University degrees lose some of their allure as the premium for being a graduate starts to fall

 afr.com  9/16/2018 11:16:06 AM 

There has been a decline in the extra money people can expect to earn in their 20s and 30s simply because they have a university degree.

The "graduate earnings premium" has fallen by 8 per cent for women since 2006 and by 6 per cent for men.

A woman leaving university with a bachelor degree in 2006 could expect to earn $15,000 more than a woman leaving school with a year 12 certificate only. But the latest figures show that by 2016, this had fallen to less than $14,000. For men the premium fell from just under $14,000 to less than $13,000.

A report from the Grattan Institute, which has been tracking pay rates for graduates, says many more people are chasing the sorts of jobs that graduates want to find.

This follows the easing of university funding caps from 2009 that has seen university enrolments soar and a federal migration program that favours people with skills, a combination of which means there are more qualified people looking for professional jobs.

In 2009 there were about 800,000 domestic students enrolled in undergraduate courses. That figure has risen to about 1.2 million in 2016 and means 41 per cent of all 19-year-olds are at university.

At the same time there has been a fall in the number of professional jobs being created, especially in the finance sector in the wake of the global financial crisis and again with the end of the mining boom.

The author of the report, and higher education program director at the Grattan Institute, Andrew Norton, said over their full working lives graduates did better than non-graduates but there was a "substantial and growing minority" that were not doing so well despite their qualifications.

"This feeds the argument that too many people are going to uni. People are taking very high risks in going to uni," he said.

''Bad starts have a lasting effect. My concern is that if you haven't made the transition to a job you really like you ...
''Bad starts have a lasting effect. My concern is that if you haven't made the transition to a job you really like you may be stuck in those less well paid jobs because your CV looks poor," said Andrew Norton from the Grattan Institute. Eamon Gallagher

"My concern is there is a cultural juggernaut pushing young people into higher education when a more dispassionate analysis tells us it is not necessarily such a good idea.

"I think a logical extension is reviewing vocational education and training. Some people may choose the VET alternative over higher ed and that's a good thing. A young guy with an ATAR of 60 would have earned more with a diploma than a graduate degree."

In 2016 more than 40 per cent of humanities graduates were expected to earn no premium, or even less, than the median school leaver. Even among law graduates the figure was still 20 per cent.

Science was one of the sectors showing a decline in income for early-career graduates for both men and women. Since 2011 there has been fall in the expected lifetime earnings of men in the science industry. This goes against the trend of recent reports, including one from the Chief Scientist in April, urging more focus on STEM at the school level.

Science was one of the sectors showing a decline in income for early-career graduates for both men and women.
Science was one of the sectors showing a decline in income for early-career graduates for both men and women. Louie Douvis

"In real terms there is less demand for STEM [Science, Technology, Engineering and Mathematics] graduates. We're pumping out all these graduates but there are not enough jobs," Mr Norton said.

The survey shows science job growth is taking place in sales and administration but there is a decline in the more well paid professional and managerial science jobs.

The graduate premium starts to rise once people hit the 35 to 44-year age group. But in cases of an under supply in certain jobs, such as after the global financial crisis, graduates had a "rough start" to their careers.

"These bad starts have a lasting effect. My concern is that if you haven't made the transition to a job you really like you may be stuck in those less well paid jobs because your CV looks poor," Mr Norton said.

« Go back