Stackable credentials can open doors to new career opportunities

The COVID-19 pandemic has resulted in record-setting unemployment in the United States. While employment for higher-income workers has largely rebounded, employment rates are still 21% lower than the start of 2020 for the lowest-wage earners. Anywhere from 32% to 43% of jobs experiencing a coronavirus-induced layoff will likely transform into a permanent position cut. Policymakers are increasingly looking to workforce training for displaced workers as one solution to a faster economic recovery. Though workforce training recruitment often targets individuals who never attended college as a young adult, even individuals who already hold a postsecondary credential may need additional training to recover from current unemployment and to prepare for the post-COVID-19 economy.

Even before the pandemic, many community college students completed two or more credentials—referred to as “stacking” credentials. For example, a student might complete a short-term certificate in cyber security one term and later return to apply some of those credits to earn an associate degree in information systems technology. The short-term certificate enables the graduate to immediately gain work experience in the field and the second credential helps them advance along that career ladder.

Stacking credentials has emerged as an increasingly popular higher education policy to support students who want to develop career skills but may not have the flexibility in their work and family schedules to commit to a longer-term program. Seventeen states have allocated funding to colleges to develop stackable credentials pathways, and 10 states require that their community college systems offer and advertise stacking options. In Virginia, we estimate about 8% of community college graduates who first complete a workforce-oriented credential return for and complete a second degree in the same field as their first within three years of their initial graduation.

In a recent paper along with our colleague Kelli Bird, we use data from the Virginia Community College System (VCCS) merged with state unemployment data to provide the first causal evidence we know of on how stacking affects working adults’ labor market outcomes. We find that adults who completed a stacked credential are 4 percentage points more likely to be employed, compared with 77% of non-stackers, and earn about $570 more each quarter relative to the $7,970 earned by non-stackers (a 7% wage increase). The most common stacks are in health or business, and individuals who complete a stack in health or business have especially high returns—a 5 and 10 percentage point increase in employment and $640 and $760 quarterly wage increase, respectively.

While we find no evidence of significant differences in returns for male and female stackers, we do find higher returns for white stackers than for Black stackers. Part of this appears to be driven by the fields that individuals pursue. Most stackers of both races complete degrees in health and business, and within these fields there are few and smaller differences in the labor market returns to stacking by race, meaning the overall differences we observe are driven by racial differences in the returns to stacking in other fields of study. Indeed, Black stackers’ third most-common field of study is child care, while white graduates’ next most common field of study is engineering technology.

In addition to direct benefits to the adult workers who complete a stacked credential, developing and promoting stackable credential opportunities to existing graduates could offer one avenue for community college systems to offset enrollment declines experienced this year. While historically a poor economy has resulted in higher rates of pursuing postsecondary education and training, this has not been the immediate case in the midst of the COVID-19 pandemic. The National Student Clearinghouse reported a substantial drop in first-time undergraduate enrollment for the fall 2020 semester, with a 9.5% enrollment decline at public two-year colleges. Enrollment declined even more for older adult learners, with a nearly 23% decline in first-time enrollment among 21-24 year-olds, a 16.5% decline for 25-29 year-olds, and about a 24% decline for learners over 30.

Of course, the extent to which individuals who experienced pandemic-induced job disruption can return to the classroom for stackable opportunities may rely on more significant financial investments by federal and state governments to support additional training. Several states have directed funding from the CARES Act to support workforce development for adult workers and boost postsecondary enrollment. In some states, this takes the form of targeted aid for displaced workers. In Michigan, for example, the Futures for Frontliners program will pay tuition for essential workers to attend their local community college.

Other states have expanded eligibility for existing programs to include individuals that were previously ineligible for aid programs. For instance, Indiana is expanding eligibility for its Workforce Ready Grant to include support for certificate programs and for individuals who already hold an associate or bachelor’s degree. Virginia community colleges have collaborated with Sentara Healthcare and Optima Health in a public-private partnership to support students in stackable credential pathways in health-care programs with the aim to expand on lessons learned though the pilot programs to other colleges in the commonwealth.

With additional funding and coordinated communication, federal efforts could further support individuals to return to community college for a second credential, building on their skills to advance along a career path that aligns with labor market demands. One of the major higher education policy efforts in President Joe Biden’s administration will likely be an investment in training at the community college level. Particularly given First Lady Dr. Jill Biden’s expertise and experience in delivering community college education, the administration has highlighted a goal of providing up to two years of tuition-free community college or training to all individuals, noting specifically that this commitment would not be limited to recent high school graduates.

Our research shows that stackable credentials improve employment and wages, particularly for students stacking in health or business. Policy and philanthropic support for these high-return stack pathways could offer one opportunity to help displaced workers take the next step in their career and recover from the pandemic-fueled recession.