Why new collar jobs should matter to your organization

If you work in HR, compensation, or total rewards, you’ve probably seen the phrase “new collar” showing up in industry reports or leadership conversations about skills shortages. But what does it actually mean, and more importantly, why does it matter for your talent strategy?

New collar jobs represent one of the most significant shifts in how organizations hire, develop, and reward talent. They challenge long-held assumptions about degrees, credentials, and what qualifies someone to contribute meaningfully in fast-changing fields. And for talent leaders, it opens a massive opportunity to expand talent pools, reduce recruiting costs, and build more resilient internal pipelines.

This article breaks down what a new collar job is, why it matters now, how it impacts hiring and compensation, and how HR teams can start integrating new collar strategies into workforce planning.

What is a new collar job?

A new collar job prioritizes skills and practical capabilities over traditional four-year degrees. It’s a skills-based approach to finding and developing talent that helps your workforce stay adaptable, diverse, and future-ready. IBM’s former CEO, Ginni Rometty, popularized the term to describe emerging tech and operations roles in which the required skills can be learned through alternative pathways such as certificates, apprenticeships, bootcamps, and on-the-job training.

But what is a new collar job in practice? Think of fields like:

• Cybersecurity
• Data analysis
• Cloud computing
• DevOps
• Technical support
• Digital design
• Advanced manufacturing
• Healthcare technology
• Mobility and logistics tech

These jobs require technical proficiency but not necessarily a bachelor’s degree. A combination of hands-on learning and training often prepares employees just as well, if not better, than traditional academic routes.

In other words, new collar jobs are a response to the real-world skills gap. They’re built for people with the ability and motivation to learn quickly, even if their path didn’t include college.

What makes a job “new collar”?

New collar roles have a few common characteristics:

• They’re skills-first, rather than credential-first. A degree might still help, but it’s not the most critical factor. Skills, certifications, and project experience matter more.
• They evolve quickly. Because these jobs are tied to emerging tech, responsibilities shift more often than in traditional roles.
• They require strong problem-solving and adaptability. Soft and technical skills go hand in hand. Curiosity, resilience, and communication are just as important.
• They benefit from practical learning environments. Apprenticeships, simulations, project-based work, and shadowing programs prepare candidates better than textbook learning alone.
• They align well with upskilling strategies. Because the barrier to entry is lower, these roles can serve as internal mobility pathways for employees who want to grow.

Why the shift toward new collar roles?

A few key forces are pushing employers toward new collar strategies. There are five things to consider.

1. Persistent skills shortages

Tech-adjacent roles across industries remain hard to fill. Degree requirements shrink applicant pools dramatically, even though many high-potential candidates possess the right skills from nontraditional routes.

2. Rising cost of higher education

As tuition costs increase, obtaining a four-year degree has become unattainable for many people. For this reason, more workers choose alternative education paths. Employers who insist on their employees having a degree risk missing out on capable candidates.

3. Faster technology cycles

Skills evolve faster than academic programs. A worker trained through bootcamps or on-the-job learning can gain relevant experience more quickly than someone in a four-year program.

4. Pressure for equitable hiring practices

Skills-based hiring supports diversity, equity, and inclusion by reducing barriers for candidates who have the ability but not the financial resources to pursue degrees.

5. Internal mobility and talent retention

Once companies embrace skills-based pathways, they can build internal talent pipelines that support upskilling and mobility. This helps reduce turnover and recruiting costs.

Why you should pay attention: the business impact

HR and compensation teams have a unique perspective on the rise of new collar jobs. Here’s why this shift deserves space in your strategic roadmap:

• Larger, more diverse talent pools: Removing degree requirements can increase the number of qualified applicants in some roles. That’s critical in a competitive hiring landscape.
• Lower recruiting costs: Hiring for potential and upskilling internally is often cheaper than competing for scarce senior-level talent.
• Stronger employee retention: Employees who move into new collar roles through internal pathways feel invested and tend to stay longer.
• Better alignment between learning and business needs: Skills-first job architectures allow companies to build talent pipelines intentionally rather than reactively.
• More efficient compensation structures: Compensation teams can design salary bands based on skill proficiency rather than degree attainment, thereby improving pay equity.

How to integrate new collar talent strategies into your organization

Shifting to a new collar approach doesn’t require a full-scale overhaul. Instead, HR and total rewards can build the foundation through small, strategic moves.

1. Audit degree requirements

Start with a job inventory. For each role, ask:

• Does a degree truly impact on-the-job performance?
• Are the responsibilities teachable through training?
• Are we limiting access to qualified talent by keeping degree requirements in place?

2. Introduce skills-based job descriptions

Rewrite job descriptions to focus on:

• Key responsibilities
• Required capabilities
• Relevant certifications or technical skills
• Indicators of learning agility

3. Partner with learning teams to build pathways

Create structured pathways that help employees step into new collar roles. Examples include:

• Micro-credential programs
• Internal apprenticeships
• Bootcamp partnerships
• Rotational programs
• Job shadowing and mentorship

These pathways make the transition accessible and predictable.

4. Update compensation frameworks

New collar roles benefit from flexible, skills-based pay structures. Consider:

• Pay progression tied to skill mastery
• Certification stipends
• Apparent leveling tied to outcomes, not tenure

This approach supports internal mobility and fairness.

5. Work with managers to shift hiring mindsets

Managers may default to degree requirements out of habit. Provide training and hiring guidelines that normalize skills-based decision-making.

6. Track and communicate success metrics

Share wins early and often. Useful metrics include:

• Time-to-fill new collar versus traditional roles
• Internal mobility rates
• Performance outcomes of new collar hires
• Cost differences between external hires and upskilling

Seeing the data helps leaders commit.

The future of new collar work

New collar jobs aren’t just a trend, but rather reflect a change in how modern work functions. As AI accelerates skills cycles and organizations prioritize agility, the demand for skills-first hiring and internal mobility will only increase.

For HR, compensation, and total rewards leaders, the shift offers an opportunity to modernize job architectures, expand access to talent, and build more equitable rewards systems. It’s a chance to reduce hiring friction, improve retention, and ensure your workforce is ready for what’s next.

Need help adapting to new collar roles?

If you’ve been curious about new collar jobs and how to integrate the practice of prioritizing skills into your organzition, then you've come to the right place.

Here at Mercer, we provide you with the highest quality pay insights, policies, and practices information as well as leading industry expertise. Reach out today to be matched with the insights and expertise to propel your talent strategy into the future. Call us at 855-286-5302 or email us at surveys@Mercer.com.

About the author

Rebecca Hall, Principal

Rebecca spent much of her career working in compensation in various corporate roles then transitioning to consulting with Mercer. Her current role, as the Content Leader for imercer.com, allows her to leverage her knowledge of human resources and talent strategy to create materials supporting Mercer’s Products & Services in North America.