Skills-Based Hiring Accelerates as Degree Value Erodes

Key points:

• Employers are rapidly shifting toward skills-based hiring as digital, AI, and job-ready credentials outpace traditional degrees in predicting performance.

• Universities are redesigning education around micro-credentials, industry partnerships, and flexible pathways to close skills gaps faster.

• Degrees still matter in regulated fields, but future workforce value increasingly depends on verified skills, adaptability, and human judgment.

February 2026 — College degrees continue to lose value across the United States as digital competencies become the new workforce currency amid persistent labor shortages and rapid technological change. As a result, employers are increasingly prioritizing skills-based credentials over traditional degrees in hiring and recruitment decisions.

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This shift is closing gaps in industries, including among small businesses, where traditional talent pipelines are misaligned with workforce demand, while simultaneously challenging long-standing academic models

“There have been massive changes in terms of employability skills, and we will see this continue for decades to come,” said Chris Clark, CEO of the Georgia Chamber of Commerce, in an interview with Focus: Atlanta. “Tomorrow’s workforce will need more skills, stronger credentials, and the ethical grounding to move through an AI workplace.”

Focus on skills-based hiring

Employers are already showing increasing preference for verifiable competencies, such as technical skills or digital and AI fluency, throughout the hiring process, which is contributing to degree erosion. 

According to a recent report by the National Association of Colleges and Employers (NACE), roughly 70% of employers deploy skills-based hiring practices when recruiting, an increase of 65% from a year prior.  

Several market forces are advancing this shift. For one, businesses are reporting a growing skills-mismatch in fast-moving areas like AI and analytics where degree requirements often fail to predict job performance. 

There are also significant cost and time barriers associated with obtaining a degree, whereas digital credentials can take just weeks or months, and cost a fraction. At the same time, alternative learning paths, such as bootcamps, micro-credentials, and employer-led training programs, are gaining credibility as efficient pathways to employment.  

As both industry and academic needs evolve, higher education institutions are being forced to reassess how they prepare students for the modern economy.

“Higher education is shifting away from an industrial, assembly-line model where students start together, progress methodically, and earn a degree to a (more) flexible system,” said David Barnett, president of Brenau University, in an interview with Focus: Atlanta.

Opportunity in bridging the gap

Barnett also noted that employers today seek enhanced capabilities and previously developed skillsets.

“What do they need a person who walks in the door to be able to do with little or no training or development on day one?” Barnett said. “Everyone wants to hire people who have some level of capacity, not necessarily someone who has to learn everything.”

For Barnett, the opportunity lies in bridging this skills-gap by aligning graduate career objectives with real market needs.“We want to find ways to meet both of those needs and then create learning opportunities that complement each other,” he added.

To that end, academic institutions across the country are developing new degree programs based entirely on input from industry partners and immediate workforce needs. For instance, Brenau University is offering students the ability to pursue micro-credentials, take classes for a certificate, or combine certifications toward a degree at their own pace.

Educational institutions are also collaborating to address specific organization needs, Florida Gulf Coast University (FGCU), for example, is partnering with Arthrex, a leader in the medical devices field, to develop micro-credentials and digital badges that equip students with the industry-specific knowledge to succeed at the company.

According to FGCU President, Aysegul Timur, these types of partnerships guarantee interviews for students who earn these badges, essentially creating a direct talent pipeline from the school to the employer. 

“This model has been replicated with other major employers in our region,” Timur told Invest: Tampa Bay.He cited collaborations with Lee Health, the region’s largest healthcare provider, as well as Hertz Corporation, Gartner, NeoGenomics, and Naples Comprehensive Health Systems.

“Through these collaborations, we have significantly expanded internships and job-shadowing opportunities,” Timur added.

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Evolving at breakneck speed

This is especially relevant as skills continue to evolve at breakneck speed and the workforce needs to shift. The demand for non-degree credentials has been explosive in recent years. According to a report by Brookings, more than 1.5 million unique non-degree credentials now appear in U.S. workers’ resumes.

At a time when the value of a university degree is facing growing scrutiny across the United States due to concerns around affordability, credentials offer easier and faster access to education.

“The role of higher education is evolving. Institutions must meet students where they are,” Mary Finger, president of Seton Hill University in Pittsburgh told Invest: Pittsburgh.

According to Finger, today’s workforce requires critical thinking, technical skills, and the ability to adapt, which makes them more attractive within the broader labor market.

In fact, workers who earn job-relevant credentials see wage premiums, especially early in their careers and without a bachelor’s degree. However, there are limits to what a credential can achieve as well. 

Meaningful returns

Only credentials that are closely tied to specific job roles deliver meaningful wage returns, per the Brookings report. Its value can also vary dramatically depending on its relevance to a given occupation and employer recognition, with credentials that lack relevance often contributing little to earnings.

At the same time, credential adoption varies across industries. According to a December 2025 report by Forbes, only 46% of employers plan to expand their skills-based hiring efforts in 2026, signaling caution and uneven execution among organizations.

This uneven pace of adoption underscores why degrees have not disappeared outright, even as skills-based frameworks gain ground. Degrees still remain central in regulated professions and many corporate cultures, despite a weakening role as the default hiring filter. 

For academic institutions, this trend highlights the need to balance traditional degree programs with emerging credentials, as employers place growing emphasis on both formal education and proven skills.

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