Our interview with Peter Cappelli, Author of Will College Pay Off?

As many organizations struggle with the number of job openings -- a record 11.5 million postings in March alone -- ramping up recruitment advertising alone isn't enough. Many companies are considering new ways to solve their talent challenges, and that includes a fresh look at the requirements for the jobs themselves.

This week we spoke to Dr. Peter Cappelli, professor at the The Wharton School at the University of Pennsylvania and the author of Will College Pay Off? A Guide to the Most Important Financial Decision You Will Ever Make. Dr. Cappelli shared his thoughts on the college degree requirement and the state of the jobs market.

(exaqueo): There’s no doubt hiring is dominating all the news cycles right now. When you talk to executives, what advice are you giving them on how to address the labor shortage?

(Peter Cappelli): I’d start by pointing out the causes.  There is no shortage of workers – we have fewer people employed now than in 2019, and those people didn’t go away.  What happened was that most employers laid off their employees, as opposed to furloughing them (not working and not being paid).  When the restrictions lifted, they all tried to hire new workers at the same time rather than planning for it in advance.  At that point, there wasn’t enough to go around, in part because not everyone was ready to come back – many were scared of Covid – and also because at the front-line retail level, which is really where the tightness is, delivery companies like UPS and Amazon were offering new jobs with lots better pay.  The workers are still coming back, labor force participation rates are recovering.  Now it’s just competition.  So employers have to choose: do you want to be in the day labor market spending as little as possible on labor and suffering turnover and churning of workers?  Or do you want to pay more with practices that attract better workers and will retain them.   

(ex): Because of the talent shortage, companies are getting creative, including loosening the restrictions on college degree requirements. Is this a good stop-gap measure, a long-term plan, or neither?

(PC): None of these practices ever made sense.  For example, legal secretary jobs started requiring college degrees after the Great Recession because there were so many applicants that this was a simple way to sort them out.  Those jobs require training but not a college degree.

More broadly, there are still lots of young people struggling to get a first job because they have no experience yet few employers  want to hire them because they don’t want to do any training or deal with onboarding them into jobs.  Why not do some training and pay less?

(ex): Many other countries recommend a gap year for young adults before choosing to pursue higher education. Do you advise students to consider a gap year? Is this useful for all young people or only those in certain situations?

(PC): I suppose it all depends what you do in that gap year.  Families with more money can send their kids on interesting experiences.  If the gap year means just struggling to find anything to do, might be a bad idea.  Another issue is that if there is something they really want to do, like go live in a foreign country, it is far easier to do it before starting college.  Taking a gap year after you graduate is really a bad idea if you want to get a job because you miss that college graduate job market.

(ex): Despite low unemployment, given the inflationary concerns, many Americans are struggling. Do you think this creates a gap where only those with means consider and attend college creating disparities in the ultimate pool of college graduates?

(PC): That’s been true for a long time.  What is true now is that there are more cut-rate college offerings that people without means may be stuck with.  These are “colleges” with no campus or evening programs with classes in an office park someplace.  You get none of the experiences of a residential education.  We might say, those are just the unnecessary fluff in education, but for employers, it is the core: have you learned to get along living with other people, have you had experiences running or working in extra-curricular activities, or more generally working in teams and groups.  Learning to write and communicate, for example, is expensive because as of yet the best ways to do it are one-on-one. 

(ex): Are there other untapped sectors (teenagers, older Americans) companies should be considering to address their hiring challenges?

(PC): Of course, older individuals past traditional retirement age have long wanted to keep working in some way and have long been frustrated by the inability to do so.

(ex): What companies are handling this situation well?

(PC): I don’t think so.  They haven’t taken employment seriously for decades because compared to the period before the baby boomers in the 1970s it has been a buyer’s market with declining unionization, which made it simple to manage.

As a simple example, everything now is focused on hiring, yet the need for hiring is virtually all driven by retention – our employees are quitting.  Everything is about hiring, almost nothing about keeping talent.


Want to hear more from Peter Cappelli? Registration is open for the 25th Annual Wharton Leadership Conference, which explores the many ways corporate and other leaders are navigating our changed world and uncertain future. The event will be held on Tuesday, June 7, 2022 at the University of Pennsylvania. Visit the website for more details and online registration, here.

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