Why are UK Graduate Wages So Low?

TLDR News
1 Nov 202309:07
EducationalLearning
32 Likes 10 Comments

TLDRThis video explores the diminishing value of a university degree, focusing on the UK's shrinking graduate wage premium. It contrasts the situation with the US, where degrees have become more valuable. The script discusses the impact of an oversupply of graduates and a lack of graduate jobs, particularly in the UK, and suggests that the economy's inability to create well-paid positions is the core issue. It also touches on the need for more STEM graduates and a stronger economy to improve the graduate premium. The video is sponsored by Ground News, an app aiming to provide objective news through data-driven insights.

Takeaways
  • ๐ŸŽ“ The UK government has been pushing for more young people to attend university for over 20 years, with the goal of sending half of young people to university set by Tony Blair's government in 1999.
  • ๐Ÿ“‰ New data suggests that a university degree may not be as valuable as it once was, with the graduate wage premium shrinking in the UK from nearly 50% in 1997 to below 40% in 2022.
  • ๐Ÿ“š The push for more academic education has only recently been balanced with a focus on technical education, such as apprenticeships and T-Levels, in the UK.
  • ๐Ÿ’ผ The graduate wage premium in the UK has fallen sharply everywhere except in London, where it remains as valuable as in 1997.
  • ๐Ÿ‡บ๐Ÿ‡ธ In contrast to the UK, degrees in the US have become more valuable, with graduates in cities like San Francisco and DC earning nearly 70% more than non-graduates.
  • ๐Ÿ’ฐ Contrary to popular belief, English graduates have the most debt of any developed country, with an average debt close to ยฃ60,000, compared to $26,500 in the US.
  • ๐Ÿ‡ฌ๐Ÿ‡ง The issue in the UK is not the number of graduates, but rather a lack of demand for graduate jobs, especially outside of London.
  • ๐Ÿ” A significant number of UK university graduates end up in non-graduate occupations, particularly in regions with less economic strength.
  • ๐Ÿค” The discrepancy in graduate wage premium between the US and the UK suggests that the problem is not just about an oversupply of graduates, but also about the demand side and the types of jobs available.
  • ๐Ÿ“ˆ The UK economy's inability to create well-paid jobs for its graduates could lead to a feedback loop of lower incentives for university education and decreased productivity.
  • ๐ŸŒ Ground News, the sponsor of the video, offers a platform aiming to provide readers with an objective way to consume news by displaying political bias, factuality, and ownership information.
Q & A
  • What was the target set by Tony Blair's government in 1999 regarding university education for young people?

    -Tony Blair's new labor government set a target of sending half of young people to university in 1999.

  • What is the concept of 'graduate wage premium'?

    -The 'graduate wage premium' refers to the additional income per hour that graduates earn over non-graduates.

  • How has the UK's graduate wage premium changed from 1997 to 2022 according to the Financial Times analysis?

    -In 1997, graduates in the UK earned just shy of 50% more compared to their non-graduate peers, but by 2022, the graduate wage premium had dropped below 40%.

  • What has been the recent political focus in education apart from university degrees?

    -The recent political focus has returned to technical education, with the current government talking less about university and more about apprenticeships, T-Levels, and the Advanced British Standard.

  • How does the graduate wage premium differ between London and the rest of the UK?

    -According to the analysis, the graduate wage premium in the UK has fallen sharply everywhere except in London, where a degree is just as valuable in wage terms today as it was in 1997.

  • What is the situation regarding the graduate wage premium in the United States compared to 1997?

    -In the United States, degrees have become more valuable, with graduates in San Francisco and DC now earning nearly 70% more than their non-graduate counterparts, compared to around 50% in 1997.

  • What is the average debt of English graduates upon graduation according to the OECD Education at a Glance 2022 report?

    -The average English graduate leaves university with just shy of ยฃ60,000 in debt.

  • How does the graduate debt in the UK compare to other developed countries like the United States, Australia, and Denmark?

    -The average English graduate has more debt (ยฃ60,000) than graduates in the United States ($26,500), Australia (under $20,000), and Denmark (just under $177,000).

  • What is the argument made by commentators in the UK regarding the value of academic education?

