Britain’s university graduates are having a rough time of it. In 1999, the average graduate salary was 80 per cent more than their non-graduate counterpart; in the latest data this was down to just 45 per cent, and that’s before factoring in student loans. Adding insult to injury, the government has worsened the terms of the loans to ensure repayments don’t wither in line with salaries.
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.
But there’s one problem: none of the above has happened in most other developed countries. In the US, college graduates today earn 92 per cent more than non graduates, up from 80 per cent in 1996, even as the share of people with a degree has climbed from 27 per cent to 40 per cent. Graduate earnings premiums have also held up or increased in the face of expanded enrolment everywhere from Canada to France, Spain and the Netherlands.