Economy Matters podcast series

Charles Davidson: Welcome to another Economy Matters podcast. I'm Charles Davidson, staff writer with Economy Matters, the Atlanta Fed's digital magazine. I'm visiting today with Stuart Andreason, who is director of the workforce development program that is part of the Atlanta Fed's Center for Human Capital Studies, and Mels de Zeeuw, who is an analyst in the Bank's Community and Economic Development Department. Guys, thanks for joining us today.

Stuart Andreason: Good morning.

Mels de Zeeuw: Sure, thank you.

Davidson: We're going to talk today about opportunity occupations generally, and then more specifically about new research that you guys, along with some Fed colleagues, have conducted on opportunity occupations and geographic differences in job requirements for those occupations. So, let's get to it. First off, I know we have an ongoing research agenda around opportunity occupations, so can we start by defining what we mean by "opportunity occupations," and why is that interesting—why is that important?

Andreason: Absolutely. We talk about opportunity occupations  as jobs that require less than a bachelor's degree, but pay over median wage. We did a lot of work on that—to look at median wages based on where people lived and worked rather than just looking at that nationally—so that number and figure change a little bit depending on where you live.

But I want to take a step back and first talk about why we're interested in that, and that really fits in with middle-skill jobs more broadly. Middle-skill jobs are often those that have been thought of as jobs that require some skill but don't necessarily require a bachelor's degree. There are a couple of trends that are happening in the middle-skill job market—and world—that suggest that things are changing significantly, which is why we were interested.

There's this dilemma going on—dichotomy, I guess, is probably the better word—related to middle-skill jobs. First is that overall it appears that there are some trends that suggest that these are declining. At the same time, we're not able to fill many of them. People suggest—some people have suggested—that that has occurred because of a shifting set of requirements and skills that are needed for middle-skill jobs, so the middle-skill job of today is very different than the middle-skill job of, say, 1950 or 1960.

Davidson: Is the high-skill job of those days now considered middle-skill?

Andreason: To some degree, yes; but to some degree, no. Some of that is just really driven by industrial change. We've obviously moved to a much more service-based economy, so there are new positions and changing positions that have driven some of these changes in middle-skill jobs. It's a very complex dynamic that's going on in middle-skill jobs, and so what we have aimed to do is just to really focus in on a segment of those.

The other thing that's happening is that many middle-skill jobs are not necessarily offering great pay. So we wanted to look at the segment of jobs that provided what we felt like was opportunity—good pay and lower educational requirements—which is where we ended up at opportunity occupations. One of the things that's really of note about opportunity occupations is that in an original report that we that we completed in 2015, we found that between 2011 and 2014 opportunity occupations—those that required less than a bachelor's degree but paid over regional median wage—declined by about 1.7 million jobs; which is a little disheartening, given that during that period overall nationally, jobs increased by about five million positions. So, [there are] divergent trends in job creation in the opportunity occupation category.

Davidson: Let's talk a little bit about this most recent research. This study explored four opportunity occupations in particular: registered nurses, first-line retail supervisors, computer support technicians, and administrative assistants. Why did we focus on these particular occupations?

de Zeeuw: These four occupations are some of the most prevalent opportunity occupations, so they represent a significant number of jobs—about between half a million, for computer user-support specialists and executive secretaries, up to 1.7 million jobs for registered nurses. So they are sizeable occupations. These really offer middle-skill workers a pretty accessible entry point into the job market and also into the middle class.

What we noticed with these four jobs when we looked at the data is that we saw significant variation in bachelor's degree requirements from employers between U.S. metro areas. We looked at registered nurse job ads in Altoona, Pennsylvania, for instance: just 8 percent of them required a bachelor's degree, but 70 percent-plus in Hinesville, Georgia, did. We saw this huge spread, and that's significant. It means that middle-skill workers face very different degrees of opportunity across the country. And so we wanted to delve into that.

Davidson: That's really interesting that there would be that much divergence. So what did we find? What are some of the reasons behind those differences?

de Zeeuw: That's what we tried to get at in the study. We really tried to tease out, "Well, what are some of the local factors that influence this variation?" So just to describe how we got at that: we got a very large data set from a company called Burning Glass Technologies. They collect data from 40,000 different job sites online and clean it up and de-duplicate it, so you get observations on individual online job ads, and we combined that with several publicly available data sets to look at about 27 million job ads across the country. And I have to give credit to our colleague, Keith Wardrip from the Federal Reserve Bank of Philadelphia, who was a partner with us on this project.

Then we came up with some predictive models to try and answer the question, What factors influence the probability of an employer asking for a bachelor's degree for these four jobs that we just talked about? We had some interesting findings. For instance, several of the most prominent factors are that the share of recent graduates in an area is important, as...

