BY SUZANNE BLAKE, Newsweek, 10/18/23
Companies are going against traditional recruiting wisdom that more education is better as they hire fewer people with graduate degrees.
Career officers and students alike at Yale, Columbia and Northwestern University all say companies are spending less time on campus looking for second-year MBA job candidates, The Wall Street Journal reported. Job offers are also going down, as the tech sector makes significant job cuts nationwide and finance deals slow.
Amazon has laid off more than 9,000 workers, while Meta cut more than 10,000 jobs from its global workforce in 2023 alone.
The shift away from graduate programs could go deeper than that though, experts say.
The slowing demand for graduate degrees might not be surprising when you consider the perceived skills of graduate degree holders versus their Bachelor degree counterparts, according to Nita Chhinzer, a business professor at the University of Guelph in Ontario, Canada.
“Employers view that candidates or employees with graduate degrees have specialized skill sets, whereas those who have undergraduate degrees are viewed as having a skill set that is more broad and malleable,” Chhinzer told Newsweek.
“Graduates are selected based on their academic success, including GPA, academic, references, and research interests. They are then put through academically rigorous programs, but the missing piece is the link between what they are learning and how it applies in practice.”
While co-op programs and internships can be helpful at getting graduate students those soft skills necessary for actual employment, being proficient at writing academic papers and research might not translate into real life job success.
There’s also a supply and demand mismatch when it comes to the types of skills universities are producing, Chhinzer said. While the trades industry has an extensive variety of apprenticeship opportunities, they don’t create enough students that actually meet the demand of the market.
Meanwhile, Ph.D.s are oversaturated, with programs producing far too many academics to meet the limited demand, she said.
“I do foresee this is causing a shift in the demand for graduate programs, because employability is a major outcome that applicants are concerned about,” Chhinzer said. “The more transparency we can get or demand regarding the types of jobs that new grads have, the more we can educate candidates about likely outcomes for graduate programs.”
Still, this might not be an immediate shift as tenure-track faculty members have no real incentive to reduce the amount of Ph.D. students, Chinnzer said.
Sean Lyons, a professor and associate dean at the University of Guelph, said the changing demand for higher degrees in the employment market shifted during the pandemic, as companies braved entirely new realities about what worked best for workforce productivity.
“Post-COVID, our assumptions about graduate school enrollments and labor market conditions are all being challenged,” Lyons told Newsweek. “Employment has continued to boom in some sectors but not in others.”
“We have traditionally believed that graduate school enrollments increase when the employment rate drops. But with so much complexity to the labor market trends right now, I’m not sure that this rule of thumb will hold up long term.”
While variations in MBA enrollment are normal over time, the spike in enrollment that happened during the pandemic is atypical, Lyons said. And this has the potential to create unrealistic expectations about continued enrollment growth.
For the 2019-2020 admissions cycle, 70 percent of American MBA programs saw an uptick in applications, according to a survey from the Graduate Management Admission Council. The survey was based on responses from more than 300 business schools globally.
New Recruiting Mantra
Even before the pandemic, the demand for higher degrees waned compared to previous years.
Roughly 46 percent of middle-skill and 31 percent of high-skill occupations had reduced their degree requirements in job listings between 2017 and 2019, according to a 2022 study from the Harvard Business Review and The Burning Glass Institute, a nonprofit labor market research organization.
And based on these trends, researchers predicted around 1.4 million jobs could open up to workers without college degrees over the span of five years.
A predictive report from analyst firm Gartner said the most successful companies this year will be the ones “more comfortable assessing candidates solely on their ability to perform in the role, rather than their credentials and prior experience,” and many companies are now operating under that viewpoint.
Despite the reduced emphasis on degrees job candidates are seeing in the current moment, Lyons still believes those with graduate degrees will continue to see long term benefits from their education.
“I believe that the value of graduate degrees will continue to hold long term, despite peaks and valleys in hiring trends,” Lyons said. “Although the [return on investment] might not be as strong in all years, the ROI is likely to continue to be positive. Of course, mileage may vary, depending on the tuition costs.”
Tuition for two-year, full-time graduate degrees can often cost more than $100,000 in the United States, with some doctoral and professional degrees priced even higher.
