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To Make the Most of Credentials, We Need a Better Marketplace

To Make the Most of Credentials, We Need a Better Marketplace

October 31, 2023

At A Glance

Short-term training and education programs can play an important role in a skills-first economy, but the value of the credentials they lead to is often unclear. Marketplace improvements will help ensure that they fulfill their promise.

Contributors
Meena Naik Director
Nate Anderson Senior Director
Practices & Centers

The number of short-term postsecondary credentials isn’t just growing; it’s skyrocketing.  

From traditional educational institutions to major corporations, seemingly everyone with a stake in ensuring that workers are equipped with the latest in-demand skills is racing to offer bite-size alternatives to traditional degree programs. Whether they’re called micro-credentials, nondegree certificates, or professional badges, they all serve one purpose: providing jobseekers and incumbent workers with evidence that proves they have the skills necessary to do a job. And the programs that offer these workforce credentials provide workers with a way to keep their skills up to date in the face of relentless economic change.  

This dynamic world of workforce credentials is one of the fastest growing categories of the postsecondary education and training market. And with an increasing number of employers shifting from degree-based hiring to skills-based hiring, short-term credentials are quickly gaining popularity among learners and employers alike.

We must improve the way the market works—creating mechanisms for all stakeholders to choose the credential best suited to their goals and to use credentials as one of many reliable indicators of workers’ capabilities.

Mixed Results 

However, evidence of the effectiveness and reliability of credential programs is mixed.  

On the one hand, there’s research that demonstrates that earning a credential from a short-term training program can lead to higher job attainment rates and wage increases than earning a high-school diploma alone. And some surveys suggest that learners are generally pleased with their decision to pursue a short-term credential.  

On the other hand, the economic returns that short-term credentials deliver vary wildly by job type, geographic location, and workers’ demographic identities, including race and gender. And the certificate holder’s current job status also plays a role, with incumbent workers faring better than people trying to break into new careers. Moreover, outside of a few fast-growing technical fields, wage returns tend to be small. For example, the largest longitudinal study of nondegree credentials found just a $1,468 gain in annual earnings for people with manufacturing credentials and an associate’s degree or less. And the returns can be worse in other fields, like cosmetology, health care, and food services, where entry-level salaries are low, especially for women who lack a degree 

Employers also seem to be confused. Data from employer surveys and job postings suggests that few employers, outside of those in IT and a few other industries, use workforce credentials as a key criterion in hiring or promotion decisions even with revised skills-first job descriptions.  

Overall, workforce credential programs are proliferating because they have tapped into a need many learners share: to find better and faster pathways to employment and advancement opportunities. And yet so far these programs have largely failed to generate the kind of economic outcomes we might expect from an education and training model focused narrowly on accelerating attainment of specific types of skills and preparing jobseekers for specific occupations.  

Researchers and education and workforce professionals have identified many potential causes for this dynamic. These include confusion created by the sheer volume of unique credentials, the lack of transparency about what skills are represented within a credential, unreliable approaches to skills validation, and the inability of data systems to efficiently share information, including data about the employment outcomes credentials lead to.   

At Jobs for the Future (JFF), we believe these shortcomings are consequences of a deeper problem: The workforce credential marketplace—the system that allows consumers to make rational decisions about which credentials are right for them and are worth the time and money it will take to earn them—doesn’t function well. There are a number of reasons for this, including the following:  

  • There’s no market-driven mechanism that enables people to easily sort and rank credentials relative to one another. 
  • It’s difficult to assess the quality of similar credentials because they can’t easily be compared to one another based on factors like program design or employment outcomes. 
  • Tracking the employment outcomes connected to individual credentials can be difficult, and employers may have difficulty identifying the credentials that will best meet their talent needs.  
  • Learners and employers aren’t able to easily and effectively communicate their level of satisfaction with credential programs or recommend improvements to those they find lacking.  

We believe the solution involves more than reducing the number of workforce credentials or suggesting ways to improve current credentials. Instead, we must improve the way the market works—creating mechanisms for all stakeholders to choose the workforce credential best suited to their goals and to use workforce credentials as one of many reliable indicators of workers’ capabilities. Achieving that goal will require a systemwide response.   

Opportunities Abound: Creating a Workforce Credential Marketplace 

Leaders throughout the learn and work ecosystem must work together to address the shortcomings in the workforce credential marketplace and create the conditions under which it’s easy for employers and workers alike to find information about credential programs and evaluate them.   

It’s time to reimagine the workforce credential marketplace in a way that offers all workers and learners more equitable opportunities for economic advancement.  

Imagine a world where workers and learners can effectively compare credentials side by side, weighing the value of a program based on its cost, the time it takes to complete, and the employment prospects it leads to. In this world, credential holders and employers would both be able to rate programs using a comprehensive consumer review system.  

