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Economic Impact: Are Having Work Credentials Worth It?

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Having the right credentials is getting an increasing amount of attention among firms and job seekers.
Businesses want to know that prospective employees have the knowledge, skills and ability to successfully perform a job.

Job seekers want to stand out as the most qualified among a large pool of applicants.
Credentials are becoming increasingly recognized by employers and sought after by workers in addition to or in the place of more conventional education levels.
One problem is that the federal government has not collected information to show whether credentials are worth it.
The Bureau of Labor Statistics provides data on wages and unemployment rates by education levels. It shows that more highly educated people generally get paid more and have a lower unemployment rate than less educated people.
When showing these statistics during speeches, audience members often ask if there are data pertaining to certain certifications. They typically ask that question because they know of an individual who earned a certification in less than a year and now makes a higher income than a recent college graduate.
My answer has been that the Bureau of Labor Statistics does not collect that type of data. But I’ll soon be able to provide a better response.
Probably driven in part by the increases in tuition and student loan defaults, the federal government put together an interagency working group late in 2009 to consider collecting data on certifications and licenses.
They define credentials as certifications or licenses. Certifications, such as those for information technology or project management, are awarded by non-government bodies and indicate the individual can perform a specific job.
Licenses are awarded by a government agency based on criteria that may include passing an exam or completing an apprenticeship that conveys legal authority to work in an occupation. Registered nurse licenses and cosmetology licenses are two examples.
In both cases, the credential needs to be renewed periodically.
However, a digital arts certificate or a motorcycle mechanics diploma may not be counted in this new database because they have been granted at a point in time when no continuing training is needed to demonstrate that they remain qualified for a certain occupation.
The labor bureau started including three high-level questions about certifications and licenses in its household survey in 2015, and the results were released earlier this year.
Although regional data are not available, national averages indicate that credentials provide an edge in the labor market to those who hold them:
  • The unemployment rate for those holding credentials was lower in 2015 (2.7 percent) compared with those without them (6.1 percent); and
  • The earnings for those with credentials were more than those without.
The bureau’s survey did not provide information on the type of credential obtained relative to unemployment or wages.
However, the U.S. Census Bureau is conducting such a survey that the agency expects to release in 2017. Once that study is released, job seekers will have more detailed information on the certifications and licenses that are commonly held by certain types of workers and that pay well.
(This article first appeared in the Sept. 4 issue of the Richmond Times Dispatch)
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