Ah, the university wage premium!
It's long been an economic puzzle/source of debate and intellectual conflict. (Bryan Caplan's The Case Against Education does an excellent job outlining what's going on, in that and adjacent education convos).
Story 1: university educates workforce, imparts new and better skills making them able to earn higher wages later on. More people through university = more people earning higher wages, productivity/GDP per capita increase.
Story 2: university imparts no skill, it's just a signaling mechanism for underlying skills ("earnings potential"), so shoving more peeps through that 4-5 year filtering mechanism is diluting the signal and shows up as lower wage premium in the data.
my prior: university is (increasingly pointless) signaling, and expanding the "franchise" is counterproductive. You learn nothing, waste everyone's time and resources (but have plenty of fun and make friends for life and partner up, so it's a life-cycle redistributed consumption good)
"A common response is to blame simple economic inevitability.""A common response is to blame simple economic inevitability."
A common response is to blame simple economic inevitability. Today 41 per cent of Britain’s workers have a degree, up from 20 per cent in 1999, and if you increase the supply of something (graduates), you reduce its price (earnings). A more nuanced version argues that rather than imparting new skills, university education mainly serves to signal who the most skilled people already are, so expanding participation dilutes the average skill level of graduates, along with their average earnings. Either way, so the argument goes, earnings erosion was inevitable, the government should have anticipated it and graduates shouldn’t have been sold an economic fiction.
Mr. Burn-Murdoch has it in for me today, trying to convince me that this is a uniquely British problem. Apparently, the (unadjusted) wage premium and success of graduates have fallen mostly/only in Britain:
more and more UK graduates are working in non-graduate jobs and earning non-graduate wages — not because of an absolute oversupply of graduates, but an oversupply of graduates relative to the numbers of well-paid professional jobs in the economy
As a result, more and more UK graduates are working in non-graduate jobs and earning non-graduate wages — not because of an absolute oversupply of graduates, but an oversupply of graduates relative to the numbers of well-paid professional jobs in the economy. Elsewhere in the world, robust increases in the population of graduates have been matched by skilled job creation.
Is the state of higher ed fine overall and it was just the Britons botching it as always?
archive: ... not working for me today.
All my friends went to uni, and most of them now are just in HR or recruitment, middleman parasite-type jobs, they earn ok money, but their jobs can be wiped with either ai or the usual restructuring.
For professions like medicine etc of course, you have to go to uni , but it depends on the profession.
Conversely, my good friend who didn't go to university became a self-employed hairdresser, had a Porsche by the time his was in his early 20s , has a flat in a prime area and has no debt, other than a mortgage, which will be paid off probably in another 9 years.
his main economic threat now isnt ai, it's the endless Turkish barbers that have popped up everywhere in the UK, that are basically money laundering fronts
he now plans of taking a massage course and making sport massage his side hustle
...or just common sense. HR/recruitment is the worst (well, maybe second worse) types of useless make-belief work.
Amazing story, good on your pal
yeah, even my cousin is in the HR department of some bank, and she's been there for a decade, milking the shit out of it and also getting a discount mortgage.
I'm glad im not the only one who thinks those jobs are make-belief work
We want to be careful here. It's not that you learn nothing, it's that you learn no more than you otherwise would have. Normally, these comparisons control for age.
...fair, but also in some disciplines, you learn things that make you and others worse off. So I rounded down to "nothing"
It does seem to be increasingly pointless if the point is to get a better job.
There might be a few high level jobs like doctors, surgeons or electrical engineers that university should continue for some time. Unless there's another way to get knowledge and experience in those fields.
Uni for social benefits or mind expansion could be useful as long as they aren't getting into debt and can support themselves through it.
That's the key point. In most cases there are other ways of doing this training more efficiently but industry would rather offload that cost onto the public and/or employee. Plus, they don't want to figure out the screening part.
Let's develop a new form of this signalling (which is mostly what I believe higher education is): let's just normalize showing your tax return. People who are able to make over a certain threshold would clearly be equipped to do whatever higher education qualifies you for. Different jobs could advertise minimum past earning requirements just as they advertise minimum education requirements now.
Sure this kinda introduces a chicken-egg problem. But solving that problem is a strong signal that someone will probably do well at more complicated tasks and that the person probably has some level of common sense, self motivation, and grit.
Down zap.
Amazeballs
In Britain the graduate premium has eroded not because intelligence or capability have diminished but because the upper tier of the job market has failed to expand in proportion to the influx of degree holders.
This is not inevitable. Countries that have managed to align higher education growth with the expansion of high productivity sectors have sustained strong returns for graduates. The UK has instead seen a concentration of opportunity in a few metropolitan areas and a hollowing out of mid to high skill roles across the country. The signaling model works when the signal is rare and when it maps onto genuine scarcity in professional positions. Flooding the market with degrees without reforming industrial policy and regional investment strategy ensures that more graduates will end up in roles they could have secured without university in the first place.
In that sense expanding university access without parallel reform in the structure of the economy is like building more airports in a country where flight demand is flat. You increase the supply of something whose utilization is capped by forces outside the educational system. The result is inevitable downward pressure on its value. The conversation needs to move away from universities alone and toward how Britain can create more high skill high wage jobs across sectors and regions.
I'm more partial to story 3:
University educates the workforce, and imparts new and better skills making them able to earn higher wages later on.
However, not everyone has the academic preparation, personality, or ability to acquire or make use of those skills. This is not a criticism of those people, only an acknowledgement of diverse human abilities and interests.
Because of this, shoving more peeps through 4-5 years of university forces the system to lower standards, thereby diluting their skill acquisition mission. It also forces the university system to create useless majors in order to fit the influx of new students who shouldn't actually be going to university.
This is fair and believable, but then why isn't the raw wage premium compressing in other countries?
Good question. I don't know enough about what's going on in the UK to offer anything intelligent. But the same question could fairly be asked of story 1 and story 2, as well.
Yup, that's what I mostly learned from this article. Not sure how that changes the stories