Davidson: So the more graduates, the more likely the employers are to require a degree?

de Zeeuw: That's right. We controlled for a host of factors, including the experience required for each job and the skills required for each job. And that was a big finding, that the larger the share of recent graduates in the labor force, the greater the chance that employers would require a bachelor's degree for these four positions.

Some other findings were, larger population centers were related to a higher percent chance for requiring a bachelor's degree. Just to give you one example: for computer user support specialists—so IT customer service, for instance—[in] metro areas that were bigger than two and a half million, there was a 6 percent greater probability of requiring a bachelor's degree.

Some other interesting things that we found is there are big regional differences in these requirements. For instance, in the Northeast, employers were much more likely to require a bachelor's degree for registered nurse positions than in the South. But even within regions we saw a big, big spread. For instance, Huntsville, Alabama, employers are 17 percent less likely to require a bachelor's degree for registered nurse positions than Atlanta. So there's a big difference in opportunity for workers dependent on these professions across the country—and even across regions.

Davidson: So, looking at this kind of study one might assume from the outside that, okay, it would mostly have to do with the supply and demand of workers—if there are a bigger pool of workers to choose from, employers are going to be pickier. But it sounds like that's not necessarily what we found?

Andreason: Well, I would actually say that what you're hitting on there is an important question that comes out of this work. We know that there are some things that drive preference for education. Let's just talk about the number and availability—the more people that have a bachelor's degree seem to drive a greater preference for education.

Now, there are a couple ways to interpret that, and you're exactly right. Is it that there's some demand for skills? Is there some difference in the type of work in these occupations that require people with greater education levels to do that? Or has the fact that workers with this education level have clustered in certain areas driven employers to be more choosy?

There are some things that are different about that. It could be that being a registered nurse is different in some places than others. It could be more complex if you're working in some areas that have highly specialized hospitals and are doing specialized care. There are some things which would basically suggest that workers with certain education and skills are drawn to live in certain places and attracted to certain jobs, and there's some matching going on.

If you take the other side, that some of this is driven by the prevalence and availability of workers that happen to be in different areas, then there's some question about, well, what can you do to work with employers to actually look at skills based in competency-based training rather than looking at credential-based training?

I'm not sure that we have a great answer on that, but we do know that not every job is created equal. Even within a metro area, the computer support specialist that works at a local university on a complex network may have a more difficult job, be interfacing with more significant IT security issues, and interfacing between different networks compared to a computer support specialist that is working at a large retailer. So there is some difference, and we know that there is some difference, in skill levels that are expected in each job. One of the things that's interesting is that we're able to get some of that data from Burning Glass.

Davidson: What about this notion that employers would view a bachelor's degree less as an actual requirement to do the work and more as a sort of proxy of, "Okay, I figure this person is likely to show up on time and be able to work in teams" and so forth—kind of a proxy for soft skills, as they're called. Did we see evidence of that at all?

Andreason: I'm not sure that our study exactly notes that, but that is something that we certainly hear in engaging with employers and training organizations that suggests that that dynamic is happening. And there's some literature that suggests that the people that have made it through getting a bachelor's degree have shown some ability to work within large institutions, to be persistent. There's some evidence that people that do that are better citizens—they're more engaged, they're involved in civic groups—and a lot of those things translate into positive things in the labor market today.

I will say that we don't have that exactly in our work. With some of the skill requirements that we found in Burning Glass, it tended to be that we were able to batch skill requirements into a couple of different ones related to software: both baseline software. That's knowing how to use relatively common productivity software and specialized software. The more that those were requested, they tended to drive up the likelihood that—for these occupations kind of near the cut point, where it may or may not be a bachelor's degree [that is required]—tended to drive employers towards requesting a bachelor's degree.

We also had a relatively rough proxy for the soft skills. We had a baseline and specific nonsoftware skills—requirements that would include some things like communications, interfacing, customer service. These are a number of things that we had.

Davidson: Stu and Mels, whoever wants to take a crack at this, I wanted to go back to something that we talked about in the very beginning—and I may misstate this, so correct me if I do—that the number of middle-skill jobs has actually been in decline, it appears. Or were we talking about middle-skill jobs generally, or more about opportunity occupations/jobs?

Andreason: I'll answer that a couple of ways. It depends on how you define it. Opportunity occupations, in the years that we looked at them, did decline, in absolute numbers—about 1.7 million fewer jobs in 2014 than 2011. The good news on that is that for many jobs that were opportunity occupations, the educational requirements were beginning to relax. Employers were looking for slightly less education, so they may be becoming more accessible.

Now, broadly in middle skills, there are lots of different ways that people define middle-skill jobs. Some may say middle-skill jobs are ones that require more than a high school degree but no more than an associate's degree. Others will look at specific industries that they suggest constitute middle-skill jobs, or they will look at the actual work involved in a middle-skill job.

