Background

Credentials help individuals communicate their level of education, knowledge, and skills to potential employers or customers. They play an essential role in our increasingly knowledge-based economy, where specific skills and experience are in high demand. They come in many different shapes and sizes, including academic degrees, educational certificates, occupational licenses, and industry or professional certifications. Each type of credential is a little different, but each one is designed to document that an individual has obtained a designated level of knowledge, skill, experience, or ability.

Figure 1: Certifications, Certificates, Licenses

Certificates, certifications, and licenses are often lumped together into one category reserved for credentials other than the academic degrees. The other commonality among these “nondegree” credentials is that they are usually designed around a specific occupation or discrete set of skills. But the similarities end there. Certificates are designed and awarded by education and training providers, including institutions of higher education, making them most similar to (and the easiest to connect with) degrees. Occupational licenses, by contrast, are awarded by government agencies, are usually time-limited, and often require an examination or proof of experience.

Certifications are also time-limited, include a written, oral, or performance-based assessment, and are designed and awarded outside of higher education by “certification bodies,” including industry associations like CompTIA, private companies like Microsoft, or—crossing over with licenses—by government agencies like the Federal Aviation Administration. The fact that certifications, licenses, and degrees are all awarded by distinct entities is what makes them difficult to combine in a single educational program. As a result, degree and certificate programs are more likely to prepare individuals for certification and licensure exams than to include them as part of the program.

Research on industry certifications is limited, particularly compared to other types of credentials. In fact, there is no definitive count of how many certifications are on the market today. According to the U.S. Department of Labor’s Certification Finder web application, there are currently more than 5,000 active certifications in use around the United States. National surveys conducted by the U.S. Census Bureau, the Department of Education, and the Bureau of Labor Statistics in 2012, 2016, and 2017, respectively, suggest that between 17 and 22 percent of U.S. adults hold an industry certification or license, with licenses being more common.¹ Adults with a bachelor’s degree are slightly more likely to hold a certification than adults without one, and analysis of the 2012 collection of the Census Bureau's Survey of Income and Program Participation (SIPP) showed that the median wage of adults with both an advanced or professional degree and at least one industry certification was 40 percent higher than their counterparts with the same degree but no nondegree credential.²

Benefits to employers, jobseekers, and educators

Certifications appear to offer a variety of potential benefits for jobseekers, workers, employers, and educators, and between 2009 and 2017 the Interagency Working Group on Expanded Measures of Enrollment and Attainment (GEMEnA) worked to develop measures to better evaluate the employment and earnings benefits of certifications and other non-degree credentials.³ Recent analysis by New America of the 2016 Adult Training and Education Survey (ATES) indicates that adults with certifications have higher employment and earnings than adults with other types of nondegree credentials, such as certificates and licenses.⁴ For example, 47 percent of men who have a certification but no bachelor's degree report making more than $50,000 a year, compared to just 31 percent of men who have no bachelor's degree and a certificate.

Credentials help individuals communicate their level of education, knowledge, and skills to potential employers or customers.

Reports from analytics firms such as Burning Glass Technologies and Emsi, which combine government labor market information with data scraped from internet job postings, also show certification holders earning more on average. Both firms find, for example, that automotive mechanics with the common Automotive Service Excellence (ASE) certification stand to earn about $9,000 a year more on average than those without.⁵ Using more conventional administrative data-matching techniques, research by CompTIA, a trade association and industry certification body in the IT sector, found that students enrolled in Illinois community colleges who earned a CompTIA certification made more money than students who tried but failed to earn a certification.⁶

Certifications offer a variety of benefits to employers as well. They can make it easier for companies to find workers with the precise skills they need. In contrast to college degrees or transcripts, most certifications attest to the holder having a very specific and demonstrable set of competencies. Incorporating certifications into recruitment, hiring, and promotion processes can help companies expedite hiring and potentially reduce costs of additional training or turnover associated with new employees that do not have the right skills. Certifying workers can also help firms limit financial or legal liabilities associated with their products or services. For example, companies that issue product warranties often require that any repairs they cover be completed by certified technicians.⁷

Finally, industry certifications can help educators ensure their programs are up-to-date and aligned with industry standards. Local economies with a supply of certified workers support the expansion of existing employers and can serve to attract new employers in search of similar skills.

Limited and uneven demand

Despite the value of industry certifications for employers, job seekers, and educators, they are not particularly prevalent in the United States: according to the ATES, only 7 percent of U.S. adults in the labor force reported having a certification, the lowest prevalence of all nondegree credentials.⁸ Moreover, while there is an abundant supply of certifications, only a few dozen seem to have much purchase in the labor market. According to a recent report by Burning Glass, 50 certifications out of the thousands that exist account for two-thirds of job posting requests.⁹ The use of certifications by employers also varies considerably by occupation. According to the same study, just two percent of online job postings for sales positions requested a certification, compared with 18 percent for computer or mathematical occupations.¹⁰

The low penetration of industry certifications in the U.S. is likely due to a number of factors. For employers outside of the few sectors where certifications have become established, awareness is often very limited. At the same time, jobseekers can struggle to find out where or how to obtain an industry certification. Where does one go, exactly, to become certified as a cybersecurity specialist, or an actuary, or a financial advisor? In countries with large certified workforces—Germany, for example—chambers of commerce administer certification exams, building a certified workforce for regional employers in the process. In the U.S., the delivery of certification exams is fragmented and often difficult for employers and jobseekers to navigate.

As the Burning Glass report aptly points out, the absence of a clear employer value proposition for certification is part of a vicious cycle that makes it difficult to build demand for certified workers. As long as there are few certified workers on the market, employers will not adjust their hiring policies; as long as employers do not express a clear preference for workers with certifications, job seekers will have no reason to get them.¹¹ Lack of demand creates lack of supply, even as employers complain of skills gaps and students struggle to find out which skills are the ones that will help them land a job.

Institutions of higher education are well-positioned to disrupt this cycle, leveraging their instructional and administrative infrastructure to prepare students for certification exams. Many institutions, particularly community colleges, already do so, primarily on their non-credit or continuing education side. But integrating certifications into degree programs could be an opportunity for institutions to increase the value of both credentials—certifications and degrees—for the students who earn them. On the one hand, college degrees continue to generate the best long-term earnings and employment outcomes of all credentials.¹² On the other hand, some certifications have considerable stand-alone value that can be amplified if the individual also has a college degree. As Michael Coburn found out, IT certifications are very valuable, but they were not enough on their own to catch an employer’s attention. Embedding certifications into degrees allows students to obtain both credentials at the same time.

The absence of a clear employer value proposition for certification is part of a vicious cycle that makes it difficult to build demand for certified workers.

While the rationale for embedding industry certifications into degree programs is straightforward, the actual process for doing so is not.¹³ It requires integrating certifications designed and issued by external entities into academic programs designed and delivered by a college or university. Certification bodies have their own policies, procedures, and financing models that need to be addressed by institutions that want to embed certifications into their degrees. The fact that certifying bodies are in charge of assessing the individual and issuing the certification creates a host of practical challenges: Which certifications are the right ones? Where can a student take the exam? Who pays the certifying body and how? And how does the college find out if a student passed or failed?

In light of these questions, embedding certifications into degree programs is an attractive but poorly understood institutional strategy. In the spring of 2016, Lumina Foundation set out to learn more about how institutions embed industry certifications in degree programs, and what they consider to be the primary benefits and challenges to the practice. Lumina Foundation's findings point to the innovative capacity of colleges and universities, many of which are addressing the challenges outlined above with creative solutions. They also point to the need for more equitable and data-driven approaches to connecting certifications and degree pathways.