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Pay gap narrows for Britain's growing graduate workforce

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While in most cases a degree will be of benefit, there is an approximately one in four chance that a graduate will receive a below-average wage, and a 50/50 chance of receiving an average wage, according to new ISER research on graduate earnings.

However, the study which was published in the British Sociological Association journal Sociology (April 2013) found there were still significant advantages to being a graduate, despite the narrowing of the gap between graduate and non-graduate pay.

Dr Malcolm Brynin analysed data from the British Labour Force Survey, and examined what constituted a typical graduate job, the proportion of employees considered to be in partially graduate work, the distribution of pay and the proportion of employees for whom a degree was financially beneficial. Dr Brynin said:

“This… does not mean that all graduates have done badly; rather, the ranks of the graduate sector have been so swelled that they now include many poorly paid people… Getting a degree is a gamble,”

Between 1993 and 2008, the average pay of graduates in managerial and professional jobs rose less than that of non-graduates in similar jobs.

Almost half of all graduates earned above the average hourly wage in 1993, by 2008 the figure had fallen to less than a quarter. The percentage of graduates earning less than the average hourly wage rose in the same period, from 8 per cent to 27 per cent.

In 1993, just under two thirds of graduates earned more than 30 per cent above the average wage. By 2008, that figure had dropped to just over half.

While in most cases a degree was still of benefit in 2008, a graduate stood a one in four chance of earning a below-average wage, and a 50/50 chance of receiving an average wage.

The study found there was significant overlap in the hourly pay of graduates and of non-graduates with A-Levels. Graduates received an average of £10.90 per hour, while school leavers received an average of £7.90. But many graduates found themselves partially graduate occupations, earning the same wage as they would have done if they had left education after completing A-levels.

The analysis covered men and women aged 16 to 60 who worked at least ten hours a week, with extremely high and low wages excluded.

Individual Choice and Risk: The Case of Higher Education by Dr Malcolm Brynin was published in Sociology, Volume 47 Issue 2 April 2013 pp. 284 – 300. This research is available as an Economic and Social Research Council evidence briefing.

Photo credit: universityofkent