Jennifer Majorana, Mackinac Center for Public Policy
General Motors is bidding farewell to four-year-degree requirements for some jobs in manufacturing and technology. The move comes courtesy of a recommendation from a diversity task force, which was commissioned to suggest ways to attract more diverse talent to the company. Why should Michigan residents pay attention?
The Detroit-based automaker employs over 52,000 workers in Michigan, with 31 facilities and $5.8 billion in taxable wages. It was likely the state’s top employer in 2019, the least year for which we have relevant data.
Furthermore, lawmakers clearly believe that GM holds economic and cultural significance for the state.
Just a few months ago, they handed GM a $600 million subsidy deal with few strings attached. Legislators wouldn’t hand over so much cash if they didn’t think GM was important.
That belief is also illustrated by some extreme statements about how the deal will position Michigan for a new Industrial Revolution and help the state compete for every job in decades to come.
The move to eliminate degree requirements calls into question Gov. Gretchen Whitmer’s goal of having 60% of Michigan’s workers obtain a postsecondary credential by 2030, known as Sixty by 30. The goal is already ambitious; currently Washtenaw County stands alone in hitting the benchmark. The state average hovers at 49%, two and a half years after she announced the goal.
On top of that, GM’s move from credentials-based hiring to skills-based hiring ought to raise questions about whether lawmakers are setting the right goal.
The thrust of Sixty by 30 is that a high school diploma is no longer enough to succeed in today’s workforce. State competitiveness is a factor. Michigan ranks below neighboring states such as Wisconsin in the number of residents with an education beyond high school.
Lawmakers have decided to spend taxpayer dollars and government resources to create new paid tuition programs. It’s an attempt to boost the number of young people pursuing postsecondary education out of high school and get nontraditional students go back to school.
At least one of the programs does encompass skill certificates. Such a certificate could potentially help a student satisfy the skills requirement for those manufacturing and technology jobs at GM. Nevertheless, according to the Department of Labor and Economic Opportunity, most enrolled students gravitate toward community college.
A higher level of education is significantly associated with higher earnings and more opportunities in the job market, for individuals. People with college degrees generally get paid more. But that doesn’t mean encouraging college credentials are states’ path to prosperity. The connection between higher levels of education and a better state economy, on the other hand is tenuous.
In fact, by emphasizing and subsidizing higher education so heavily, the state may actually be driving the already-high cost of college even higher.
And the latest move by General Motors signals that at least some jobs that currently require a four-year degree could likely be done equally well by a skilled person without one.
Increasingly, jobs that in times past represented tried-and-true career pathways for high school graduates, like administrative and clerical positions, now call for a bachelor’s degree. And a study by Burning Glass Technologies indicates it is happening even when the substance of the job hasn’t changed. It’s a phenomenon known as upcredentialing.
A significant recent contributor was the willingness of college graduates during the Great Recession of 2007-2009 to take jobs that required only a high school degree.
Employers now seem to use a college degree as a proxy for possessing desirable traits or analytical skills, which could benefit them in increased productivity. That’s a tradeoff, though, since according to the same study, positions with a potentially unnecessary credential take substantially longer to fill. Difficulty filling positions seems to be one motivation for General Motors to “decredential” some roles.
Few people will dispute that education has value. At the same time, it’s important to consider the unintended consequences of subsidizing the pursuit of credentials, in the form of a college degree. Just under half of working-age Michigan residents have a degree beyond high school. It’s not clear whether or why that figure represents such a grave threat to our state’s future that taxpayers ought to fund programs with little accountability for results. Graduation requirements, for example, would be sensible guardrails in the face of an average drop-out rate of 31% nationwide, based on students entering school in 2011.
Much of Michigan’s spending on the Sixty by 30 goal has been justified in the name of narrowing the skills gap between income brackets, regions of the state, gender and race. “Commitment to equity” is one of the guiding principles on the Sixty by 30 strategic plan.
Why, then, does General Motors believe that dropping four-year-degree requirements for certain jobs will help achieve its goal of becoming the most inclusive company in the world?
Subsidizing degrees isn’t the only way to close the skills gap. It would be better for job searchers and less costly for taxpayers if more employers followed GM’s example and dropped degree requirements that aren’t needed.
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Jennifer Majorana is assistant director of advancement for the Mackinac Center for Public Policy.
