‘Graduate premium’ is shrinking fast

Essex scholar Malcolm Brynin points to worsening odds on university ‘gamble’

May 23, 2013

Source: Getty

Premium hand: is it a losing one?

The economic advantage of having a degree has dropped by nearly 30 per cent during the past two decades, but paradoxically more and more jobs now require higher education, according to research.

Governments have also “masked” the risk of going to university by using average figures for graduate salaries and unemployment, according to Malcolm Brynin, reader at the University of Essex’s Institute for Social and Economic Research.

In 1993, a degree holder would earn 52 per cent more than someone with low or no qualifications, compared with a 14 per cent advantage for a worker with A levels, a difference of 38 percentage points.

But by 2008 the gap had narrowed to percentage points, according to data from the Labour Force Survey, a drop of 29 per cent.

Dr Brynin found that over the period measured, degree holders were paid more on average but a “high proportion” earned much the same as A-level school leavers, “so … many graduates benefit little from their degrees. Getting a degree is a gamble.”

In 1993, 47.9 per cent of graduates who went into non-manual work were paid more than 30 per cent above the mean average wage, he states.

By 2008, however, just 23.1 per cent were placed in this category, while .1 per cent were paid “below average” (defined in the study as less than 30 per cent below the mean pay of all employees).

Paradoxical prerequisite

Yet despite the economic benefits of a degree declining dramatically, paradoxically higher education is “more and more a prerequisite for a ‘good’ job”, Dr Brynin argues in the April edition of the British Sociological Association journal Sociology.

In 1993, just under a quarter of averagely paid non-manual employees were graduates, but by 2008 this had risen to 34.3 per cent.

To earn merely average pay, “it is increasingly necessary to be a graduate”, Dr Brynin writes in “Individual Choice and Risk: The Case of Higher Education”.

A growing number of occupations are now entirely staffed by graduates, while other jobs are moving from being non-graduate to marginally or partly graduate, Dr Brynin adds.

Young people have been “led to believe by the assertions of economists and politicians that education pays”.

These arguments push young people into university, “and so the government’s claim becomes a self-fulfilling prophecy: more people enter work as graduates, so more jobs seem to be graduate jobs”, the academic argues.

Graduates are only more likely to be employed or earn higher salaries on average, a “critical” caveat, Dr Brynin writes.

“This powerful message masks the risks individuals face when they perhaps decide they have no choice but to invest,” he adds.

The 2010 Browne review, which made the case for raising undergraduate tuition fees, used the commonly cited figure that the average graduate earns an additional £100,000 over their lifetime compared with someone with just A levels.

This estimate of the “graduate premium” was based on work carried out in 2002 by the former Department for Education and Skills.


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Reader's comments (2)

It would have been helpful if the article had indicated the source of the paper. In terms of the paper itself all the stuff about risk is pretty extraneous. I do not see how it adds much to anything. It would have been much better if the sociology had been stripped out and the paper aimed at a specialist HE journal. There then could have been greater emphasis on the literature on graduate earnings and employability. Treating graduates as a single undifferentiated entity for example is not very helpful and no reference is made to the evidence on the very different levels of payback graduates from different disciplines can expect to make.
", but paradoxically more and more jobs now require higher education, according to research." What is the paradox? With greater access it is clear that entry standards, at the lower end, are much lower now than 20/30 years ago. So we should expect a lower average "graduate premium"; there are more of them and on average they are are of lower IQ. If employers describe a job as "graduate" level that is much like recruiting A-level school leavers 20/30 years ago. "Graduate level" does not imply the high standard of 20/30 years ago; the bottom end is MUCH lower than it used to be.

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