Most Companies Say College Isn't Worth It for Their Employees

The value of a college degree might be disappearing in the job market, a new study surveying 70,000 small businesses found.

The Freedom Economy Index (FEI), which is run by job recruiting companies RedBalloon and PublicSquare, discovered businesses are increasingly disappointed with the skill sets of their college-educated employees.

When asked if institutions of higher education were graduating students with "relevant skills that today's business community needs," 67 percent of employers said "strongly no." Another 24.4 percent of employers said "somewhat no," and only 8.7 percent said "somewhat yes," "strongly yes," or "other."

Markus Kraus, finance expert and owner of Trading Verstehen, said the survey indicates a deeper desire by employers for practical skills and industry-specific knowledge in job candidates.

"This shift indicates a need for higher education institutions to evolve, integrating more practical, real-world training into their curricula," Kraus told Newsweek. If the shift continues, companies might redefine their hiring criteria, focusing on skills and experience over formal qualifications.

Despite the common sentiment that a college degree is necessary to enter most industries, only 10 percent of the respondents in the Freedom Economy Index said a college degree would make a job candidate more hirable. Meanwhile, 41.5 percent said degrees make "no difference," and more than 40 percent said a college degree actually made them less likely to hire a prospective applicant.

One employer said in the survey: "The talent shortage will just get worse because high schools and colleges produce no talent."

Another shared their frustration: "They don't show up to an interview, and work is too hard, 9-5 is such a struggle."

Many finance experts say learning a trade could prove much more profitable than earning a college degree in today's job market. Trades tend to have fewer people entering them, making them more in demand than college degrees in various low-paying fields.

The feedback from employers also indicated this could be the case.

"We would hire someone with hands-on experience over someone that read about it in a book," one respondent said. Another said: "I only care about skills. If you ain't got the skills, you ain't got a job."

The employers' sentiment might not match the job requirements they're posting online, however. A Georgetown study found two-thirds of all jobs list a bachelor's or associate's degree as a requirement and around 60 percent of college students end up earning more than the average high school graduate after 10 years.

Some companies will immediately throw out a resume if it doesn't list a college degree, and the fact that the survey highlighted the experiences of small business owners might matter in terms of their overall hiring expectations, experts say.

"Small businesses by nature have fluid job roles, with employees expected to integrate multiple competencies or skills to help the company succeed," Nita Chhinzer, an associate professor at the University of Guelph's Department of Management, told Newsweek.

"Most universities and colleges have specialized programs which create graduates with specialized skills. This helps new graduates succeed in large businesses with clear job definitions and highly delineated roles or departments."

Still, academic success doesn't mean a job candidate will be able to apply what they learned in real life, she said: "Employers are looking for people who can think strategically with the ability to forecast and react to predicted changes."

This often requires small class sizes and well-trained professors, which many college budgets have not been able to withstand. College graduates today are also facing a unique loss to their resumes and skill sets due to the pandemic, according to Chhinzer.

"Unique to this batch of new grads is the lost opportunities for volunteerism and work during the Covid-19 restrictions, which stunted their opportunity to get meaningful career development experiences for years," Chhinzer said.

The remote work that became prevalent during the pandemic also led to a mismatch between expectations for many younger workers, who often started their first jobs and graduated college entirely remotely.

In a recent exam, Chinnzer had a student claim that working from home was a fundamental human right for employees, highlighting the mismatch between some new workers of today and employers looking to hire.

"New grads often have their own views of what the world of work looks like and are likely to leave employers if they experience a mismatch between their perception and reality," Chhinzer said.