A recent study from Harvard Business School's Managing the Future of Work project and the Burning Glass Institute (BGI) has revealed that despite a significant number of major companies pledging to eliminate degree requirements for new hires, most have not followed through. The study, which analyzed 11,300 hires from 2014 to 2023, found that only 20% of the employers who dropped their degree requirements actually changed their hiring practices in a meaningful way.
In fact, 45% of the organizations made the change in name only, merely pledging to do so without implementing any substantial shift. Another 18% were identified as "backsliders," initially making the promise to drop degree requirements but ultimately hiring more graduates than before. According to Matt Sigelman, president of BGI, there is "no doubt" about the sincerity with which these promises were made. However, the act of not hiring graduates still feels "unnatural" and "risky" to many hiring managers.
The unconscious bias towards graduates is a cause for concern, especially for the 37.7% of Americans pursuing a bachelor's degree before entering the workforce. The struggles facing young workers, particularly those without a degree, are evident. Additionally, the report suggests that this trend is making it increasingly challenging for individuals without degrees to compete in the job market.
While some companies, like Delta Air Lines, have made efforts to shift to skills-based hiring, the study suggests that the underlying systems and practices within many organizations have not fully embraced this change. Other major companies, including Bank of America, Amazon, and Lockheed Martin, are mentioned in the study for struggling to follow through on their commitment to drop degree requirements. However, there are indications that some of these companies are making progress, such as Bank of America's initiative to hire 20,000 low- and moderate-income employees by 2025 and Amazon's investments in talent development for individuals without degrees.
The study also highlights the benefits of skills-based hiring for both employers and employees. Non-degreed candidates hired into roles that dropped degree requirements have shown a 10-percentage point higher two-year retention rate compared to their college-educated counterparts. Furthermore, this hiring approach presents substantial opportunities for workers and eases recruitment burdens in a tight labor market. In conclusion, the report suggests that companies have an opportunity to embrace skills-based hiring as a win-win that can have a positive impact on business and workforce mobility.
The United Auto Workers, energized by the gains they secured in negotiations with the Big Three automakers, recently announced a campaign targeting the thirteen nonunion auto companies in the U.S. Soon thereafter, a group of U.S. senators wrote to the thirteen companies to urge them to sign “neutrality agreements” with labor unions trying to organize at their manufacturing plants.
In December, Microsoft reached such an agreement with the AFL-CIO, whereby the U.S. software giant will remain “neutral” in efforts by unions to encourage workers to become members.
A neutrality agreement is a contract between a union and an employer that typically forbids employers from communicating with employees about the unionization effort or the union behind it. This includes not discussing with workers the viability of any promises the union makes, the accuracy of information provided by the union, or details about the union’s record. Employers that sign neutrality agreements are even precluded from answering employees’ basic questions about how the bargaining process works.
So in short, these deceptively named neutrality agreements are anything but. Employers are not actually asked to be neutral, but instead to leave employees in the dark about the choice they face.
Employees are often unable to access this information easily on their own — or in some cases, at all. Compounding the lack of information is the fact that unions have few obligations under the law to provide any information to employees about their own record, and are free to make promises they may not be able to deliver on — for example, the UAW’s demand in 2023 negotiations for a 32-hour work week.
Unions and their allies argue that they need to silence employers in order to protect employees from intimidation or false promises. But the law already prohibits employers from doing these things. So why do the UAW or the AFL — or any other union, for that matter — feel the need to cancel all debate on the merits of union representation? Why are these unions unwilling to stand on their records and engage in healthy debate over facts?
The truth is that labor unions have largely failed to make a great case for employees. This is why the latest numbers again show a decline in the share of workers who belong to or are represented by unions for 2023. Even though Gallup found that general support for unions is high, not many workers are actually interested in joining a union.
Part of this is due to a history of unions mismanaging employees’ dues. The record is extensive of corruption by the UAW and other local and national unions throughout the years. There are also many questions about the long-term effects of some recently signed union contracts. Take, for instance, reports pointing out their effect on automobile costs, inflation, and long-term U.S.-based job growth. Among other things, the UAW contracts may impede automakers’ investments in technology, thus threatening their long-term viability.
Rather than take these questions head-on, labor unions prefer to rely on neutrality agreements to diminish the chances that workers will ever learn about possible problems with unions generally or with their union in particular. This is unfair to workers, who have a right to make an informed choice about union representation.
The truth is, once an employer recognizes a union, that union becomes all of its employees’ exclusive bargaining representative. It is very difficult for workers to decertify a union once it is in place, as many Starbucks employees are currently discovering the hard way.
Under the Securities and Exchange Commission’s new universal proxy rules, the SEIU will attempt to advance its slate of three pro-labor candidates for board seats at Starbucks. It is well known that the SEIU is conducting a far-reaching corporate campaign, using investor and public pressure to coerce Starbucks into making concessions. These pressure tactics, assisted by union-friendly regulators at the SEC, must not interfere with employees’ privacy and right to make an informed decision about their membership in a union.
Rather than pandering to unions and silencing employers at the expense of their workers, politicians, government agencies, and investors should be encouraging open and free debate about union representation, working to maximize employee participation in union elections and guaranteeing employees’ right to vote by secret ballot.
The imposition of neutrality agreements through outside pressure — whether from the government, investors, or other sources — will leave many workers without the information they need to make an informed decision regarding their future. Neutrality agreements are bad for workers, bad for companies, and counter to our nation’s democratic principles.