In the past few years, many major employers have dropped college-degree requirements for jobs, looking instead for experience, skills, and potential.
This has been a positive change for people who, despite being qualified, have been locked out of jobs by what is sometimes known as “the paper ceiling”—the widespread restriction of jobs to degree-holders, which can lower workforce diversity and deepen inequality.
Recent relaxation of degree requirements may signal a bigger cultural shift. We may be approaching a point where employers can verify skills rather than relying on an imperfect proxy: degrees.
But so far, credentialing systems have restricted paths forward. Historically, degrees have dominated the credential market, but now alternative credentials are flourishing. In 2020 there were as many as 960,000 credentials—including degrees, badges, certificates, certifications, licenses, and apprenticeships—offered in the U.S. alone. And these credentials nearly tripled between 2018 and 2020.
Yet emerging credentials haven’t fulfilled the once widespread expectation that they could revolutionize education for a skills-based world. Moreover, people who learn skills at work often earn no credentials at all, narrowing their paths to job opportunities and career advancement.
Credential systems still need to overcome some long-standing challenges if they are to match the right people with the right jobs. In the end, people need credentials that make skills visible, and employers need trustworthy credentials that detail work-relevant skills.
To realize the vision of skills-based hiring, researchers are converging on solutions. Soon, it could become easier for people to attain portable, recognized credentials that will make it easier for people to connect with jobs.
The main problem with current credentials? Lack of transparency.
The most common complaint about credentials is that they don’t prove actual competence. Some credentials are awarded only to people who show they can perform at task well, but they can be awarded merely for passing written exams or for attending class too—assessments that might show book knowledge and broad comprehension, but not ability. Assessment methods are uneven, and most credentials don’t say whether someone has proven what they can do.
Employers often use college degrees to assess whether a candidate has broad human skills—like critical thinking, persistence, or communication abilities—but employers often say that degrees tell them too little, especially about specific technical skills needed for a job. Awarding credentials for competence rather than book learning or classroom hours can go a long way to improving labor market transparency.
Alternative credentials—badges, course certificates, industry certifications—offer more granular detail, but a lack of standardization, in various forms, has prevented their widespread adoption.
Most efforts to reform credentialing systems have focused on improving standards for alternative credentials and on incorporating them into degree programs as “stackable credentials”—credentials that students earn for demonstrating specific competencies on the way to a degree; once a student acquires enough of the right credentials, the college or university awards them a degree.
Both solutions can facilitate skills-based hiring, by, in theory, making skills more visible. But these solutions have been snarled up mainly by a lack of coordination and agreement among stakeholders about what would make credentials more transparent.
“Credentials don’t provide the right information for people who need to evaluate and compare them,” writes Kelsey Berkowitz, a former Senior Policy Advisor at Third Way, a bipartisan think tank. “That’s because there is no common way to describe and understand the DNA of any given credential.”
A common language for credentials is lacking.
That credentials lack a common language has been highlighted too in a recent report from the Digital Credentials Consortium (DCC) of MIT Open Learning. But the report’s authors, led by Anthony F. Camilleri, point out that, even if they aren’t used, standards for describing competencies and skills already exist. The report names the Comprehensive Learner Record (CLR) and Credential Transparency Description Language (CTDL).
These standards, however, have not met commercial needs, according to the report. They “are written primarily by educational stakeholders, which is reflected in standard design, as well as in naming and marketing,” reads the DCC report. “It’s telling that none of the major standards actually mention ‘employment’ in their naming.”
The DCC report adds that academic credentials tend to contain information employers don’t need, like “student and course codes, assessment weighting information, [and] credit transfer information.”
Even though these standards ostensibly create, in Berkowitz words, a “common way to describe and understand the DNA of any given credential,” they are not used that way in practice. Which means there still is no common language for credentials.
Toward common languages and standards for credentials.
