ago, you could earn middle-class wages and live a fairly comfortable life with only a high school diploma. That was in a more production-focused economy. Beginning in the 1980s and then accelerating in the 1990s, economic growth became dominated by knowledge work. That requires – or at least favors – higher levels of education. Bachelor’s degrees grew to become the ticket to the middle-class workforce. Economists such as David Autor at MIT and others have shown that the workforce has become highly polarized. The better educated are pulling ahead, while those without college education – and especially completed credentials - are falling behind. We can also see this in the polarization in our political dialogues, and the discussion about income inequality and if capitalism is working. Meanwhile, the cost of higher education has risen, and borrowing to fund it has certainly gone up dramatically – and this elevates the scrutiny on is the return worth the investmen

I think some of the crispest work that’s been done on this recently is by economists at the Federal Reserve Bank of New York, Jaison Abel and Richard Dietz (see Do the Benefits of College Still Outweigh the Costs? andAre Recent College Graduates Finding Good Jobs?). What’s interesting is I’ve seen one their statistics cited constantly as evidence that there’s a crisis in terms of higher education and how it relates to the job market: that 44% of recent college graduates are “underemployed,” - that is, working in jobs that do not “require” a college degree. That’s not a good statistic, but they show that rate is fairly typical for the historical pattern; spiked due to recent recession; and is, in fact, lower than the rate after the 1990 recession. Yet, the underemployment rate has indeed been rising since around 2000. That’s also when the “college wage premium” flattened out: the wage premium that you earn by completing a degree is right at historical highs, but it’s no longer moving upward like it did in the ‘80s. Interestingly, the premium for advanced degrees has grown - but it’s stayed flat for the bachelor’s. So we’re in a situation where a bachelor’s degree is no longer about “getting ahead” and instead it is many times the price of admission to the professional workforce.

KH: Assessment of learners and learning is one of the connecting points between higher ed and labour. During the last couple of years, we’ve seen a dramatic climb in the interest of higher ed in competency-based education. If it’s taken seriously, CBE could provide employers and other gatekeepers with a far more detailed and comprehensive picture of a person’s abilities. But is this the kind of information that employers want? Are they in a position to make use of it?

SG: The marketplace is definitely trending toward more transparent documentation of learning outcomes and graduates being able to digitally present employers with their skills and capabilities. This is a dominant theme that cuts across many segments of the market and institution types - everything from online microcredentials offered by non-institutional providers, to the traditional undergraduate experience, and professional master’s programs from elite universities. “Badges” for example can be thought about as more micro-level illustrations of the competencies gained in a program – a complement to rather than a substitute for a degree.

I like to think of competency-based education in its simplest sense, as a philosophy in which the educational outcomes are purposefully aligned with specific skills and competencies. For many, the word “competencies” evokes the vocational and technical skills, and thus it gets dismissed it certain circles, but competencies can be things like problem-solving or critical thinking and analysis. CBE has great promise – but employers still don’t fully understand it: there needs to be more “customer education” from higher education institutions in that sense. In 2015, Parthenon–EY did a survey of nearly 500 hiring managers and found that only 9% of employers had a strong understanding of what competency–based education was.

Meanwhile, employers themselves are still moving toward competency-based hiring – that’s a prominent trend that HR leaders are talking about in 2016, and it is increasingly being enabled by technology. Often within employers, job descriptions and goals are not well designed or thoughtful and consistent, and many hiring decisions are still made based on instinct in notions like cultural fit. For competency-based education in all its variants to reach its full potential as a higher resolution signal in hiring, the employer side of the equation needs to have its job definitions and ability to analyze hiring trends in order.

There are many new exciting firms, technologies, and experiments related to things like e-portfolios and extended transcripts – ways to document learning in greater detail and present it to the outside world – but employers are not necessarily ready to integrate more information into their hiring systems, and transcripts and grades aren’t especially meaningful to most. This is where investor Ryan Craig’s notion of “competency marketplaces” like LinkedIn are truly disruptive and bear monitoring – you have central repositories developing that bridge professional work and experience, and learning outcomes and credentials. In general, there needs to be more connectivity and integration between the “data” produced on the educational side and the data input into employers’ hiring systems. Cloud computing and our data-rich society will increasingly enable this. If certain platforms gain traction and become dominant, things can change quickly.

Keith Hampson