Not everyone benefits economically from UK HE. And this matters

With the Labour Party winning a decisive parliamentary majority in the UK’s recent general election, we’ve all been reflecting on how to boost economic growth, social mobility and equality.

One known pathway for providing “opportunity for all” is education. In particular, improving access to higher education for disadvantaged and under-represented groups could help not only to upskill the future labour pool but also to reduce entrenched inequalities in society at large.

At the same time, there has been growing scepticism about the long-term rewards of higher education. In many cases, the scepticism is healthy: in the current economic climate, with many students having to choose between heating and eating, it’s understandable that some students and parents are questioning whether higher qualifications pay off in the labour market.

Yet I have some good news for them. A new report from TASO – Transforming Access and Student Outcomes in Higher Education analysed the earnings and employment status of more than a million individuals in England over 16 years post-GCSE (exams taken at age 16) and found that university and college graduates are more likely to be employed and to earn more at work than their peers with no post-school qualifications.

Students who attended more selective universities were earning more than £20,000 a year more by their early thirties, and all higher education graduates were much more likely to be employed: 84 per cent were, compared with 65 per cent for those with no known post-school qualification.

Some of the strongest wage returns came from higher education qualifications at further education colleges, such as non-degree qualifications at skills levels 4 and 5. While a wedge is often driven between vocational and more academic pathways, policymakers should study the drivers of these positive outcomes and consider whether college resources and employer demand would permit expanded provision of non-degree higher education – which is still relatively small in scale – without eroding that high wage premium.

When it comes to higher education’s role in closing equality gaps, disadvantaged and under-represented students clearly get a boost from their qualifications. Those from free school meal (FSM) backgrounds have stronger labour market returns across every level of qualification yet consistently earn less than their more advantaged peers with the same level of qualification.

And there are similar and striking findings for gender: while women with higher education qualifications earn more than those without, the gender gaps are stubbornly persistent, and they widen for the best paid graduates from top-third universities. In fact, female graduates from a university outside the top third earn barely more than males with no post-school qualifications, and those who attend the most selective third of universities earn no more than males who graduate from less selective institutions.

The findings for ethnicity are more mixed, with Asian graduates earning more and black graduates earning less than their white counterparts, and all minority ethnic graduates being less likely to be employed than white graduates.

One conclusion we might draw from this relates to the importance for social mobility of ensuring equal access for all to higher education and addressing inequalities in prior attainment in school. Another, however, is that education alone cannot deliver opportunity for all. We might regard the data as capturing society’s wider inequalities and discrimination, as well as variances in employment destination and status (part- or full-time) by race and sex: all factors that education by itself cannot address.

So it’s not all good news. These persistent socio-economic, gender and ethnicity gaps are both unfair to the millions of individuals affected and a drag on the UK’s economy. Moreover, when we drill into the data further – by subject and institution type, or by such intersections as gender, free school meal status and prior attainment – it’s clear that not everyone is benefiting economically from higher education. And this should give us pause.

Higher education is, of course, valuable beyond the contribution it makes to pay packets or economic output. It is also correlated with better health and well-being, among other non-economic benefits. Moreover, a commitment to knowledge and learning is what makes us distinctively human and has driven culture and innovation for millennia. These benefits should be at the forefront of policymakers’ minds when they think about the overall value of higher education.

Nonetheless, economic outcomes – jobs, pay, conditions – matter to most graduates, and particularly to those from disadvantaged backgrounds. There is scope for better information and advice for applicants to higher education who place the most value on economic returns. There is also scope for universities to do more to improve graduate employability, particularly for those less likely to benefit from their parents’ social networks to get them ahead in life.

Employers, too, have a clear role to play, given that they are the ones making decisions about who gets hired – and how much they are paid.

And yes, there’s a wider role for government. To better align talent and opportunity, policymakers need to understand how the economic value of qualifications varies by class, race and gender. And they need to make it a strategic priority to tackle those inequalities, across different policy areas and across different Whitehall departments.

That way, everyone can be empowered to follow the best pathway for them – whether that is higher education or something else.

Omar Khan is chief executive of TASO – Transforming Access and Student Outcomes in Higher Education, the What Works centre for higher education.