Skills-Based Hiring and Older Workers

The nature of work has changed dramatically as automation and technology, as well as their effects on job tasks, have increased. The fast pace of technological change, exemplified by the automation of industrial processes and the increased application of artificial intelligence, is eliminating or permanently changing many traditional jobs in manufacturing and the broader economy while creating new jobs that many members of the workforce currently lack the requisite skills. The traditional educational system is struggling to prepare workers quickly for this new economy.

These changes have generated concern that an increasing number of workers lack the skills that employers value. Although researchers and policymakers have widely debated the skills gap, evidence suggests that employers are increasingly changing their training and hiring practices to emphasize skills over formal qualifications. Skills-based hiring focuses on job candidates’ observable and measurable skills that are relevant to a job rather than on educational credentials. Further, employers increasingly emphasize behavioral characteristics alongside relevant skills and knowledge as key competencies that must be considered when evaluating job candidates. This recruiting approach aims to identify and hire the most suitable candidates for performing each job in an organization, thus optimizing long-term results and subsequent cost savings and improving workforce retention and job satisfaction.

Although skills-based hiring is still relatively uncommon, how might older workers fare if such a paradigm were to replace traditional hiring practices? On the one hand, skills-based hiring could screen out millions of older workers if their skills are no longer relevant. On the other hand, older workers could benefit from skills-based hiring if they have acquired desired skills through their experiences but do not have college degrees screened for with hiring practices. Even if older workers had the skills that employers are seeking, would age-related stereotypes dissuade employers from hiring them?

The researchers’ review of studies and the interviews they conducted suggest that a skills-based hiring paradigm could help reduce age-related bias in hiring and in the workplace and help low-income older workers overcome challenges stemming from the lack of a traditional degree or the inability to change careers.

(This report is 78 pages in length and was published in 2022.)

The researchers identified the following recommendations for employers:

• Increase the use of real-time labor market information (LMI) to identify the optimal job skills that job seekers should develop and that companies should look for in their recruits.
• Improve transparency in communicating skills needed to potential employees.
• Prioritize reskilling and upskilling current employees over recruiting new staff.
• Build a culture of lifelong learning.
• Offer short-term paid internships to middle-aged and older workers.
• Provide clear guidance to older employees on the benefits of continued learning.
• Promote a diverse workforce.

The researchers identified the following recommendations for policymakers:

• Involve older adults in redesigning existing workforce training initiatives and creating new ones.
• Invest in open real-time LMI, including building capacity for conducting basic LMI analysis at the state level and coordinating effectively between federal and state LMI services.
• Disseminate information to employers about the growing importance of older adults in the labor market.
• Support developing a credentials and qualifications framework that recognizes, compares, and categorizes skills acquired through various pathways.
• Encourage continued expansion of shorter, stackable learning modules and other flexible educational options.
• Provide employer incentives to offer customized training options to older workers.
• Support expanding apprenticeship opportunities for older workers.
• Provide incentives and subsidies for low-income middle-aged and older adults to seek training outside of their job to acquire new skills or upgrade existing ones.
• Promote changes to existing workforce initiatives and develop new ones aimed at lower-income older adults to help them search for jobs and present themselves on the labor market.

• Last Updated:
• Created:
• Resource Publication Date: 2022
• Author(s): Butrica, B.; Mudrazija, S.
• Funding Source: AARP Public Policy Institute
• Resource Availability: Publicly available
• Posted by: Justin Venneri
• Posted in: Workforce System Strategies