    -Commentators in the UK suggest that too many people are going to university, leading to an oversupply of humanities degrees and a shortage of technical skills.

  • What is the percentage of university graduates working in non-graduate occupations in certain regions of the UK?

    -In regions like Yorkshire, the Humber, Scotland, the Northeast of England, and the West Midlands, well over a third of university graduates are working in non-graduate occupations.

  • What are the two main problems identified in the UK economy that affect the availability of well-paid graduate jobs?

    -The two main problems are regional inequality, with an over focus on London, Oxford, and Cambridge, and a relative shortage of STEM graduates.

  • What does the script suggest as the primary issue with the UK's graduate job market?

    -The primary issue is not that the UK has too many graduates, but rather it doesn't have enough of the right sorts of graduates, specifically STEM graduates, and the wider economy isn't robust enough to support them.

  • What is Ground News and how does it aim to help readers?

    -Ground News is a website and app developed by a former NASA engineer, aiming to provide readers with an easy, data-driven, objective way to read the news. It offers a quick visual breakdown of the political bias, factuality, and ownership of the sources, backed by ratings from three independent news monitoring organizations.

  • What feature of Ground News helps readers identify stories that are disproportionately covered by one side of the political spectrum?

    -The 'Blind Spot Feed' feature highlights stories that are disproportionately covered by one side of the political spectrum.

  • What is the offer provided by the script to viewers for Ground News subscription?

    -The offer provided is a 30% discount on the Vantage plan of Ground News, which is under $6 a month for unlimited access to every feature on Ground News.

Outlines
00:00
๐ŸŽ“ University Education and Graduate Wage Premium

This paragraph discusses the UK government's long-standing efforts to increase university attendance among young people, with a goal set in 1999 by Tony Blair's government to send 50% of youth to university, which was only achieved in 2019. The theory was that a more educated population would lead to a richer society and better job prospects for individuals. However, recent data indicates that a university degree may not be as valuable as it once was. The script introduces the concept of 'graduate wage premium,' which is the difference in hourly earnings between graduates and non-graduates. It reveals that in the UK, this premium has decreased from nearly 50% in 1997 to below 40% in 2022. This change is partly due to the influx of more graduates into the market, which has diluted the value of a degree. The script also contrasts this with the situation in the US, where degrees have become more valuable over the same period, with graduates in certain cities earning up to 70% more than non-graduates. The video promises to explore whether it still pays to attend university and if the perceived oversupply of university graduates is valid.

05:01
๐Ÿ“‰ Decline in Graduate Premium and Economic Factors

The second paragraph delves into the reasons behind the shrinking graduate wage premium in the UK, suggesting that it's not merely due to an oversupply of graduates, but rather a lack of demand, specifically not enough graduate-level jobs. It highlights a regional disparity within the UK, with a significant number of graduates in areas like Yorkshire, the Humber, Scotland, the Northeast of England, and the West Midlands working in non-graduate roles. This trend has been increasing since the 2008 financial crisis. In contrast, in the US, graduates are more likely to find jobs that match their degree level, which explains the higher wage premium. The paragraph also touches on the economic issues contributing to this phenomenon, such as regional inequality with a focus on London and a shortage of STEM graduates. It suggests that the UK economy is not strong enough to create well-paid jobs for the number of graduates it produces, which could lead to a negative feedback loop affecting productivity and incentives to pursue higher education. The paragraph concludes by pointing out that more students are choosing STEM subjects, which could help improve the graduate premium, but emphasizes that the wider economy needs to improve to support the influx of graduates.

