One of the main policies of the Blair government was to increase participation in higher education to 50%. No doubt one aim was to increase access to the higher salaries generally enjoyed by graduates; yet 25 years later, with the 50% target reached, there is growing evidence to suggest that this aim has failed.
Research shows that, when you compare the National Minimum Wage (NMW), another of the Blair Government’s policies, to the average graduate starting salary, the two have gradually converged. In 2001, the NMW was the equivalent of an annual salary of £7.2k, and the average graduate starting salary is estimated to have stood at 115% higher, at £15.5k. But by 2023, the graduate starting salary of £25.9k was only 30% higher than the National Minimum Wage of £19.9k.
The commercially led jobs market tends to be brutally honest about the genuine value of candidates, and I suggest this evidence demonstrates its verdict: the more graduates that the higher education system produces, the less in relative terms to the National Minimum Wage they are going to get paid. The modest and eroded premium of 30% above the National Minimum Wage is hardly the outcome that the Blair Government anticipated and I believe this shift to mass higher education must now be viewed as a policy failure – particularly now that students emerge with a life-changing level of personal debt.
Furthermore, there is growing anecdotal evidence highlighted in recent media stories that, in the attempt to make more of our young adults winners, the reality is that mass higher education is piling up more and more losers who emerge into a jobs market saturated with graduates with limited chance of converting their degree into to a job that justifies the three years of study and the huge debt. Examples include:
- Students are racking up huge debts, but how can they tell if it’s value for money? – Guardian 11th Feb 24
- ‘I’d be better off if I hadn’t been to uni’: UK graduates tell of lives burdened by student loans – Guardian 4th Aug 24
- ‘Like throwing myself at a wall’: UK graduates struggle in ‘insane’ job market – Guardian 29th Aug 24
The student finance system is undoubtedly broken, yet the problems in the graduate jobs market don’t appear to be being considered. Far from it, as Universities UK has recently stated, the solution lies in increasing fees and increasing participation to an astonishing 70% by 2040. Their justification is that you tend to earn more if you go to higher education but never has the adage that ‘There are Lies, Damn Lies and Statistics’ ever been so apt.
While it is true that those attending university do go on to earn more, it is statistically incorrect to claim that this is all due to the causation of having studied for a degree, particularly when you consider that many graduates end up in jobs where their degree subject is not directly relevant. (The Institute of Student Employers’ 2023 Student Recruitment Survey found only 19 per cent of adverts for graduate jobs stipulate a specific degree.)
It can instead be reasonably argued that the jobs market pay premium is merely rewarding the correlation that exists for most graduates who tend to be more academically able and hard-working. Trying to claim that all the success of higher career earnings is down to the ‘essential’ element of spending three years at university before entering the workforce is bogus. We might as well say that there is good evidence that if you are above average academically and you work hard, then in your 20s and 30s, you will be earning more than if you weren’t.
Ironically though there is another causation effect at play in that the jobs market is increasingly prejudiced against non-graduates for even the most junior clerical and managerial roles, so it is forcing 18-year-olds to enter higher education and get themselves into significant debt to give themselves a chance at the most basic of entry-level roles when they attempt to enter the workforce aged 21. It has been legitimately argued that the practice of discriminating against non-graduates in this manner is damaging to society and should be banned.
Many higher education advocates will claim that we shouldn’t fixate on graduate starting salaries but should rather consider the likely increased earnings say five years after graduates have entered the workforce. This doesn’t, of course, explain why the graduate premium has reduced from 115% to 30%. And it falls into the same trap of illegitimately claiming that all the uplift in salary once a graduate embarks on their career is causation rather than correlation. Surely, if an individual’s salary increases over time, this is due to their innate ability, work ethic, on-the-job training opportunities and general development of their abilities through actual work experience? So, the increased pay after five years may not be a ‘graduate’ premium at all but more an ‘entering the workforce’ premium.
The Labour Government has to do something to relieve the pressure on university and student finances. But we shouldn’t be throwing ever more students into higher education and a life of debt with high marginal tax rates, making them disillusioned by false promises and unrealistic expectations before they have even set out in life. Instead, we need to cap student participation numbers drastically, ban the proliferation of discriminatory graduate-only job adverts, encourage employers to start recruiting 18-year-olds again and train and educate them in the workplace – and we need to ensure those 18-year-olds are not coerced by society into thinking that entering the workforce is some kind of dud option and a failure.
