Why I Find Entry-Level Job Requirements Stupid

July 4, 2024 (3 weeks ago)

Introduction

Picture yourself on the hunt for a new job. After scrolling through numerous job postings, you finally land on one that seems to be a perfect fit. That’s until you see the required years of experience, necessary certifications, and a host of skills you need to be proficient in.

In 2023, 42% of employees felt they were excluded from job opportunities due to a lack of formal qualifications or experience. Lacking enough of the right experience, skills, credentials and or education ranked second among the biggest barriers for job seekers in 2022.

The job market today is definitely tougher than the job market we’ve seen over the last couple of years. Many job seekers don’t know what they’re qualified for and feel that they’re unqualified for jobs even that, on paper, look like a good fit. Meanwhile, companies say they are putting skills first. There has been a shift over the past few years towards skills-based hiring, with employers far more concerned about employees experience and skills than even their degrees.

46% of companies plan to increase their hiring in the first half of 2024, because their current employees lack the required skills. 79% of workers in hiring managers said that skills, experience, and past accomplishments are more valuable than credentials and education.

I think right now we see businesses working together and trying to identify what are the skills that are really necessary to do the jobs for which they’re hiring today, and to be able to predict the jobs that they will be hiring for in the coming months and years. So why are job requirements becoming more demanding, and what implications does it have for both job seekers and the economy as a whole?

Inflated requirements

The US labor market has cooled in recent months because overall economic activity has cooled. We had a big bout of inflation and the fed raised interest rates to slow down the economy to allow supply to catch up. As a result, the labor market has slowed down as well.

Hiring rates in the US have dipped to 3.5% in March 2024, following heights during and after the pandemic. Total job postings declined more than 15% at the end of 2023 compared to the year prior. There was one open job for every active applicant on LinkedIn in 2022. By the following year, that ratio turned to one job for every two active applicants. When there are more candidates on the market looking for jobs and less jobs out there, the job market becomes more competitive for job seekers.

But for employers, that means they get their pick of talent. If a job says that it requires no experience, but 100 people apply and many of them do have experience, well, of course the employer is going to take the person with the most experience. We also are in a high interest rate environment where companies have less access to capital, and so they’re less prepared to take a risk. They’re only hiring where needed for sure bet jobs, and they’re not being that experimental anymore. There’s another reason why. And that is about the hiring process per se, which has changed.

Employers increasingly got rid of recruiters. 2023 saw a sharp decline in online job postings for job recruiters with several prominent companies like Google, Apple and Amazon laying off a significant number of recruiters and employees in the HR department. The recruiters were the kind of professional people who understood the job market, understood jobs, and would go to the line managers and say, hey, this job doesn’t need five years experience.

With those people gone, there’s no real pushback on hiring requirements that line managers who really aren’t experts on this stuff, they might ask their team, what do you think you need to do this job and say, well, it’ll be nice to have a master’s degree. Well, somebody who has five years experience, that would be great, too. And so the requirements inflate and then they can’t find anybody to fill the job. And they say, oh, there’s this skills gap. There’s a problem in the labor force. And they don’t raise the wages either, right? So you’re trying to fill the same job at the same pay. But now you’re requiring more background, more experience, more years of education. Guess what? Hard to do.

Entry-level jobs

As companies grow more selective, 54% of recruiters said quality of hire will be their top priority for 2024 through 2029. 83% of chief human resource officers said their hiring talent with specialized skills, while hiring fewer new employees than they did a year ago. What we’re seeing on LinkedIn is that for employers, skills are becoming a priority. 73% of recruiters say that that is a priority when they’re trying to source candidates.

They want to know what skills they have, what they can actually do. What employers want is evidence that you can actually do the work. The other thing is they want somebody who’s done exactly that job before and not something that looks quite similar. Hiring for entry-level and less specialized positions dropped from 79% in 2022 to just 61%. Typically, when the labor market slows, entry level workers are hit a bit harder than overall workers. We don’t have real entry-level jobs hardly at all. Every employer wants to hire somebody who’s already worked someplace else.

Entry-level jobs only account for 2.5% of all the jobs posted on ZipRecruiter as of the end of April 2024, and just 1.9% of all jobs available today say they do not require experience at all. Over a third of employers refrain from hiring recent Gen Z college graduates in favor of older employees, with more than half saying recent college graduates are unprepared for the workforce. A survey also found that more than half of Americans who graduated from a two year or four year college did not apply for an entry-level position because they felt unqualified.

Many entry-level job seekers find themselves in a catch 22. In order to get experience, you’d need a job, but in order to get that first job, you need experience, and that is a very challenging position to find yourself in.

Upskilling

57% of general job seekers between 2020 and 2022 also said that a lack of skills or training prevented them from applying for a job they wanted. 84% of unemployed workers said they are interested in more opportunities to learn more skills. The United States does not have a robust system that enables us to support the kind of upskilling and training that workers need throughout their career in order to advance. Federal government spends very little and has little control over education and on training, too. There are some pretty big training programs the federal government pays for, but it’s not really where the action is. It’s state and local governments.

