New data reveals the salary premium graduates can expect to earn with their degree has decreased drastically over the past decade.
Getting a degree is a serious investment these days, but one of the main reasons students still choose to go to university is because most graduates have access to better jobs and higher salaries. Or at least that’s what we’re often told.
New data has revealed that the salary premium graduates can expect to receive – that is, how much more they earn in comparison to non-graduates – has almost halved over the past decade.
How much more do graduates earn?
Research has long shown that having a degree often (but not always) guarantees you a higher salary in the long-term.
Data from the Office of National Statistics (ONS) shows that in 2004, those with a degree earned 41% more than those who didn’t have a degree.
However, in 2017 graduates only earned 24% more than their non-graduate counterparts, meaning the salary boost from a degree has decreased by 17 percentage points.
The earning potential from postgraduate degrees has decreased in a similar way. Back in 2004, those with a master’s degree or doctorate could expect to earn 69% more than those without one. In 2017, this dropped to 48%.
The research shows that while graduates can still expect to earn more as a result of having a degree, they won’t earn as much as they did previously, and the salary gap between graduates and non-graduates is decreasing.
Why are degrees decreasing in value?
Experts believe that the graduate salary premium is mainly decreasing as a result of the fact that more people have degrees nowadays.
In 2004 the number of students aged 18-24 was 1.4 million, rising to 1.9 million in 2016. In fact, since the cap on student numbers was lifted in 2015, the number of 18 year olds starting university has risen to record-breaking levels each year.
With so many workers now having a university education, it seems employers are less willing to pay more for graduates, as they’re no longer at a premium.
The findings could be part of the reason why 32% of students feel their degrees are not good value for money.
In which industries is a degree worth the most?
Crucially, this salary premium isn’t the same across all industries.
The ONS data shows that having a degree is more worthwhile in some industries than others.
For example, research shows that in agriculture, hospitality, real estate, and arts and recreation, graduates actually earned less than average from 2004-2017.
This means that in these industries, graduates didn’t receive a higher salary as a result of having a degree at all.
However, in mining and quarrying, and finance and insurance, data shows that graduates earned twice the average in 2004-2017.
Are you surprised by how much more graduates can earn? Let us know in the comments!