Ditching Degrees: Walmart’s New Hiring Strategy is a Boon for Workers

In September, Walmart made a historic announcement: it will rewrite job descriptions for corporate roles to focus on skills, not college degrees. This shift acknowledges that too many American workers with the knowhow and experience to advance professionally face a completely artificial barrier to family-sustaining employment: they lack a piece of paper issued by an expensive college or university.

Decades of degree inflation—the practice of attaching new educational requirements to jobs that were previously open to all applicants with the necessary skills—has hurt workers and undermined productivity. Reversing degree inflation is good for workers and good for businesses, and both the private and public sectors should prioritize it.

Six out of 10 Americans over the age of 25 do not hold a bachelor’s degree. That does not mean that these individuals—who disproportionately come from minority populations, rural communities, and economically depressed areas—cannot succeed in a professional position with the potential for high wage growth. Often, they are highly qualified by alternative means, including apprenticeships, self-directed learning, military service, or years of experience in a related role.

For many of these workers, college simply is not a good investment. The average published cost of attendance (including tuition, fees, housing, and other costs) rose to almost $28,000 per year for 2022-2023 at public institutions. This puts the four-year sticker price of a college degree well north of $100,000 (an increase that outplaces inflation by more than 110% since 2000 for those who pay full freight). A good portion of that “investment” funds a “college experience” unrelated to learning marketable skills: luxury dorms, lazy rivers, extravagant sushi bars, and armies of administrators.

Among borrowers who complete an undergraduate degree at a private college, the average cumulative debt load is now $33,000 (or $27,400 for those who attend a public university). For degrees with lower median earnings, this means that the return on investment (ROI) of attending college can actually be negative. Many students who do not finish their degrees nonetheless incur substantial student debt. Artificial labor market incentives that push students to pursue a college degree hurt underprepared students the most because they are most likely to have trouble completing a high ROI program.

Four-year degree requirements also ignore the realities of equipping workers for success in the contemporary workforce. As technological advancements—especially machine learning—continue to reshape entire industries, the skills and competencies relevant to specific jobs will evolve at a faster pace than a traditional, campus-based education can keep up with. When it is necessary for workers to learn specific new skills tightly aligned to their role or function, on-the-job education and short, competency-based credentials are often the most efficient way to upskill.

Removing degree requirements is also good for businesses. The U.S. economy is currently experiencing a serious labor shortage—there are almost one and a half jobs open for every unemployed worker. Firms that create barriers to employment that are unrelated to job responsibilities therefore put themselves at a competitive disadvantage. Their labor costs are also higher because they are hiring from a smaller pool of college-educated workers who command a higher price for their work.

The available research suggests that firms that hire workers based on careful attention to skills fare better than firms that focus on other factors. A recent McKinsey & Company study concluded that “hiring for skills is five times more predictive of job performance than hiring for education.” This aligns with Harvard Business School research, which shows that when employers are asked to evaluate worker productivity, large majorities report that non-degree workers with experience perform as well or better than recent colleges graduates.

A range of businesses have piloted skills-based hiring reforms in recent years. Accenture and IBM now prioritize skills-based recruitment strategies instead of focusing on college credentials. As a result, they now require a college degree for far fewer positions, a trend that extends to knowledge-intensive positions such as software engineering. The firms will benefit from access to a larger talent pool without sacrificing productivity.

The public sector can also adopt skills-based hiring practices. State governors have taken the lead here. Governor Larry Hogan made Maryland the first state to open large numbers of professional positions to applicants who are “skilled through alternative routes” in March 2022. Governors on both sides of the political aisle quickly followed, including Josh Shapiro in Pennsylvania and Kristi Noem in South Dakota.

After decades of degree inflation and skyrocketing college costs, Walmart’s decision to prioritize skills over degrees is a big step in the right direction. If additional employers and states follow suit, the labor market can be reshaped into one that values a worker’s ability and potential more than rarified parchment, opening new roads to a family-sustaining career to many Americans in the process.