A degree is worth extra £12,000 a year

If you have gone through University, chances are you'll enjoy a significantly better wage.

Over the past decade, people with a degree have enjoyed salaries of £12,000 a year on average more than non-graduates, according to the latest figures from the Office for National Statistics (ONS).

The median salary for graduates aged between 22 and 64 stood at £29,900, compared to just £17,800 for those who did not go to University. But it’s not just the headline figures that are interesting...

Earning with age

The ONS used the Labour Force Survey to work out the average weekly earnings over the past decade. And one interesting result was that, early on in our working lives, a degree is pretty irrelevant.

The median earnings for those aged 22 stand at around £15,000, irrespective of whether the worker has a degree or not. Clearly, having a degree in your back pocket doesn’t allow you to leapfrog other workers straight off the bat.

However, that level-playing field swiftly disappears – median earnings increase at a faster rate each year for those with degrees than without, levelling off a little by the age of 35 before peaking at the age of 51. The ONS believes a significant factor in median earnings falling from this point is that they are in a position to retire early.

By comparison, those without a degree see their earnings level off at 30, peaking at the age of 34.

The gender gap

There has always been a gap between the wages earned by men and women. However, the figures from the ONS demonstrate where and why there is such a difference.

For starters, there is less of a gender difference between graduates than between non-graduates. The table below looks at median hourly earnings:

However, whether the employee has a degree or not, earnings will level off earlier for women than men, a fact that the ONS attributes to many women taking time out from work to start a family. Women without a degree see their wages begin to level off at 31, compared to 34 for men, while female graduates see their wages level off at 33 compared to men at 39.

Choosing the right subject

It will come as no surprise that your choice of course plays a pretty big part in determining the salary you can expect. When I went to University I studied Politics and Philosophy. Sadly, the jobs market for philosophers these days is pretty bare, while there are more than enough politicians around, so you could argue I didn’t pick my course particularly well.

According to the ONS’s figures, almost half of all men (47%) select a course in business, finance, sciences or engineering, compared to just one in five women. In contrast, one in three female graduates have a degree in a health-related subject of education, compared to just 9% of men.

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And the salaries on offer in such different marketplaces are distinctly different. The banking and finance industries pay an average of £37,300, compared to an average of £27,600 in public administration, education and health. With the former industries dominated by men, and the latter sectors dominated by women, it goes some way towards explaining the disparity in pay between men and women.

For more on the influence of your degree course on your resulting earnings, be sure to have a read of The best and worst-paying university degrees.

Getting what you pay for

These findings will no doubt be welcomed by those that support the increases to tuition fees proposed by the Government, which sparked such fury from the nation’s students last year.

The argument in favour of higher tuition fees has long been based on the fact that graduates earn more than non-graduates over their working life, and so should pay more towards the cost of that degree. Why should non-graduates have to subsidise the studying of graduates, when those students will go on to earn far more in the long run?

That’s all fine, but with the cost of a degree now hitting a whopping £84,000, it stands to reason that more students will be motivated by their likely final salary when picking a degree course.

That could see financial and business courses seeing greater demand, while those without an obvious vocation to follow – such as my own choice, of politics and philosophy – may see fewer students willing to condemn themselves to such a level of debt when the salary they get afterwards means it will take them an awful long time to clear that debt, if at all.

And I think that’s a shame. There should still be room for education for education’s sake. How many of us knew at 18 what we wanted to spend the rest of our lives doing for a living?

No guarantee

What’s more, having a degree is no longer a guarantee of even getting a job. Back in January, figures from the Office for National Statistics showed that one in five new graduates are out of work. That’s the highest level of graduate unemployment since 1995.

Indeed, graduate unemployment has risen at a rate of 3.5 times the national figure. Graduates have enjoyed a profitable decade, but it may be that the next ten years will not see such a pronounced difference between those with degrees and those without.

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