So now it's official. The ‘graduate premium' is a myth
Have you ever thought about the main reason why school leavers keep choosing to go to university and higher education (HE) participation rates continue rising? Of course there are many reasons; a chance for young adults to get away from their parents, ease of application and acceptance, it looks more fun than going to work, an interest in the subject… But what is the main driver that underpins society's messaging and ends up channelling 18-year-olds into university rather than the workforce? Well, it's the perception that there is a 'graduate premium'; and put simply, the narrative goes like this – 'Don't worry about the debt, you're going to get paid more to make up for it'.
And the HE sector well knows the importance of maintaining the societal belief in the graduate premium to drive up their customer numbers. They are relentless in their efforts, issuing constant public comments, articles and self-commissioned reports, often via sympathetic think-tanks, claiming the limitless powers of HE to deliver a graduate premium to all who enrol.
But this positive advertising is starting to contrast starkly with increasing evidence, now in plain sight, of graduates' difficulties getting jobs as well as the low pay on offer of not much above minimum wage. There is a growing realisation that we are burdening too many of our young adults with morale-sapping student debt for their whole working life, with little or no corresponding improvement in their career prospects. There are also concerns that we are building up a dangerous stockpile of student loans that won't be repaid, only for the taxpayer to pick up the tab. Meanwhile, money is flowing freely into the bloated HE sector via unwitting students being used as pawns.
The Government has announced a White Paper due out this summer regarding Post-16 Education. So given the importance of the notion of a graduate premium, you would assume that the Government has ensured there is robust informative data to inform policy-making. Well, sadly not. There is only one Government report, the annual Graduate Labour Market Statistics, which attempts to quantify the graduate premium; and my research shows that it is fundamentally flawed. Some will say that the IFS Graduate Lifetime Earnings report from 2020 also 'proves' a graduate premium, but my research argues that it is just as flawed.
My findings are already supported by the Royal Statistical Society, and the Office for Statistics Regulation (OSR) has also found a case in my favour and agreed that there is a problem with graduate premium data. The OSR has intervened and forced the hand of the Department for Education (DfE), who admitted in their release today that their figures are misleading – and to such an extent that even though this has been a mainstay of graduate outcome reporting since 2007, they have decided to cease publication.
The DfE have agreed that a report demonstrating the difference between the career pay outcomes of those with equivalent A-level results is necessary, and they intend to produce it as part of their LEO data e.g. comparing school leavers with three Cs who attended university and those that did not.
But the inadequacy of the data doesn't stop there. Using mathematical modelling, I've found that since we surpassed 30 per cent HE participation as long as 20 years ago, the marginal graduates added – increasingly being drawn from school leavers with relatively lower prior academic attainment – haven't earnt any graduate premium at all on average. Yet this phenomenon isn't explored in official Government statistics.
When graduates do earn a premium, there is still the age-old statistical issue that correlation does not prove causation. For the majority of graduates, the job they end up doing will have no meaningful connection to the degree subject itself. So you must question why the official Government statistics keep churning out data that implies that studying for a degree was the main causation reason for the higher earnings, whereas in fact it is more likely their pre-existing attributes such as academic ability and ambition.
Furthermore, when there is a link between the degree subject and the graduate's career, did they genuinely need to study academically for three whole years at great cost to themselves beforehand? Couldn't the course have been far shorter? And to what extent could it have been cheaper and more effective for them to start work at 18 and learn from colleagues, undergoing job-based formal and informal training in order to progress? You can often learn far more in three weeks of doing the job than you can in three years of theoretical study. The existing statistics don't explore this at all and by implication see their main role as demonstrating what degree is better than another. They act on the assumption that for non-manual work, everybody should get a 3-year degree before entering the workplace, rather than whether a degree is necessary at all.
Until now, these inadequate statistics have allowed the sector to hijack the official figures and mislead the public and Government regarding the benefits of higher education, claiming that 'everybody' will be able to benefit from the supposed average premium. What is needed is root and branch reform of graduate statistics. I believe it would provide compelling evidence that surpassing around 25-30 per cent HE participation was a monumental mistake, and we certainly should never have let it reach the existing 50 per cent.
The vicious spiral of never-ending increasing participation is condemning ever more of our young adults to pay huge amounts for unnecessary degrees. The Government's ideologically driven policies are led by a misguided false notion of 'opportunity for all'; but in the hands of a commercially-driven sector it has become a gross exercise in mass exploitation. The only way for this to end is for the Government to introduce a sensible, pragmatic cap on student numbers, calculated based on useful data – not the misleading data currently being produced.
Paul Wiltshire is a parent campaigner against Mass HE and is the author of 'Why is the average Graduate Premium falling'
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