The world of work is redefining what it means to qualify for a job. Degrees still matter, but growing evidence shows that non-degree credentials, from professional certificates to industry certifications, deliver measurable market value. Understanding how these credentials translate into wage outcomes is not just a recruiting or learning issue. It has direct implications for compensation frameworks, internal equity, career mobility, and skills-based pay strategies.

A recent analysis from The Brookings Institution examined 37.7 million U.S. worker resumes to estimate the wage effects of different non-degree credentials. The findings offer a clear message. Not all credentials carry the same value, and job relevance matters.

Relevance Matters

One of the strongest findings is straightforward. Workers who earn their first job-relevant non-degree credential see an average wage increase of about 3.8%. By comparison, a credential that is not closely related to the job is associated with roughly a 1.8% increase. Additional relevant credentials continue to add value, about 1% per credential. Credentials that are not job-related do not show the same effect.

For HR and compensation professionals, this distinction is important. Many organizations treat credentials as a simple checkbox. Earn a certificate and receive a bonus. The research suggests that compensation policies should differentiate based on whether the credential strengthens skills that are directly applied in the role.

Implications for Skills-Based Pay and Equity

The Brookings study also found that non-degree credentials can have a stronger wage impact for workers without a college degree. In many cases, the wage gains are 1.5 to 2 times larger than for workers who already hold a degree.

This has practical implications for HR leaders focused on skills-based pay and internal mobility. When credentials are directly tied to job requirements, they can provide meaningful advancement opportunities for employees who may not have traditional academic pathways. Compensation structures that recognize relevant credentials can help create clearer development paths while maintaining internal equity.

Credential Type Also Matters

The research also highlights differences among credential types. Certifications that require assessment and ongoing maintenance tend to show stronger and more sustained wage benefits when they are job-related. Shorter badges or micro-credentials may provide an initial boost, but the long-term impact depends on whether the skills are applied in the workplace.

For compensation design, this reinforces a practical principle. Reward credentials that strengthen capability and performance, not simply participation.

Practical Actions for HR

• Map credentials to clearly defined job competencies before incorporating them into pay structures.
• Prioritize incentives for credentials with documented market value.
• Align career pathways with skills that show measurable return in the labor market.
• Help managers understand the difference between credential completion and demonstrated skill application.

As organizations continue shifting toward skills-focused workforce strategies, the Brookings findings provide helpful evidence. For HR and compensation leaders, the message is clear. When job-relevant credentials are tied to real capability, they can and should influence pay design in a thoughtful and disciplined way.

Source: brookings.edu