A new analysis uncovers a mixed picture when it comes to whether master’s degrees actually add value in the American labor market today. That’s nearly 25 million adults in the U.S. who have earned a master’s degree. The number of people working towards these credentials has more than tripled between 2000 and 2019. Indeed, hiring managers themselves seem to have ambivalent opinions on the relevance of advanced degrees to job performance. They often view master’s degrees as an indicator of promise, not a predictor of better work performance.
Although some fields, such as education and urban planning, continue to consider advanced degrees an asset, changing hiring practices are in place. Walmart, for example, is phasing in skills-based hiring for its corporate jobs. The retail behemoth is changing the way it writes job descriptions, focusing more on the relevant skills than on traditional educational qualifications.
Even with this backdrop many hiring managers continue to cling to an outdated preference for candidates with advanced, primarily master’s degrees. According to a November 2020 survey, an overwhelming 72 percent of hiring managers are currently willing to pay increased salaries. They prefer applicants who have a master’s degree. Of them, 64% would offer at least a 10% pay increase, with 20% even willing to go up to 15%. Importantly, 23% of these managers would offer a salary increase of 20% or higher.
Workforce expert, Eva Chan from the Department of Labor, explains that a masters degree is not just the cherry on top. For hiring managers, it’s a big opportunity indicator. “Even if it doesn’t guarantee better performance, it can show that you’re very driven, you’re disciplined, you’re committed, and that you’ve given your time, money and effort into accomplishing a goal,” she states.
Unsurprisingly, Gen Z hiring managers show a significant bias for hiring candidates with a master’s degree over Boomer hiring managers. They are two times more likely to view those with terminal degrees as better performers. This educational divide indicates that younger managers may continue to consider educational accomplishments as applicable or visionary.
Hiring managers are still split on the real-world impacts of employing a workforce with master’s degrees. A staggering 62% report that graduates perform equally or worse than those with a bachelor’s degree and two years of experience. This finding calls into serious doubt the real-world value of pursuing and earning a master’s degree in today’s labor market.
Yet the financial burden tied to obtaining a master’s degree is profound. The average cost is over $62,000 but the average graduate school federal loan debt balance is over $94,000. These numbers highlight the continued rising cost of advanced education which individuals are increasingly paying for themselves.
According to Chan, whether obtaining a master’s degree significantly improves one’s career opportunities usually is a matter of personal circumstance. “I think we’re in a transition where the symbolic value of degrees still affects salary decisions,” she observes, “even if employers don’t actually think the performance of master’s degree holders matches the credentials.”
Employers are increasingly realizing that experience teaches just as many important skills and traits, if not more, as those held by advanced degree holders. Then, the conventional focus on academic credentials will slowly start to lose its grip. “More and more employers are realizing experience can show a lot of these same qualities,” Chan adds.