RUTHFULLY YOURS

https://www.tabletmag.com/sections/news/articles/reskilling-america

Should fewer Americans go to college? In 2022, 37.6% of adults without a disability had at least a bachelor’s degree. In 1990 only 20% of the older-than-25 population had a bachelor’s degree, and in 1970 the share was 11%. And yet according to the Strada Institute for the Future of Work, a decade after graduation with four-year degrees 45% of Americans work in jobs that do not require college diplomas. These unfortunate young Americans have wasted four years of their lives and tuition money, and in some cases have incurred sizable student loan debt, in exchange for coursework that is essentially worthless.

What explains the large-scale miscredentialing of the American workforce? The endless greed of tuition-hungry universities is one factor. But the main cause is the insistence of many American employers, including federal, state, and local government, that new hires have college diplomas—even for jobs that are currently filled by workers without four-year degrees.

Like other forms of inflation, degree inflation reduces the inflated unit of currency. Today a worker earning between $40,000 and $60,000 in inflation-adjusted 2022 dollars is as likely to have a bachelor’s degree as a worker in 2006 who earned between $60,000 and $80,000, when there were fewer college graduates as a share of the workforce. According to the Foundation for Research on Equal Opportunity (FREOPP): “Between 1990 and 2021, all occupational categories except one—teachers and librarians—experienced degree inflation, meaning the proportion of prime-age workers with a bachelor’s degree increased.”

There is no reason to believe that receptionists and bank tellers with B.A.s in popular majors like communications or business, to say nothing of gender studies, are more productive and skilled than their non-college-educated predecessors who had high school educations plus on-the-job training. According to a survey of employers by Bloomberg, college diplomas are most often used as a screening device for entry-level job applicants, rather than as evidence that the potential hires have job-relevant skills: “For more than half of employers surveyed (60 percent), a college diploma was seen as a stand-in for work ethic, personal skills and mental capacity, as opposed to the actual skills associated with the job.”

From the employer’s perspective, weeding out job applicants in favor of college graduates on the assumption that at least someone with a B.A. is likely to show up on time and complete assigned tasks may make sense. But wasting four or more years in college at a cost of $100,000 and up is a wildly inefficient way for graduates to prove they are more punctual and harder working than their peers. Worse, using college degrees as a simple sorting mechanism discriminates against the majority of Americans, whether from inner cities or rural areas, whose education ends with high school or some college, for a mix of cultural and economic factors that have no strong relation to either native intellect or the capacity for work discipline.

What if young people could acquire certificates for useful job skills that would encourage employers to waive the four-year-college requirement? For years pundits and policymakers have discussed the need for noncollege pathways to career success, and some firms and government agencies have begun to waive unnecessary college diploma requirements for applicants. The problem is that any attempt to replace four-year degrees with widely recognized skill certificates runs into barbed-wire barriers in the form of existing licensing requirements in many occupations. It is not enough to have a skills certificate, if you must also pass a federal or state licensing exam in order to work.

In their book The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality (2017), Brink Lindsey and Steven M. Teles point out that occupational licensing has risen from covering only about 5% of American workers in the 1950s to 15% in the 1970s to being required for around one in four today. Behind this explosion of occupational licensing requirements is the economic self-interest of practitioners of the licensed trade, who pressure state licensing boards to protect them from competition by making licensing standards artificially high. According to a study by the Obama administration, licensing requirements tend to produce a “wage premium” for licensed workers, ranging from a negligible one in the case of food preparation workers (think McDonald’s) to a percent wage premium of more than 15% for health care support workers and workers in business, finance, and education.

The danger that the artificially inflated incomes may fall with more entrants to the sector motivates occupational cartels to resist licensing reform. While minimal skill requirements are necessary in occupations involving health or public safety, many licensing requirements are deliberately made excessive in order to protect incumbent members of an occupation who influence the requirements of state licensing boards. In addition to boosting incomes in cartelized occupations by restricting competition, onerous state licensing requirements reduce interstate mobility because workers must get a new state license to work in the same profession when they move from one state to another.