And those have been squeezed. And in many states they’re squeezing everything down. You know, less and less spending. OECD countries, on average, spent 0.11% of their GDP on training their workers in 2021. In comparison, the US spent only 0.03% of their GDP on job training. One of the reasons we may not see as much on the job training in the US as we see in other countries, is that we rely on the private sector to do a lot of our training. Employers have largely given up on training, particularly compared to where they were 30 or 40 years ago. They’re not developing talent internally. They’re looking outside to hire people rather than to promote them from within. And there’s a good reason for that. Our labor market in the United States is very, very, very flexible.

You can pour a lot of money into an employee as an employer, only to see them leave after two months or three months. And so there are disincentives in our labor market for employers to make big investments in workers, especially after the great resignation when so many people were switching jobs very quickly. There’s also a huge mismatch between the skills employees have and the skills employers are looking for. So I think we have a huge skills mismatch problem in the United States with lots and lots and lots of people studying subjects for which there aren’t that many job opportunities and very, very few people getting the skills in trades and industries where they’re in very, very high demand.

Right now, there are more people that have four year degrees than there are jobs for which businesses are hiring with that requirement. At the same time, there’s too few people who have been able to access the kind of training or skills programs that enable them to get jobs that require more education than a high school diploma and less education than a four year degree. Believe it or not, it’s a lot harder to become one of those skilled trades than you would think. The union training programs are great, but they’re smaller proportion of the economy by a lot than they used to be. So if you want to become a welder in many places, the community colleges are your maybe only choice.

And that becomes like a two year degree program. Community colleges, don’t, we think, cost that much, but if you don’t have the money to pay for it, it’s a burden. Jobs that require skills training are really the backbone of the economy. We saw this during the pandemic. We see it today still with transportation and the supply chain. And the businesses that hire these workers are creating jobs in our community and are really growing local economies.

It could cost the US as much as $975 billion by 2028, if upskilling doesn’t catch up with the demand in the workplace. In order to keep having rising standards of living in the US, we need to do two things: we need to be productive, and we need to maintain our competitive edge in the global economy. In order to do that, it’s important for workers to upskill and be able to adopt all the new technologies that are available in order to help us stay competitive and be productive.

Skills-based hiring

Despite the challenges in upskilling, more employers are turning towards skills-based hiring. A study from 2023 found that more than half of employers use pre-employment assessments to test their job applicants’ skills, knowledge and abilities, with 79% of HR professionals saying those scores are just as important, if not more important, than traditional hiring tools like resumes and interviews. Skills based hiring is when employers consider candidates based on what they can do, and not necessarily their pedigree or degree credentials.

The idea is simply, could we go back to just figure out what skills you need and then see whether people are actually have those skills and hire for the skills? The biggest impact can be seen in the rise of jobs that require no degrees. Major companies like Walmart and IBM have publicly announced their intention to hire more workers without a degree. In January 2024, 52% of US job postings on Indeed did not mention any formal education requirement, up from 48% in 2019.

The share of US job postings requiring 2 or 4 year degrees fell from 20.4% to 17.8% from 2019 to 2024. For reference, just 46.6% of Americans have an associate’s, bachelor’s, graduate, or professional degree as of 2022. We’re seeing businesses removing degree requirements in a hope of expanding the pool of workers from which they can hire. Skills-based hiring has shown to be effective in reducing mis hires, as well as cost and time to hire, while increasing employee retention by 89%. 86% of candidates also said that skills-based hiring helped them secure their dream job.

But whether it actually makes a long-lasting impact is up to debate. A study from 2024 found that only 37% of companies that had increased their share of workers hired without a BA degree by nearly 20% made lasting changes to their hiring. In 2023, skills-based hiring provided new opportunities for less than 1 in 700 hires. It takes time for a culture shift like that to funnel through the organization to every single hiring manager, so the top of an organization may choose one thing, but the actual hiring manager and interviewers and recruiters may still be doing something different. Experts say solving the issue of upskilling in the US requires the role of policy.

It should be a public policy concern because we have lots of young people who are skilled and ambitious and want to do things and can’t crack that ceiling. And we have employers who, frankly, are making mistakes. They’re just churning through people at sort of lower-level jobs rather than trying to get somebody and develop them and hang on to them for a little bit.

And they don’t need to be huge economic shifts in how we’re spending dollars. It needs to be relatively small investments that help companies come together and have conversations about how folks within one metro area, or one rural part of a state, are going to be training and developing the kind of workers that they need. For current job seekers, there are several ways to prepare their applications to better suit the needs of current employers. I think the advice on this is not new, and the advice is what employers want to see is, have you done this work before? Right?

And so that means can I find any situation where I can do this work, even if I’m volunteering someplace or getting an internship that looks exactly like the kind of work I want to do. And if I can do that, my odds on being able to get a job are just much better. Increasingly, there are lots and lots of cheap, affordable, convenient, accessible online training programs, many of which have a large practical component.

There are also freelancer platforms where you can get experience doing certain jobs. You can often get jobs just by being the cheapest candidate, and sometimes it’s worthwhile doing that to build up that experience and get good reviews. So don’t feel out of hope. There are ways to gain skills, credentials, and experience that can be affordable and convenient.

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