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Labour market myths: 'You're better off not going to university'

Laura Greaves

July 2018

With media focus on 'fake news', you’d be right to question assumptions about the graduate labour market. Equip yourself with the facts to challenge labour market misconceptions

What's the assumption?

The rising cost of student debt and the abolition of maintenance grants could lead to the belief that 'you're better off not going to university'.

What are the facts?

There are a great many ways to debunk this particular myth, but many are complicated. This article focuses on a very simple set of data that helps to demonstrate quite how wide the differences are between the employment of graduates and non-graduates.

The Department for Education's Graduate Labour Market Statistics 2017 report revealed that university graduates experienced positive outcomes, highlighting the potential importance of a degree in improving a graduate's employability prospects.

The employment rate for working age graduates and postgraduates in 2017 was higher (87.5% and 87.7% respectively) than that of non-graduates (71.1%).

Working age non-graduates also experienced a higher unemployment rate (5.3%) than graduates (2.8%) and postgraduates (2.4%).

Graduates also appear to be more resilient during tough economic periods, evident following the events of the 2008 recession. Despite being affected by the fall in employment rates, which occurred across all groups, their recovery period was shorter than non-graduates, as outlined in the graph below.

,Graduates,Postgraduates,Non-graduates
2006,3.276423243,2.445703794,6.198861055
2007,2.778546514,2.619337676,6.250330201
2008,3.218275388,2.404234177,6.700228172
2009,4.4297147,3.179687966,8.961198369
2010,4.284712058,3.627934837,9.208596968
2011,4.296582882,3.865575541,9.541228586
2012,4.288055976,3.847429835,9.389752635
2013,3.995230739,3.417501533,9.146138202
2014,3.278215404,2.326424748,7.503361863
2015,3.107466272,2.324486344,6.437910794
2016,2.926809521,2.092277921,5.947520767
2016,2.806286172,2.376049927,5.304823444

Data from the Department for Education analysis of the Labour Force Survey.

The unemployment rate for working age graduates after the recession peaked in 2009 at 4.4%, and then steadily declined to reach pre-recession level in 2014. For their non-graduate counterparts, their peak was in 2011 at 9.5%, reaching pre-recession level a little later, in 2016.

To find out more see effects of recession on the graduate labour market.

Graduates were also more likely to be in high-skilled occupations. A breakdown of the data shows:

  • 65.5% of working age graduates were in high-skilled employment.
  • At 77.8%, the figure for postgraduates was slightly higher.
  • Fewer non-graduates were in high-skilled occupations (22.2%), with a large proportion (49%) in medium to low-skilled employment.

There is also a significant gap between median salaries of graduates and non-graduates. Although graduates often accumulate high levels of debt through their studies, their median average (working age) salary in 2017 was £33,000 - £10,000 more than the average working age non-graduate's salary of £23,000.

Those with a postgraduate qualification had an average salary of £39,000.

A similar trend emerges when looking at young-age population (21 to 30 year olds) salary data. We can see that non-graduates still have a lower average starting salary (£20,000) than graduates (£25,000) and postgraduates (£28,500), with the only difference being a smaller gap between salaries.

What will happen in the future?

University may be a costly investment, but the average difference in lifetime earnings between working age graduates and non-graduates could equate to £371,000 by retirement age (65), assuming that graduates and non-graduates enter the labour market at 21 and 18 respectively.

The growth of degree apprenticeships over the next few years and the future potential for level eight (PhD) apprenticeships could see more students choosing alternative HE options, although we can't predict the effect this will have on the number of people pursuing traditional academic pathways.

Also in this series

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Laura Greaves
Information analyst
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