The federal government can first undertake credential reforms in its own hiring. While federal employment is roughly 3 million jobs, or less than 2% of the national workforce, state and local governments tend to follow federal requirements while employing an additional 20 million Americans.

To date, attempts to overcome the balkanization of the American workforce by instituting universal licensing requirements have met only limited success. Twenty states have enacted “universal license recognition,” permitting workers licensed in other states to practice a trade. But as the Institute for Justice points out, the scope of these universal license recognition laws is limited by residency requirements (five states), rules that the previous state license must be “substantially equivalent” to the state’s own requirements, penalizing workers from states with less rigorous licensing (12 states). More generous jurisdictions, including Virginia and Arizona, allow transplanted workers to pursue their trades on the basis of a similar “scope of practice” rather than similar licensing requirements (eight states), while five states permit obtaining a license if the practitioner has at least three years of experience in an occupation.

State-level occupational licensing made sense in an agrarian America with mostly local markets. However, if a new constitutional convention were held today, it is doubtful that the delegates would set up a system in which dental aides may need to pass a different test each time they move across arbitrary state borders. At the same time, nationalizing education requirements for hairdressers and florists and casket sellers is unlikely to be a cause many national politicians would treat as a priority.

The good news is that technological innovation is likely to create many entirely new occupations, while rendering others obsolete. This may provide opportunities for exclusive federal government licensing in some cases and, in other new vocations, the outsourcing of state licensing to national nonprofit organizations. In aviation, an occupation that did not exist before the development of modern technology and one that is inherently national, the federal government is the sole licensing authority. Pilots must be certified at the national level by the Federal Aviation Administration (FAA), part of the U.S. Department of Transportation. As telecommuting creates new jobs in which clients are in different states or countries than practitioners, the federal government can seek to preempt regulation, including licensing regulation.

Another option involves national licensing associations recognized by state authorities. One new technology-based industry is nuclear medicine, a field that uses radioactive tracers for diagnosis and treatment. A national organization, the Nuclear Medicine Technology Certification Board (NMTCB) was founded in 1977 as a nonprofit incorporated in Delaware. In 1978 the NMTCB administered its first exam to more than 600 students in 22 sites across the country. Today a majority of states require a license to practice nuclear medicine, and most of them waive a state exam for those who have been certified by NMTCB or by the American Registry of Radiologic Technologists (ARRT), a national nonprofit based in Mendota Heights, Minnesota.

As technological innovation creates new job categories—flying car mechanic? Robot pet veterinarian? AI-assisted virtual reality fantasy castle interior decorator?—states should be encouraged to outsource occupational certification to national nonprofits with national tests and national registries of certificants like NMTCB or ARRT.

A program to eliminate or nationalize occupational licensing requirements must be accompanied by policies to boost the power of workers, both licensed and unlicensed, to demand higher wages—policies that include unionization or sectoral wage boards, higher state or local minimum wages, and laws against the abuse by employers of noncompete agreements. Otherwise, the elimination of the wage premium caused by overly restrictive, cartellike state licensing schemes will cause the wages of everyone in the industry to drop. The goal must be to lower barriers to entry to the nursing aide profession without lowering the incomes of nursing aides.

Reductions of both legal and illegal immigration are also necessary in order to increase both access and wages. Lowering excessive barriers to entry in licensed occupations, or eliminating licensing of some trades altogether, will not improve the lives of American workers if they are forced to compete with great numbers of desperate immigrants willing to work for low wages in miserable conditions.

Providing greater career opportunities for young Americans who obtain certifiable skills as an alternative to obtaining a four-year college degree is necessary. But it will not happen overnight. Success will require greater nationalization and standardization of skills training, with states outsourcing more certifications to national nonprofit agencies, and with federal preemption of the regulation of new industries. And moving from our balkanized, state-based licensing system to an integrated national labor market will fail to raise the incomes of non-college-graduate workers, unless the power of those workers to compel employers to pay higher wages is enhanced by pro-labor laws and tighter labor markets.

Change will not happen overnight, but we can see how today’s overcredentialed and underpaid workers can be succeeded by workers who can go from high school to practicing a trade for a living wage without a costly four-year detour on a university campus in order to obtain a degree they are unlikely to ever use.