What are new collar jobs and why they 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.

New collar jobs explained

Prioritizing skills and practical capabilities over traditional four-year degrees, new collar jobs are on the rise. The term was first coined by IBM’s former CEO, Ginni Rometty, describe emerging tech and operations roles in which the required skills can be learned through nontraditional pathways. These include jobs in cybersecurity, data alalysis, cloud computing, DevOps, digital design, and more.

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, or 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.

Characteristics of a new collar job

New collar roles have a few common characteristics. This includes focusing on skills first, not credentials. Sure, a degree is helpful, but with new collar jobs it is not a critical factor. New collar jobs also evolve quickly because these jobs are typically tied to emerging tech, which tends to shift more rapidly than traditional roles. It is also important to note that new collar jobs require strong critical thinking skills and adaptiblity. People who fit these new collar jobs tend to be fast learners and adaptable, and enjoy hands-on education.

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. A shortage in skills

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. Unaffordable 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. Rapid 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. The need 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. Mobility and talent retention needs

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.

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?

Whether you are familiar with the term or this is your first time hearing it, Mercer is here to help you navigate. We provide you with the highest quality pay insights, policies, and practices information as well as leading industry expertise. You can also browse through our Skills Suite for more data on upskilling and reskilling. Want to talk to someone instead? 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.