University degree does not mean higher earning power
Almost half of school leavers go on to university. But have they been sold a pup about graduate salaries, asks Mark Langhammer
As the series of school league tables produced by the Belfast Telegraph demonstrate, anxious parents thirst for information.
Parents want to give their children the best start possible. Parents only get 'one shot' and naturally want to create the best pathway for their children.
The 'opportunity bargain' for young people is that, if they work hard and achieve educationally, then wage returns in the labour market will follow. But does this opportunity bargain hold?
Our undergraduates are tested every month of their lives, from nursery through to A-levels. Parents and young people alike are sold on the notion that high skills gained at university will be rewarded by a graduate wage premium. However, the conclusion of recent research is 'Tough. You'll be poorer than your parents.'
With industrial decline, the assumption is that, as manufacturing moved to low-wage countries, we would keep competitive advantage through 'brainwork' in a 'knowledge economy'.
Now we must question whether our investment in young people, close to 50% of whom go to university, was based on false premises.
The developing nations - the countries that made 'stuff' for us - are producing graduates themselves by the thousand and are now more than capable of doing their own 'brainwork'.
Technological change has allowed China and Brazil to leap-frog phases of development. Technology transfer is an important part of developing countries' industrial strategy.
Unsurprisingly, there are strong linkages between the development of industry in Taiwan, Singapore and China and the supply of skills. Lax planning and regulation in India is a factor in fronting rapid growth. In short, and contrary to the prevailing UK government view, economic growth drives skills, not the other way round.
Corporations talk of a 'war for talent', chasing a small elite of managers. These elite recruits are sought less for skills than for attitudes, recruited as they 'think like us'.
For the bulk of other graduate skills needs, there is a global Dutch auction, where lower costs win every time.
The combination of high graduate availability with standardisation of new technologies makes graduate labour a buyer's market.
The recent Office of National Statistics (ONS) report confirmed the trend that recent graduates are more likely to work in lower-skilled jobs.
Transnational companies aim for processes whereby jobs are progressively reduced to standardised, technologised operations.
This means that a 'high skills, low wage' equilibrium is the way of the future, with a levelling-down of graduate wages a near certainty.
In the UK, this trend sees stratospheric rewards in the City and within a financial services elite, but with other graduate opportunities stalling.
An elite of graduates may earn more in a global 'war for talent', but for most graduates, wage returns will reduce. With costs of attaining graduate status escalating exponentially, young people and their parents should not be asked to gamble on opportunities which won't be credible in the future.
For our young people and their future prospects, will league tables even matter? As Dorothy told Toto in The Wizard of Oz, "We're not in Kansas anymore."