Depending on how you look at the middle-skill job market, there is some disagreement as to whether it's growing, declining, or shifting. There's relatively broad agreement that in changes in those middle-skill jobs, the education required is going to be more significant. You can no longer just graduate from high school and go into a job that is going to be stable and lead to the middle class. There's going to need to be some additional training. That might only be six additional weeks of a technical skill training program after you've graduated high school. It might be some of these programs like a registered nurse, which is more than an associate's degree—it's very close to a bachelor's degree. So there is some question, exactly, about what the trend is. But there's broad agreement that there are shifting requirements in it.

de Zeeuw: If I can just add to what Stu was saying: one dark cloud on the horizon is the trends we're noticing with registered nurses. [With] opportunity occupations generally, we see standards relaxing. But registered nurses, it looks like they're moving in the opposite direction. Employers—hospitals—are becoming more likely to require a bachelor's degree for a registered nurse position. Since that is the largest opportunity occupation, that could signify it's going to be harder for middle-skill workers to easily get a registered nurse position without having a bachelor's degree.

Andreason: Currently, no states require a bachelor's degree to get a license, a professional license, as a registered nurse. But there is some discussion at the state level. Licensing is done at the state level, and there are some discussions in states looking at making that a requirement. The shift has been significant enough that the Bureau of Labor Statistics has changed their designation, from when we started doing research on opportunity occupations, to say that the typical degree for entry into a registered nurse [position] is now earning a bachelor's degree.

So should the trend continue—and our research suggests that that's not a done deal, and that in many metros it's very different. In some, it's almost an absolute requirement, and others it's very much not so. But should the trend continue, registered nurses may no longer fit our definition of opportunity occupations. That's one of the things that we've found in this work, is that there's a real difference between looking at pedigree in attainment versus competency and skills in training—especially when there are these fields that have shortages.

Davidson: So just because you have a degree doesn't mean you're going to be a really good nurse, necessarily, or a better one than someone who doesn't have a bachelor's degree?

Andreason: Well, almost the opposite: just because you don't have a degree doesn't mean you can't do the job. There may still be the sorting—it may be that people that have the degrees are more specialized. But especially when you're dealing with a lot of these shortages and opportunities for people to get in the profession, the competency and skill might be the more important screen. You need people to be able to help patients. One other big factor, in terms of competency- and skill-based training versus attainment-based training is one of the things that happens with people, whether it's nursing or any of these other...

Davidson: When you say "attainment-based"...sorry to interrupt, Stu, but you're talking about education, right?

Andreason: Yes, education—getting a degree.

Davidson: Right.

Andreason: Not only is there this need to get more people in, but it's costly to earn a degree. So for people that are of limited means and have more strains on their finances and time, doing those extra few courses could be a pretty significant difference in their ability to access professions that give them a solid wage and opportunities to build wealth and to provide a stable life for themselves and their family.

That's another dynamic here, is that they may be commonsense, practical screens. But there are people that end up being limited in their ability to pass those commonsense and practical screens because they have limited resources, because they're strained in terms of the amount of student loans that they've already taken or time that they've taken off of work to get that education that would allow them to do the job, but not necessarily to have the credential that commonly is associated with getting that job.

Davidson: There's obviously a lot to pick apart here, but going back to this most recent research, what are the implications of that? What are the major things that we'll take from that going forward?

de Zeeuw: I think, broadly, it just gives us a better idea of how economic opportunity for these middle-skill workers is distributed across regions, across the country, how their opportunities differ, and, broadly, the factors that influence that. I think this would be useful to policymakers in these regions, to see these results and to come up with strategies to address that—to increase access to these middle-skill jobs.

Davidson: It strikes me that this is getting at some questions about equality of opportunity, basically—and that's pretty critical these days.

Andreason: I think that one of the—to add on that, one of the real goals of this work is to better understand what's happening broadly in these professions, but also to understand what's happening in local labor markets. We want to be sure to raise the awareness around accessibility to these professions and potentially the professions that are going to provide opportunity—that they're providing the right type of training and credentialing that are going to get people access for jobs. It would be a shame for training organizations to focus on getting people an associate's of nursing, if all of the jobs in the community require a bachelor's degree. We want to help make sure that there are opportunities for organizations to align the training and credentialing that they do with what the labor market is demanding anyway.

I think that this work helps to do that. It helps to show some of the changes that have happened in these occupations in specific and what some of the trends are at a more granular level than national trends in these occupations. There's some really interesting work on what's happening at a local level.

Davidson: Stu, Mels—thanks so much for your time today.

Andreason: Thank you.

de Zeeuw: Thank you.

Davidson: That was interesting. Thanks for listening; and tune in for more Economy Matters podcasts down the road. Thanks.