In the months that followed the onset of COVID-19, devastating unemployment and the rapid shift to remote learning renewed questions about the efficacy of a pricey, multi-year college degree—and sparked a national outcry over the relevance of traditional higher education in a COVID-changed world. Parents and students alike were rightfully skeptical of paying high prices for a redacted experience (remote learning) with seemingly lower returns (bleaker prospects of good jobs in a weak economy).
The reality is that not all college graduates are reaping the employment returns post-secondary education is believed to promise. If you’re a college student relying on features of higher education—such as college curriculum and career services—to make a transition to the workforce, you could be set up for failure. A pre-pandemic study shows that more than 4 in 10 college degree holders are underemployed and are likely to remain that way for decades to come. This coupled with the astronomical cost of college and mounting student loan debt raises a need for alternative pathways into America’s workforce. The current college system is not putting all Americans to work.
And the pandemic has exposed challenges in the system that go beyond college. Struggling mid-career professionals dislocated by COVID also need pathways to fulfilling jobs. Sadly, there aren’t enough CARES packages to provide for the 10 million Americans—at least—who are currently unemployed. Even an aggressive approach by the Biden administration is unlikely to place every un- or underemployed American into a well-paying, sustainable career.
But for students and job-seekers trying to navigate an increasingly complex, volatile labor market, there may still be reason for optimism. Technology companies that have disrupted industries across the country have now set their sights on the labor market.
The past few years have seen the emergence of a new category of technologies and approaches that establish new pathways to opportunity by transforming how workers find jobs and how employers hire. We estimate this wave of tech disruption in the job-search business—what we call “jobtech”—to be approximately $40 billion in size, and growing rapidly. Jobtech isn’t just big business, either; it may help the country chart a path to a more effective economic recovery.
These emerging companies bridge the gap between people and jobs by matching, training, and often literally placing candidates into positions. That’s different from edtech, which focuses on the learning but not the workforce connection; and from HR tech, which prioritizes recruiting but not training or skills development. It’s more than the professional networks and digital job boards that put all the pressure and responsibility on the worker. And it has the potential to address the pain points of both students and workers who are underemployed, or newly unemployed due to the pandemic, by translating skills and experiences into positive labor market outcomes.
Jobtech has the potential to be more effective for job seekers by aligning their aspirations more directly with the needs of employers. Unlike higher education institutions, a jobtech company’s profit and survival depend on people getting placed in good jobs. Consider firms like Talent Path, a staffing firm that trains workers for specific tech jobs at its client companies, and then creates a pathway to full-time employment at those companies. Or Upwork, whose end-to-end freelance management platform provides paid gigs for freelancers that enable them to get hired based on their skills, rather than their pedigree. The success of these businesses hinges on securing opportunities for job seekers. This guarantees customer satisfaction, repeat business, positive margins and a healthy, sustainable business model.
But the benefits of jobtech extend to employers as well. Services can help companies access talent that is notoriously difficult to recruit for by allowing them to test out potential workers who are adequately trained for a specific role with the right technical and soft skills. That sort of innovation can come from unlikely places, like in the case of Optimum Healthcare IT. Originally founded as a technology solutions provider to hospitals, Optimum launched a program that hires recent college graduates who studied life sciences, trains them as apprentices in core skills like electronic medical records integration, and then places them in jobs at hospitals. It’s a way of reducing the “hiring friction”—time and money spent on recruiting—that employers so often face as they seek talent with hard-to-find skills.
While we are still in the early innings of the jobtech revolution, this market has the potential to be as large as edtech or HR tech in the years to come. As it matures, it’s likely we’ll begin seeing consolidation, or the emergence of bundled services, as neither employers nor job seekers want dozens of solutions across different parts of the job search process.
Given the potential of technology to match people to jobs, and thereby rejuvenate economic opportunity and address many of America’s most serious economic, social, and even political challenges, this space is worth watching closely. Of all the changes digital transformation is bringing to America, jobtech may be the one with the greatest promise of supporting a more resilient economic recovery.