Mindmap
Keywords
๐Ÿ’กUniversity Education
University education refers to the academic instruction provided at higher education institutions, typically leading to a degree. In the video, it is discussed as a long-term goal set by the UK government to increase the number of young people attending university, with the belief that a more educated population leads to a richer society and better job prospects for individuals.
๐Ÿ’กGraduate Wage Premium
The graduate wage premium is a term used to describe the additional income that university graduates earn compared to non-graduates. The script discusses how this premium has been shrinking in the UK, indicating that a university degree may not be as financially rewarding as it once was, which is a central theme in evaluating the value of university education.
๐Ÿ’กSupply and Demand
Supply and demand is an economic principle that describes the relationship between the availability of a resource and the desire for that resource among consumers. In the context of the video, it is used to explain how an oversupply of university graduates can lead to a decrease in the graduate wage premium, as there are more graduates than there are high-paying jobs available for them.
๐Ÿ’กTechnical Education
Technical education is a form of post-secondary education that focuses on practical and hands-on skills rather than academic theory. The script mentions a shift in political focus from university education to technical education, such as apprenticeships and T-Levels, as a response to the perceived oversupply of university graduates and a need for more technical skills in the workforce.
๐Ÿ’กSTEM Degrees
STEM stands for Science, Technology, Engineering, and Mathematics. The video suggests that there is a demand for STEM graduates, implying that these fields of study are more likely to lead to well-paid jobs and contribute positively to the economy. The script points out a need for more focus on STEM education to improve the graduate wage premium in the UK.
๐Ÿ’กRegional Inequality
Regional inequality refers to the disparities in economic and social conditions between different areas or regions. The script discusses how an overemphasis on economic development in certain regions, like London, Oxford, and Cambridge, contributes to a lack of well-paid graduate jobs in other parts of the UK, leading to underemployment of university graduates.
๐Ÿ’กProductivity
Productivity is a measure of the efficiency of production in the economy, often expressed as the output of goods and services per unit of input. The video suggests that the UK economy's lack of productivity is a factor contributing to the lack of high-paying jobs for graduates, which in turn affects the graduate wage premium.
๐Ÿ’กUnderemployment
Underemployment occurs when a worker is employed but not fully utilized, often in a job that does not require their full skills or qualifications. The script uses this term to describe the situation where university graduates in certain regions of the UK are working in non-graduate occupations, which contributes to the decline in the graduate wage premium.
๐Ÿ’กEconomic Disparity
Economic disparity refers to the differences in economic conditions and opportunities among different groups or regions. The video discusses how economic disparity, particularly the concentration of economic activity in certain areas, contributes to the problem of graduates not finding jobs that match their qualifications.
๐Ÿ’กPolitical Bias
Political bias refers to a preference or inclination towards a particular political perspective or ideology. The script touches on the idea of political bias in news reporting, especially in relation to economic policies, and how it can affect the public's understanding of issues like graduate employment and wage premiums.
Highlights

The UK government has been trying to increase university education for over 20 years, with a target set in 1999 to send half of young people to university.

The graduate wage premium, which measures the earning advantage of graduates over non-graduates, is shrinking in the UK.

In 1997, UK graduates earned nearly 50% more than non-graduates, but by 2022, this premium dropped below 40%.

Successive UK governments have pushed more young people towards academic education, leading to an excess of graduates and a subsequent drop in wage premium.

The UK government is now focusing more on technical education, including apprenticeships and the Advanced British Standard.

In contrast, in the US, the graduate wage premium has increased, with graduates in San Francisco and DC earning nearly 70% more than non-graduates.

Contrary to popular belief, English graduates have the most debt of any developed country, averaging nearly ยฃ60,000, compared to $26,500 in the US.

The rising wage premium in the US cannot be offset by higher graduate debt levels, indicating other factors are at play.

The fall in the UK's graduate premium is not due to an oversupply of graduates but rather a lack of graduate jobs in the country.

In regions like Yorkshire, the Humber, and the West Midlands, over a third of university graduates are working in non-graduate occupations.

The UK economy's inability to create well-paid jobs for graduates is a significant issue, potentially leading to a feedback loop of lower productivity.

The UK needs more STEM graduates and an economy robust enough to support them, as the current economy is not creating enough high-paying jobs.

Ground News, sponsored by a former NASA engineer, offers a data-driven, objective way to read the news with a focus on political bias, factuality, and source ownership.

Ground News' 'Blind Spot Feed' highlights stories disproportionately covered by one side of the political spectrum, promoting a more balanced media landscape.

The video encourages viewers to try Ground News and offers a 30% discount on their Vantage plan, emphasizing the importance of supporting independent news platforms.

Transcripts
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