New figures show UK graduate pay freeze
Graduate salaries in the UK have not risen since 2008, according to the latest government figures.
The annual graduate labor market statistics published by the Department for Business, Innovation and Skills (BIS) show that the median salary for a graduate aged 21–30 in 2015 was £24,000—the same as it was in 2008.
But the figures show there is still a financial advantage to having a college degree in the UK. The median salary for non-graduates in the same age group was just £18,000 in 2015.
Graduates are also more likely to have a job, with the unemployment rate for young graduates standing at 4.9% in 2015, compared to 8.6% for non-graduates. These figures mark a return to unemployment rates a decade ago, following a sharp increase in the wake of the financial crisis.
The figures show degree results also have an impact on pay. Young graduates with a first-class degree earn £3,000 more than those with an upper-second-class degree, who in turn earn £2,500 more than those with a lower-second-class or third-class degree. Degree subject is also a factor, with science graduates earning more than those with arts and humanities degrees.
Across all age groups, the median salary in 2015 was £31,500 for graduates and £22,000 for non-graduates. These figures have risen only slightly since 2008, when they stood at £31,000 and £21,000 respectively.
The government statistics do not take inflation into account, so in real terms graduates are worse off than they were seven years ago.
The cost of a degree has also increased significantly since 2008. In 2010, the government increased university tuition fees in England from £3,225 to £9,000 a year.
Douglas Webber has written for IZA World of Labor about the financial benefits of a college degree. He writes that: “Students deciding whether to invest in college and what field to study may be making the most important financial decision of their lives. The return to education varies greatly by institutional quality, discipline, and individual characteristics. Estimating the returns for as many options as possible, and making that information as transparent as possible, are paramount in helping prospective students make the best decision.”
The BIS report can be accessed here.
Is the return to education the same for everybody? by Douglas Webber
The boom in university graduates and the risk of underemployment by Gustavo A. Yamada
Overeducation, skill mismatches, and labor market outcomes for college graduates by Peter J. Sloane
Find more IZA World of Labor about the economic returns to education