Labor Market Slowdown is Driving a Shift to Skills-Based Hiring

More employers are beginning to prioritize skills over specific years of experience when hiring for high-wage positions.  

It’s a hiring trend driven by various factors — including the need to control costs, adapt to changing labor market conditions, and leverage the growing availability of online learning platforms and certifications. 

According to a study published by Indeed, only 30% of job postings in April 2024 specified a certain number of years’ experience. This was down from nearly 40% in April 2022. 

USA today reports this decline was most prevalent in higher-paying sectors that traditionally required higher education — such as banking, scientific research, and information design.  

These fields have seen a dramatic reduction in both educational and experience requirements, with year-specific experience mentions in job postings falling by more than 20 percentage points for high-wage sectors (from 66% to 44%) since April 2022. 

Postings mentioning these requirements in low-wage jobs fell seven percentage points, and they fell 10 percentage points for medium-wage jobs.  

Researchers at Indeed’s Hiring Lab suggest the skills-first hiring practice is likely a tactic by companies to broaden their candidate pool and manage labor costs more effectively.  

However, this shift is not just about reducing costs but also about improving the quality of hires.  

According to Indeed’s Hiring Lab, “One of the main drawbacks of using years’ experience as a proxy for job proficiency is that even if a candidate fulfills the year requirement, the quality of that experience is not clear. A worker who uses a skill or technology daily will likely have greater proficiency than one who uses the same tool once a month, even if they have the same number of years under their belt.” 

Fields such as project management, accounting, and civil engineering still commonly ask for defined experience levels, with around 49%, 48%, and 47% of job postings in these sectors specifying some number of years’ experience, respectively.  

In comparison, sectors such as beauty & wellness, pharmacy, and therapy generally have more flexible experience requirements, with only 16%, 20%, and 21% of the job listings, respectively, specifying a certain number of years of experience.  

The decline in experience requirements is also linked to broader economic trends. As the labor market has slowed, the number of people quitting jobs to take new positions has dipped below pre-pandemic levels. 

This change is driven by the need to control costs, adapt to labor market conditions, and leverage the growing availability of online learning platforms and certifications.  

Moreover, the data reveals that many companies have enough veteran workers and are seeking college grads or others with less experience to reduce labor expenses. By not specifying an experience level, companies may also attract more seasoned workers willing to take lower-paying positions.