With workers and employers better able to identify worthwhile credentials, education and training providers would be incentivized to improve their offerings. For example, they could work with employers to ensure that their courses help people build the skills that are in demand in the labor market. And employers would have access to information that helps them determine how to financially compensate workers who have the credentials they need.  

And new technologies could make the marketplace even more efficient. Think of digital wallets that hold verifiable and easily shared electronic copies of people’s learning and employment records (LER), or next-gen artificial intelligence systems that expedite and accelerate the process of sorting, storing, and sharing credentials. 

Successfully reinventing the workforce credential marketplace will involve learning from—and not repeating—past mistakes.  

For example, in an environment where data can be accessed, shared, and tracked easily, organizations could exploit the system and create a model that gives preferential treatment to certain credentials, replicating existing recruiting, hiring, and advancement strategies that favor degrees from some universities over others in hiring and advancement processes—an approach that eventually leads to a lack of trust and breakdown of the system itself. This would replicate barriers that have long limited employment and educational opportunities for members of many demographic groups, including Black, Latine, and Indigenous workers, women of all backgrounds, and residents of rural communities.  

Survey data reflects this reality, with record percentages of younger U.S. workers and learners reporting that they question the value of a college education and are convinced that they will be worse off than their parents were. The challenges of the current marketplace cut across people of all ages and backgrounds, but JFF believes that it’s possible to eradicate those barriers if the new marketplace is intentionally designed to be inclusive and equitable for all.  

Our Vision: 5 Features of a Marketplace That Works 

The new workforce credential marketplace we envision would be designed to eliminate all of those risks and instead serve as a catalyst of equitable economic advancement.  

It would include the following key design features to ensure that workforce credentials benefit all stakeholders.  

  1. Democratized access: All users should be able to easily access and navigate the credential marketplace 
  2. Comparability: Users should be able to compare and evaluate credentials based on specific criteria, including employment outcomes 
  3. Voice: Learners, workers, and employers should be able to easily capture and share feedback about credentials 
  4. Dynamic design: The structure and functionality of the marketplace should be able to evolve in response to changes in stakeholder needs, technological advances, and more 
  5. Data interconnectivity: To ensure that disparate systems are able to share data and users are able to easily find relevant information, the marketplace should make use of a rich array of metadata, including skills and competencies  

System-level partnerships are essential to building the future of work that we envision. The steps we’ve outlined here are just the beginning.

The Road Map to a Marketplace That Works 

We realize that our vision can’t become a reality unless all stakeholders throughout the work and learn ecosystem engage in a collective effort to build an equitable workforce credentialing marketplace. Here are the first steps that are essential to achieving that goal:   

  • Create credential transparency: Credentials must use standards to facilitate sharing of information about what credential holders know, what they can do, and the results they’ve achieved on the job. This will foster trust in the system and help attract investments that enable further development.  
  • Employ best practices in learning design: Defined best practices will foster quality education and training experiences characterized by clear learning objectives, reliable assessments, and consistent program designs.  
  • Link outcome data: Outcome data, including information about the skills and expertise learners acquire and the employment gains they achieve, should be linked so all stakeholders can access, collect, and share it.  
  • Build stackable educational experiences: Designed with the nonlinear trajectories of many individuals’ work and learning journeys in mind, credentials should be modular and stackable, with each experience serving as a building block for more advanced training in the future.   
  • Ensure data integration: Platforms should be based on technology standards that can continually evolve to ensure that data can be collected, shared, and reported among systems.  

JFF is well positioned to support and accelerate efforts to design and build a more efficient and equitable workforce credential marketplace. We have extensive experience and expertise supporting initiatives that drive systemic change. We’re also committed to building a skills-first economy enabled in part by short-term credentials. We’ve demonstrated that through our investment in EQOS, a nonprofit with a framework designed to evaluate the quality of postsecondary education and training programs, and our recent move to integrate with the Rework America Alliance, a Markle Foundation initiative that takes a skills-first approach to connecting workers to quality jobs.  

But system-level partnerships are essential to building the future of work that we envision. The steps we’ve outlined here are just the beginning. We must collectively answer many questions about how best to build and support a new credential marketplace, including these:  

  • How are quality, value, and trust defined for credentials and for the marketplace? 
  • How must learning design and existing education systems evolve or grow to support incremental, short-term, and stackable credentials?  
  • What types of incentives would encourage employers, educators, credential providers, and workers to engage in the market? 
  • How will data and data-tracking systems support equitable outcomes and opportunities for all learners and workers?  
  • What types of changes in funding models and policies are needed to support workforce credentials?  

JFF seeks to facilitate this evolution and expand the role workforce credentials can play in promoting equitable economic advancement opportunities for all workers. But achieving that goal will require alignment and coordination across all stakeholders in the work and learn ecosystem. Join us as we design, scale, invest, and influence to create a marketplace that works.  

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