A teacher’s license. A forklift driving certification. A business analytics badge. While these things appear to have little in common, they are all examples of short-term credentials. Short-term credentials are awards received after completing a program that requires fewer than two years of study. And they are one of the hottest topics in higher education today.

There is a well-known relationship between the amount of education a person has and their eventual earnings. Generally, the more you learn, the more you earn. For this reason, higher education has often been seen as a road to economic security and intergenerational mobility—the pathway to doing better financially compared to your parents.

However, recent trends in higher education are challenging this notion. Rising tuition, cost of attendance, and increasing student debt have contributed to a slight decline in enrollment rates. These trends are a cause of for some researchers and policymakers. They fear young people may face poorer economic outcomes in the future due to missed educational opportunities today.

This is where short-term credentials come into play. These alternatives to education and job training have grown in popularity. People who forgo college, including those from lower-income backgrounds, hope short-term credentials will provide better economic outcomes. Overall, acquiring these credentials is cheaper and takes less time than traditional degree programs. They are often associated with occupations or skills that may be in demand. However, very little is known about short-term credentials compared to two- and four-year degrees. Previous research offers mixed results on whether short-term credentials result in higher wages and better employment outcomes over time.

One of the most important factors in determining the value of short-term credentials is employers’ perception of them. If employers don’t value these credentials, what are the benefits to students? We follow this line of questioning to explore the pros and cons for employers and job candidates.

The rise of short-term credentials

Our first finding is that both the supply and demand for short-term credentials has been increasing over time; that is, the supply of students completing these programs and the demand from employers who request them in job descriptions. Data from the Department of Education show that the number of awarded sub-baccalaureate certificates grew 89 percent between the 2000-2001 and 2021-2022 school years (Chart 1).

Chart 1: Number of certificates granted by higher education institutions increases

We found that the rise in certificate holders has been followed by an increase in job postings mentioning short-term credentials (Chart 2). The most rapid growth in certificate demand was between 2014 and 2017, though there appears to have been an uptick in interest between 2021 and 2022.

Chart 2: More job postings ask for certificates

However, just because a credential is popular among employers doesn’t necessarily mean it leads to a better wage. We looked at three types of job postings: those that required only a high school degree, those that required an associate degree, and those that required a bachelor’s degree. For each category, we then analyzed a short-term credential appeared to make a difference in wages. An important caveat is that our dataset includes advertised wages, not necessarily actual wages.

In Charts 3A–C, we show the average hourly wages advertised in postings from 2011 to 2023 that required a certification and postings that did not. For each group of jobs, there is a minimum and a maximum hourly wage, indicated by endpoints on each blue or orange line.

Chart 3: Higher wages offered in job ads seeking certifications

Two takeaways emerge from these charts. First, jobs requiring associate degrees offer the largest wage increase for certifications. These jobs provided an average bump of $7 an hour in minimum hourly salary and an average bump of $9 in maximum hourly salary. The bump was less for jobs seeking bachelor’s degree holders ($3 in minimum and $4 in maximum hourly salary) and high school degree holders ($2 in minimum and $4 in maximum hourly salary).

Nevertheless, the second takeaway is that jobs requiring a four-year degree, with or without an added certification, generally pay better. By comparing Chart 3B and Chart 3C, we see that jobs requiring a four-year degree typically advertised higher pay than jobs requiring associate degrees.

The nuance of industry and occupation

A natural next question is what kinds of short-term credentials are the most beneficial? To begin answering this question, we again used job posting data to identify the most requested certifications by education level. Singling out the most popular certifications could help identify certifications with strong employment outcomes.

Figure 1: Most popular short-term credentials in job postings by degree

Figure 1 shows each education group’s top 10 most requested credentials in 2022. Among job postings seeking high school graduates, a large share of the top 10 credentials is associated with the healthcare industry. An even larger share of job postings seeking candidates with associate degrees seek credentials in the healthcare industry. There is a greater industry mix among job postings looking for candidates with four-year degrees or more, including business and information technology.

However, when it comes to wages, it can be difficult to determine the benefit of specific short-term credentials or even credentials broadly within the same industry. Our article on short-term credentials and industries points out that occupations in education and sales offer very different results, with different educational attainment groups finding the most benefit and, in other cases, the size of potential wage boost changing over time.

Tailoring programs to workforce needs

Our research shows it is extremely important to acknowledge the nuance within short-term credentials, whether they provide boosts in wages or are available to workers of all educational levels. Even credentials within the same industry can offer vastly different pay bumps.

With the data that we used, it is not always clear that short-term credentials give a job applicant an advantage. Results may be surprising when analyzing specific industries, occupations, and credentials, especially when applied to different educational attainment groups. For these reasons, it is important to tailor short-term credential programs to the individual needs of the local workforce as well as local demand for certain occupations, just as we see with MVEDA’s AutomateUp pilot program.

More on short-term credentials