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Are Better Credentials the Answer to the Skills Gap?

Yesterday marked the inaugural gathering of the National Network of Business and Industry Associations, a group of over twenty membership-based organizations representing employers from across the economy. Collectively, the Network represents thousands of employers in sectors projected to be the source of over seventy percent of new jobs over the next decade. Convened by the Business Roundtable, the purpose of the meeting was to address the difficulty their members experience finding skilled workers and knowing which credentials they can trust. Across the board, industry representatives spoke of the “skills gap” in their sectors and their frustrations with an education system they perceive as unresponsive.

While we can disagree on whether our slow growth and jobless recovery are the result of a skills gap, a jobs gap, or a wage gap, it is clear that the labor market is not functioning as well as it could for either job seekers or employers.

While we can disagree on whether our slow growth and jobless recovery are the result of a skills gap, a jobs gap, or a wage gap, it is clear that the labor market is not functioning as well as it could for either job seekers or employers. Although unemployment is down from the highs of 2010, there are still more than two job seekers for every vacancy, historic levels of underemployment for college graduates, 3.6 million long-term unemployed (many of whom are highly educated and/or skilled workers), and declining rates of labor market participation among the young. While employers blame job seekers for not having the right skills, and job seekers blame employers for being too picky – and everyone blames schools for teaching all the wrong things and failing to prepare graduates for the world of work – we are left with a real and growing threat to our economic future as jobs go unfilled and the skills, work experience, and morale of unemployed and underemployed workers deteriorate.

The National Network aims to help the labor market function better for their members by improving the quality of credentials used for hiring and promotion. The focus reflects growing and widespread frustration with the opacity of existing educational credentials, particularly academic degrees, which tell employers relatively little about what a graduate can actually do. It is also a response to the proliferation of non-degree credentials over the past decade, such as certifications, certificates, and badges, and the difficulty employers (and job seekers) confront in evaluating the value of these new credentials. Many of them are only as good as the paper they are printed on. But others, particularly industry-accredited, standards-based certifications and competency-based certificates with third-party assessments, do a great job reliably validating the skills and competencies employers need.  It is the adoption of these credentials – and the standards and processes associated with developing them – that the National Network is promoting to its members. High quality credentials have the potential to streamline the process through which businesses and workers find one another, making the labor market function more smoothly, and helping students and educators determine what’s needed to enter a rewarding career pathway.

Although building better credentials sounds straightforward, it is anything but. Yesterday's meeting was not the first attempt to bring stakeholders together to talk about standards and credentials. In the 1990s, the National Skills Standards Boards (NSSB), a coalition of business, labor, education, and civil rights leaders, was established for a very similar purpose and become bogged down in such bitter partisan and sectoral conflict that the effort was abandoned by the mid-2000s. But we are in a different time, facing different economic challenges, and have the benefit of learning from the failure of the NSSB.  The National Network is proposing a more modest, employer-driven effort that is limited to industry associations and directed at their voluntary adoption of jointly-developed credential standards and competency models, research on the economic value of industry-based credentials, and a coordinated messaging campaign to employers, educational partners, and the wider public on the role of non-degree credentials and career education in supporting economic development. It is led by industry and professional associations who serve a critical coordinating and communication role, and understand the ins and outs of the hiring and skill needs of their members. It’s an excellent first step toward organizing a cross-sector dialogue among folks representing the end users of credentials. If the Network can build trust in, and widespread adoption of, industry-wide credentials among their members, it can serve as an essential foundation from which to drive change in educational programs and improve labor market outcomes. The IT sector has made considerable progress developing industry certifications that help companies find the talent they need, but adoption of new credentials as been spotty in more established sectors, such as manufacturing and retail. And even in the IT sector, there are lots of credentials of dubious value, creating confusion for employers and job seekers alike.

There are other factors that will challenge the Network’s efforts, including shifting expectations around who should provide and pay for job-specific training and the highly decentralized and autonomous nature of our postsecondary education system, that I will write about more in the future. But for now, it is very encouraging to see such a large and esteemed group of industry associations, representing such a diverse set of employers, tackling the skills and credentialing challenge. The more they succeed in clarifying and credentialing the skills employers need, the better for everyone.