Credentials will need to be standardized in two ways. First, we need competence standards. We need a common language shared by employers and educators for naming, describing, and measuring competence. Second, we need technical standards for the credentials themselves. Such standards would address how credentials can be stored and shared digitally and what data fields a credential must contain so the recipient can evaluate the credential.
Regarding competence standards, both Berkowitz and the DCC report highlight work by the T3 Innovation Network, a collaboration between the U.S. Chamber of Commerce and the Lumina Foundation, as a potential model for credential standardization. According to both sources, the T3 Innovation Network has included all stakeholders from the credential ecosystem and has offered a framework to, as Berkowitz puts it, “harmonize data standards so different competency languages can be interoperable.”
The DCC report breaks technical standards into two parts, which they call the envelope and the content.
“The envelope contains the information required to package and secure the content,” write Camilleri and coauthors. “The content contains the actual claims being made about the user [i.e., credential holder].”
The DCC notes that these technical standards are approaching an advanced stage of development. They highlight a form of digital credential called “Verifiable Credentials,” which are “issued according to the W3C Verifiable Credentials Recommendation.” These recommendations are used to ensure the security and interoperability of digital credentials.
Whatever standard is used, the DCC urges educational institutions to “prioritize the use of widely accepted standards and avoid credential silos.” Yet, the DCC report also states that “many” panelists, who were interviewed for the report and hailed from both industry and education, “argue that the market can support the coexistence of different credential standards.” Against the panelists’ belief in plurality, the report’s authors warn that too many credential standards risk “further fragmentation of the space.”
While the DCC and Berkowitz highlight general problems with credentials, specific industries may have their own credentialing problems and needs.
MassBridge, a collaborative project with MIT to develop a state-based training model for manufacturing technicians, has found that manufacturers also have not developed consistent credential standards across the industry, though standards exist.
In U.S. manufacturing, “there are many competing systems” for credentials, writes GOI founder George Westerman and coauthors in a report for MassBridge. “The result is that many employers simply do not use them in hiring.” Still, the report finds that colleges and training institutes should “embed” industry-recognized credentials—such as those developed by non-profits like SACA, NOCTI, AWS and NIMS—into academic certificates.
To establish standards, experts in credentialing usually call for more collaboration among stakeholders—including employers, schools, government agencies, credentialing organizations, and providers of digital human-resource technologies. Collaboration too must be ongoing, especially in fields that are innovating fast, to ensure credentials remain relevant amid change.
Challenges beyond standards.
While setting standards that make skills transparent may be the most pressing challenge, the credentialing system faces other difficulties too.
Foremost among them is that employers often do not award credentials to employees who learn skills at work. Employer-awarded credentials could make employees’ skills visible, benefiting employees and employers alike. Employees could show qualifications, while employers would enjoy an expanded applicant pool of qualified candidates for jobs where skills-based hiring is used.
Digital credentials have been especially attractive. MIT’s DCC has developed the Learner Credential Wallet, an open-source app that allows people to store and share their credentials digitally. But so far, the DCC acknowledges, “few other institutions and providers … issue the verifiable credentials supported by the Learner Credential Wallet.” Adoption of a standard credential wallet is an ongoing challenge.
Most human-resource management systems, or HRMS, may not have the ability to recognize alternative credentials. For example, a report by the Society for Human Resource Management (SHRM) found that 45% of surveyed HR professionals use automated prescreening of resumes, but of that 45%, only 32% said their automated system detects alternative credentials. This suggests that such systems may need to be updated to recognize the range of credentials that are issued today, or risk letting good candidates slip through the cracks.
To make any change, stakeholders will need motivation. The DCC report by Camilleri and coauthors suggests studies on the financial benefits that digital credentials could provide. They anticipate that studies will prove that digital credentials, by improving hiring accuracy and reducing fraud, will lower costs.
Alternative credentials “are popular with job seekers who are often excluded from the talent market,” reads an SHRM report. Recognizing these credentials “enables companies to access diverse talent that may not have had the access, opportunity or time to build skills in traditional ways.”