Why are UK Graduate Wages So Low?

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.

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.