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CEW Report: Balance of Education and Competencies Critical to Labor Market Outcomes

As cognitive competencies have steadily eclipsed physical ones in workplace relevancy, five have risen to the forefront, according to a new study from the Georgetown University Center on Education and the Workforce (CEW). Deciding which to prioritize in pursuit of a chosen profession – and the best educational path to acquiring and honing them – is fundamental to finding career success. 

“Workplace Basics: the Competencies Employers Want” identifies five cognitive competencies that are highly sought throughout the labor market. They are “communication,” “teamwork,” “sales and customer service,” “leadership,” and “problem solving and complex thinking.”

Of these, the communication competency is the clear frontrunner. The CEW report places it among the top three competencies demanded within all occupational groups. It also correlates with the greatest increase in wages.

To arrive at its findings, the CEW report reviewed data from the Occupational Information Network database. The database contains information on competency use among more than 1,000 occupations. The report distills this data into workplace demand within 19 major competency categories that comprise associated knowledge areas, skills, and abilities. 

The report also examined how wages correlate with workers’ level of education and how intensively they use these competencies. In all but two of the nineteen categories, workers who used a skill more intensively could expect an earnings premium versus those who used it less frequently. 

For example, on average, a 20 percent increase in wages was associated with a one-quartile increase in how intensively workers used the communication competency. The same usage increase for problem solving and complex thinking returned an average wage premium of 19 percent. 

The two exceptions to this trend were the physical competencies “strength and coordination” and “fine motor skills.”

The report also suggests a correlation between higher levels of education and opportunities to perform cognitive competencies at wage-increasing intensities. For example, more than three quarters of the most intensive users of the key communications competency had a bachelor’s degree or higher. Meanwhile, only 10 percent of workers who most intensively utilize strength and coordination had a bachelor’s degree or higher. The report points to this trend as evidence that postsecondary degrees can serve as effective indicators of job readiness for prospective employees.

At the same time, it offers a reminder of how important the link between learning – wherever it occurs – and work is. Although the report acknowledges the earnings premium that generally results from a college degree, it notes several exceptions. 

Among healthcare professional and technical occupations, the findings show that some workers with only a high school education were able to match or even exceed the median earnings of their peers who had at least an associate degree. The difference? The higher-paid workers were the most intensive practitioners of the communication or problem solving and complex thinking competencies. A similar dynamic existed between workers with some college/an associate degree and their peers with at least a bachelor’s degree.

The connection between higher earnings and postsecondary education becomes more tenuous among blue-collar workers. But, like their counterparts in some white-collar occupations, they can counter these educational wage premiums. The report showed that blue-collar workers who intensively apply key competencies on the job also can outearn their peers who have completed more formal education.

Perhaps the most important – albeit unsurprising – finding of the report is that formal education credentials, competency mastery, and their applied use do not exist in bubbles. Rather, it is their interaction within the context of specific workforce needs that determine what – if any – wage premium a worker might expect. 

For example, some “commoditized” competencies, with relevance throughout the labor market, may not command the greatest earnings enhancements. On the other hand, the report reminds us that competencies less ingrained across the workforce, such as engineering and mathematics, can fetch substantial wage premiums within certain occupations. However, it cautions that workers who rely on specialized competencies may be most susceptible to workforce disruptions. 

The report concludes by stressing the importance of workers understanding the variables they can control when planning for career success. These include the right balance of formal education and experience that will, in turn, empower them with the right balance of competencies for their occupation of choice. 

Of course, many things are out of workers’ control. These include how and at what pace the mix of optimal competencies changes within an occupation. Workers can respond by upskilling and reskilling. This can be most effective if, as noted earlier, they focus on aligning an intensive use of competencies with occupations that have a strong demand for them. 

On the other hand, the report acknowledges that not even the best preparation can overcome workplace biases that result in unjust compensation. Still, it argues that workers in all situations benefit from a holistic intersection of education, competencies, and occupational needs.

As for recommendations aimed at educators and employers, the report echoes CAEL’s emphasis on education-employer partnerships. It urges postsecondary institutions to focus on both general and specific competency areas with clear ties to career choices. For their part, employers should take every opportunity to inform policymakers and educators on top “real world” workplace competency needs. 

The full report, which includes detailed competency analysis across nine major occupancy groups, is available at cew.georgetown.edu/cew-reports/competencies

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