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States play a key role in identifying credentials of value

Nearly everybody agrees that young people need to start learning about the world of work early — even in high school. The question — which credentials can they earn — really matters. State officials and others need to sort this out, and now there’s some new help in figuring out one of education’s most vexing problems.

JPMorgan Chase and others have been supporting the New Skills for Youth initiative, designed to help states strengthen and expand their career readiness systems. After a year of study, Education Strategy Group has released a key resource for that work, Credential Currency: How States Can Identify and Promote Credentials of Value.

This new report underscores growing recognition that credentials matter more today than any time in history. Credentials provide currency in the labor market and serve as key points along an individual’s path to economic opportunity, especially those from underserved communities. Our educational systems — K-12 and postsecondary — are recognizing this economic shift and placing greater emphasis on college and career readiness for all students.

But with the tremendous growth of different types of credentials — diplomas, degrees, certificates, industry certifications, licenses, badges, and other microcredentials — how do we separate the “wheat from the chaff?” Whose role is it to identify the “credentials of value?” How are these valuable credentials defined?

Many stakeholders can lay claim to a role in identifying credentials of value: students, by enrolling in programs; employers, by recruiting employees with specific credentials; and credential providers, by marketing their programs. Increasingly, K-12 leaders in several states are stepping up to identify credentials of value. In the past, leaders have focused primarily on high school diplomas and college degrees. But the rapidly changing credentialing marketplace now requires new approaches.

Industry-recognized credentials, for example, are increasingly important. Twenty-six states now include industry-recognized credentials as a component of their reporting or accountability systems for high schools. That is up from 11 states prior to the passage of the Every Student Succeeds Act (ESSA), signed by President Obama in late 2015. This represents a significant shift in state recognition that earning an industry credential while in high school can improve a student’s long-term prospects.

As greater weight is placed on these credentials, a fundamental challenge has emerged: Though more than 4,000 credentialing bodies nationwide offer thousands of industry-recognized credentials across sectors, very little information is available about their value. How can states that have encouraged the growth of industry-recognized credentials determine which ones to prioritize, support, or fund? In short, how do they pick the winners?

The new Credential Currency report provides a roadmap for states to follow.

First, states can identify high-value credentials by analyzing employers’ signals of value and by noting which credentials count for postsecondary credit. All states are advised to build a priority list of credentials — across sectors — to inform their decisions about programs and funding.

Next, states can incentivize attainment of high-value credentials by demonstrating how they improve students’ future prospects. They can build incentives into K-12 funding and accountability systems that encourage districts and schools to prioritize high-value credentials. And they can publicly communicate the importance of specific ones to students, parents, and employers.

Third, states can collect and report data on credential attainment — data that are reliable and actionable, not reliant on self-reported information.

In the long run, identifying credentials with labor market value is critical for several reasons. First, it strengthens the alignment between education and the workforce; second, it provides truth in advertising by identifying which credentials are actually in demand; third, it enables data-driven conversations about improving equitable outcomes; and fourth, it increases the return on investment for students and states.

Improving equitable outcomes is especially critical. Not only must we prepare students for the demands of the workforce — now and in the future — but states have a responsibility to make sure all children have the skills and knowledge to be successful in life after high school. Ensuring students have equitable access to high-value industry credentials is a vital step toward enabling their economic and career success.

States will surely be challenged as they seek to develop and maintain a coherent list of industry-recognized credentials with labor market value. But many states already engaged in this process can serve as models for the newcomers.

Ultimately, a credential or a combination of credentials (e.g., diploma plus industry certifications) is powerful currency for students. It is up to K-12, postsecondary, and workforce leaders — and the employers who recognize this currency by employing students and advancing them in their careers — to ensure that students can cash in that currency to realize economic prosperity. Right now, states must work to separate the wheat from the chaff, provide clear signals and supports, and open pathways to credentials of value.

Kate Snedeker

A series of reports show investing in employee tuition reimbursement yields significant financial payback.
See Talent Investment series