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The IBR is a publication of the Indiana Business Research Center at IU's Kelley School of Business

Education required, but at what level?

Deputy Director, Indiana Business Research Center, Indiana University Kelley School of Business

Economic Research Analyst, Indiana Business Research Center, Indiana University Kelley School of Business

There is much in the news about employers struggling to find skilled workers. And there are many workers and students uncertain about what skills and educational requirements they should focus on. Labor market researchers throughout government work hard to convey that information through a variety of tools and resources from federal and state agencies and regional workforce boards based on occupation (job title) and the requirements for that occupation. This article will focus on the determination of education requirements for those occupations.

Saying “this job requires a certificate in welding” or a “bachelor’s degree in business” is, believe it or not, easier said than done. Companies that employ people generally set out requirements in their job postings, but those requirements may not actually be “required” if the people being hired have skills (soft and hard) that the employer wants and the company is willing to train.

There are actually multiple sources for data on education requirements by occupation—the U.S. Bureau of Labor Statistics, the U.S. Department of Labor, the U.S. Census Bureau’s various surveys, the job postings themselves, as well as independent surveys of businesses.

The intent and collection methods behind each of these sources is important when comparing the often coinciding, but sometimes conflicting, education requirements. To that end, we have delved deep into the methods and results of each of the major sources of education requirements by occupation and produced an interactive tool to help users understand the differences among the sources in a coherent way (see Figure 1).

Figure 1: Interactive graphic

Source: Indiana Business Research Center

O*NET data are reported by incumbents working in that occupation, while some are reported by occupation experts. Even when incumbents provide survey responses, they are reviewed and may be adjusted by occupation experts.

ACS and CPS data are survey responses of incumbents, but each person provides their job title, rather than an occupation code at the time of the survey. Those job titles are then translated into occupation codes by a third party.

Another difference between ACS/CPS and O*NET data is what the incumbents report. O*NET incumbents report the typical minimum education level required for their occupation, whereas ACS and CPS incumbents report their personal highest level of education, which may be higher or lower than the minimum level required by employers for the occupations they hold.

Aside from differences in data sources and reporting methods, there are challenges with attempting to standardize requirements by occupation. Some of these standardization barriers include the following:

  • Occupations evolve over time. Changing tasks and skills associated with an occupation can translate into different occupation requirements for a position.

  • Some positions are difficult to categorize into one standard occupation code. This is particularly true for emerging occupations, where a person’s occupation may cover aspects of several other established occupations.

  • Educational requirements differ by firm characteristics. A small business in a rural area may have vastly different occupation requirements for a position than a large urban firm. Similarly, a new start-up company will likely have different educational requirements than a well-established firm, even when hiring for the same occupation. Additionally, some firms value in-house training over formal education.

  • A firm may have a minimum and a preferred level of education for a position. An employer may also be willing to substitute work experience for formal education requirements.

All of these considerations generally make it impossible to definitively set a single, minimum level of education required for each occupation. Instead, the available data should be used as a guide to generalize common education requirements of occupations.

And it is good to keep in mind the broad educational attainment level of adults (age 25 and older) in Indiana. High school completion has steadily increased over the past 45 years, though the number of Hoosiers lacking a high school diploma or equivalent remains persistently high—nearly 525,000 in 2015 (see Figure 2).

Figure 2: High school educational attainment in Indiana

graph

Source: U.S. Census Bureau

We now have a (slight) majority of Hoosiers with at least some college. The number having at least some college (which may include certificates) has grown to more than 900,000 adults in Indiana, while more than a million Hoosier adults have a bachelor’s degree or more (see Figure 3).

Figure 3: Postsecondary educational attainment in Indiana

graph

Source: U.S. Census Bureau

It is also important to keep in mind that education requirements for jobs do change over time. The Indiana Business Research Center has analyzed the changes in education requirements in O*NET occupations, looking specifically at the changes between 2004 and 2015 across Indiana occupations—including the former Hot 50, high-wage/high-demand and STEM. For all occupations, there has been a decrease in the requirements of less than high school, high school and some college, along with an increase in the requirements of an associate degree, bachelor’s degree, master’s degree and doctoral degree. The percent that required a high school diploma decreased by 3.8 percent, while the requirement of a bachelor’s degree increased by 2.6 percent. See the article “Requirements of the job: Tracking changes to the education component” for that full analysis.