Transcript – Graduate earnings over the last decade
This is a short video looking at graduates’ earnings over the last decade.
Coming up we will compare earnings for those people with a degree and those without. Earnings generally increase over a period, so to account for this, earnings in each of the quarters over the last 10 years have been adjusted using the average weekly earnings series produced by the ONS.
This then allows an average to be taken over the decade. Then we will look at how earnings varies for those of different ages, before finally showing differences between men and women, and different types of industry.
The information comes from the Labour Force Survey, which is a survey of households across the UK. Using information on qualifications and earnings, we can identify individuals with a degree, or an equivalent qualification, and the types of subject studied.
Firstly we will look at median earnings, also known as average earnings, for those with a degree and for those without. To explain this, if we took everyone who earns within the UK, and put them in order from the lowest earner to the highest, the value of the median would be the earnings of the person standing in the middle.
Here is the median for all employees in the UK, and over the last decade it stood at £21,000. Now for those who had a degree, their average earnings over the decade was £30,000, while for those without a degree, it stood at £18,000.
Therefore those people with a degree earn £12,000 per year more than those without.
Now lets look at earnings and how they vary for individuals at different ages. Firstly for all employees in the UK we see that earnings increase between individuals aged 22 to around the early 30s. It then levels off, before falling for those aged older.
Now looking at those with a degree, and those without a degree, earnings for those aged 22 are pretty similar at around £15,000 per year. For those with a degree it then increases sharply, again to around the early thirties, before rising to a peak of £34,500 at the age of 51, then falling sharply as the higher earners leave the labour market earlier.
For those without a degree, the rise up to the early thirties is not as sharp and they peak at £19,400 at the age of 34, before levelling off and falling at the older age groups.
Next, we will compare the earnings of men and women with and without a degree, but because of differences in the number of hours worked between the sexes, hourly earnings are a better indicator.
Here is the line for men with a degree, and women with a degree, and we see that the earnings for women level off earlier than for men as women are more likely to leave the labour market when starting a family. Earnings are also lower for women than for men which is partly explained by the degree subject studied, which we will explain later.
Looking at men and women without a degree, we see a similar pattern with earnings levelling off earlier for women than for men.
We have shown that men earn more than women, and if we look at the types of subjects studied, around 1 in 3 women have a degree in either health related studies or education, whilst less than 1 in 10 men have a similar qualification. Almost 1 in 2 men have a degree in business, finance sciences or engineering, whilst only 1 in 5 women have a similar qualification.
So why is the degree studied so important? Well, average earning for those with a degree was £37,300 in banking and finance industries, compared with an average of £27,600 in public administration, education and health industries.
With a higher percentage of men holding qualifications directly linked to the higher paying industries, compared with women, this in part can explain why their earnings on average are higher.