Professional-level physical therapist education programs produce graduates with different degrees: baccalaureate, master's, and doctorate. There is an ongoing debate within the profession whether a universal professional-level degree should be required. The purpose of this study was to examine whether employers observed or perceived differences among graduates with different degrees and whether the degree was a factor in hiring decisions. A written questionnaire was mailed to 350 physical therapist employers, randomly selected from a list of clinical education sites used by physical therapist academic programs in California and Nebraska. Employers were asked to compare graduates in terms of clinical skills, professional characteristics, and salary. One hundred eighty-nine questionnaires (55%) were returned. Chi-square analysis with post hoc testing revealed that employers preferred to hire graduates with master's degrees rather than graduates with baccalaureate or doctoral degrees. There was a significant association between professional-level degree of the new graduate, preparation of the graduate for work involving patient education, supervisory skills, application of research to clinical practice, and professional advancement. Less than 25% of the respondents reported a difference in salary based on degree. Approximately 80% of the respondents believed there should be a universal degree requirement in physical therapist education, with 70% of these respondents indicating that the degree should be at the master's level. These results have implications for the future of physical therapist education and the resolution of the professional degree controversy facing the profession.