How valuable is a short-term credential for a job seeker? It’s complicated

Employer demand for short-term credentials is rising. These credentials are, on average, associated with higher wage offers, especially for those without four-year degrees. But which credentials are most likely to lead to higher wage offers?  It depends on the industry and can change over time.

With an estimated 24,000 credentials available in the state of Texas alone, more information about which credentials have the greatest value could help prospective students and educators identify the best paths to economic opportunities.

Top credentials sought by employers

To begin answering these questions, we use Lightcast job posting data to identify the most commonly requested certifications by educational attainment (high school degree only, associate degree, bachelor’s degree or more) (Chart 1). Among jobs seeking associate degree holders, nearly 2,000 unique certifications were mentioned 3.4 million times in postings in 2022. Singling out the most popular certifications could help identify certifications with strong employment outcomes.

The graphic above shows each education group’s top ten most commonly requested credentials.[1] Among job postings seeking high school graduates, a large share of common credentials is associated with the healthcare industry (for example, certified nursing assistant, certified medical assistant and phlebotomy certification.) A smaller share is associated with the food service industry (for example, ServSafe and food handler certification.)

For job postings seeking candidates with associate degrees, nearly all of the top ten most sought-after credentials are in the healthcare industry, including registered nurse and certified registered nurse practitioner. The only common credential not associated with the healthcare industry is child development associate. There is a greater industry mix among job postings looking for candidates with four-year degrees or more. In addition to healthcare, common credentials are found in business (for example, project management professional) and information technology (for example, IT infrastructure library certification.)

This first step in our analysis shows that credentials related to healthcare are most sought after, followed by a mix of other industries. While these occupations may be highest in demand, they may not provide the largest payoff for students and trainees. The next step in our analysis is to understand the wage gap found in many occupational groups and identify trends that shed light on which credentials potentially have high return on investment.

Occupational group highlights: education and sales

We used data from the Current Population Survey to analyze the wage gap between credential holders and non-credential holders within different occupational groups.[2] We continue to break out workers into educational attainment groups to see whether wage gaps appear broadly or only among certain populations. We chose to highlight the education and sales occupational groups because they showcase some important caveats when it comes to understanding the potential returns on short-term credentials.

First, while our previous article showed, on average, those without bachelor’s degrees tend to gain the largest wage boosts from credentials, the education occupational group shows this is not always the case.[3] For this group, those with bachelor’s degrees plus credentials experience meaningful wage bumps over their non-credentialed counterparts (Chart 2). Meanwhile, those with high school degrees or associate degrees did not receive significant wage bumps from obtaining credentials.

Adding to this nuance, a narrower analysis of workers within the early care and education subgroup (preschool teachers and child care workers) found the combined high school and associate degree-holding group gets a higher wage boost with credentials compared to the group with bachelor’s degrees plus credentials. So while credentials seem to reward bachelor’s degree holders the most within the broader education occupational group, the pattern among the early care and education occupation is reversed.

Like the education occupational group, bachelor’s degree holders in the sales occupational group also have larger wage boosts with a credential compared to credentialed high school and associate degree holders. However, a distinctive pattern within this occupational group is that this wage boost appears to increase over time (Chart 3).

Chart 2C shows the difference in wages widening over time for bachelor’s degree holders with and without credentials. The wage difference for associate degree holders also widens, though to a lesser degree (Chart 2B). This suggests the reward for earning a credential is not fixed and can change over time. The shifting nature of this return on investment adds further complications when it comes to assigning value for specific credentials within industries.

Conclusion

Our results show it is extremely important to acknowledge the nuance within short-term credentials, whether they provide boosts in wages and whether these boosts 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.

Note

1. We exclude all CPR and basic lifesaving certifications from each educational group’s top ten, given the prevalence of these two certifications and lack of association with a particular industry.
2. An important caveat to this Current Population Survey analysis is that it is not possible to determine whether credentialed workers have credentials that align with the occupational groups they work in. For instance, someone with a personal training certification who switched careers and now works as a photographer would be considered a credentialed media and communications worker, even though the certification does not relate to media and communications.
3. This group not only includes teachers but also social and human service assistants, librarians, preschool teachers and others.