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Notes from the Field

Skills Are Bridges Not Gaps: A Skills-Based Approach for Transitioning Workers to Higher-Paying Occupations

Skills-based hiring practices—those that prioritize skills necessary to succeed in a role over formal educational credentials—show potential for securing higher positions for lower-wage workers and helping employers get the workers they need.

The views expressed in this report are those of the author(s) and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System.

In our recently released report, Exploring a Skills-Based Approach to Occupational Mobility, my co-authors and I suggest that job training and hiring practices that emphasize transferrable skills could help employers efficiently fill in-demand or hard-to-fill positions and provide new career opportunities for workers who have been laid-off, furloughed, or simply want a career change. Using almost 60 million online job ads, we showed that identifying common skills across occupations can be used to create an efficient pathway to transition workers from lower-paying to higher-paying occupations. This post provides an overly simplified, practical example of how a skills-based strategy would be employed.

To illustrate this approach, say employers in an area need to hire more computer network support specialists, but there are simply not enough workers in the local labor market to meet the demand. A skills-based approach to filling this position would identify occupations that require similar skills to those needed for a computer network support specialist and design a series of short-term training programs to build the skills needed to bridge the gap from the similar job to the computer network support specialist.

A computer network support specialist analyzes, tests, troubleshoots, and evaluates existing network systems such as local area networks (LANs) or wide area networks (WANs). Table 1 provides a list of 10 occupations that require skills most similar to a computer network support specialist in the Cincinnati metro area. The degree of similarity is measured using a skill similarity score. The similarity score is calculated by comparing the 25 most-requested skills in online job postings for each occupation and producing a value between 0 and 1 to indicate the degree of similarity (see Exploring a Skills-Based Approach to Occupational Mobility for more information about calculating a skill similarity score).

Two related technical occupations—computer user support specialist and engineering technician—have high similarity scores to a computer network support specialist; a handful of less obviously related occupations have some degree of overlap in requested skills, too. A time-sensitive skills-based solution to filling a computer network support specialist job would be to focus on hiring from those occupations with the higher similarity scores because additional training would be minimal and could be completed quickly.

But other jobs on the list might be selected for other reasons. For example, some occupations might be shedding workers if their industry is experiencing a major change, and many of those workers might need to find alternative employment. A skills-based solution to filling the computer network support specialist might also seek to address the transitioning workers’ needs and prioritize those occupations if the skills similarity is close enough. In our current environment with COVID-19 shutdowns, customer service representatives may be one such occupation (Table 1).

Table 1. Occupations most similar to a computer network support specialist in the Cincinnati metro area

Occupation Similarity Score
Computer User Support Specialists 0.84
Engineering Technicians, Except Drafters, All Other 0.76
Photographic Process Workers and Processing Machine Operators 0.73
Dispatchers, Except Police, Fire, and Ambulance 0.62
Bill and Account Collectors 0.62
Customer Service Representatives 0.61
Interviewers, Except Eligibility and Loan 0.59
Security and Fire Alarm Systems Installers 0.58
Health Technologists and Technicians, All Other 0.57
Production, Planning, and Expediting Clerks 0.57

Let’s say we take customer service representatives as the potential source from which to recruit and train future computer network support specialists. Those designing the training curriculum that will transition workers from customer service representatives to computer network support specialists will need to begin with a closer examination of the demanded skills. Figure 1 shows the 25 most requested skills for computer network support specialists and the degree to which those skills are held by customer service representatives. For skills common to both occupations, surpluses—those skills more important for a customer service representatives than for computer network support specialists—are indicated in light blue. Skill deficits—those skills a computer network support specialist needs that a customer service representative likely does not have—are shown in green. Importantly, the more commonly requested, 21st century skills are those that create the most overlap, while the deficits are primarily technical skills. The training curriculum will need to focus on the skill deficits, such as technical support, troubleshooting, Microsoft Office, network support, and network administration.

Skills surpluses and deficits for customer service representative vs. computer network support specialist
Skills surpluses and deficits for customer service representative vs. computer network support specialist

Skills-based hiring practices are those that deprioritize formal educational credentials in favor of testing applicants for the range of skills necessary to succeed in a role. Targeted training and close collaboration between employers and local training providers, especially community colleges, can ensure training satisfies the skills needed for any given market. Skills-based occupational transitions have the potential to promote economic mobility for lower-wage workers without a bachelor’s degree while helping to meet the talent needs of employers. However, just like any bridge, making these connections is a complex process that requires the proper supports in order for the bridge to be navigable for all participants. Collaboration between employers and training providers holds the key to realizing this potential.