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HEi-think: The problem with measuring graduate earnings

Following last week's Institute for Fiscal Studies report on graduate earnings, John O'Leary, editor of The Times and Sunday Times Good University Guide, examines the problems with using data on pay to compare universities.

 

Measuring graduate destinations six months after graduation probably made sense 50 years ago, when the big employers’ Milk Round provided enough options for every student who wanted a job to go straight into one from university. In an age when so many graduates start out in internships and most young people have several different jobs before they reach 30, the process has become an embarrassment. 

Last week's report on graduate earnings by the Institute for Fiscal Studies may be the first step towards more useful information for university applicants. That is certainly what it was intended to be by David Willetts, who paved the way for the research as Universities Minister, knowing that it would create pressure for fuller disclosure.

The report contains few surprises – well-qualified students from affluent homes who take subjects like medicine or economics at leading universities earn a lot more than others. But by demonstrating the differences in average graduate earnings at Russell Group universities, it naturally begs questions about what the range would be at some of the rest. Jo Johnson, the current Universities Minister, has already promised to let us know as soon as the law allows.

Since the researchers have demonstrated that family background is as significant as the choice of university or subject, perhaps we shouldn’t care – but we will and so will ministers. The fact that average graduates in some subjects earn no more than those who went straight into work from school has already restarted the debate over so-called Mickey Mouse degrees.

Yet, as the report itself makes clear, comparing universities on the basis of graduate earnings is not as straightforward as it may seem (which is why they have never been used in league tables). In particular, regional differences in pay rates skew the picture. It is noticeable that four of the five Russell Group universities that opted out of the exercise are in areas of relatively low pay. Other universities outside London that attract a high proportion of local students will be affected even more.

The subject mix would be another huge factor if universities were to be judged on overall average earnings. At the extremes, having a medical school would be a considerable advantage, while large numbers in the creative arts would be bad news. The IFS report is careful not to provide overall figures in its institutional comparisons.

Of course, it is possible to allow for any differences, but ministers tend not to want to complicate such exercises because the figures lose their force. The Prime Minister has promised greater transparency, not complexity.

Ideally, the 10-year comparison would be based on categories of job rather than salaries, as the six-month snapshot is at the moment. It is the point at which that snapshot is taken that is unsatisfactory, not the currency of the comparison. A degree is not just a route to a big pay cheque and universities should not be incentivised to produce bankers rather than vicars.

The trouble is it would be vastly more complicated (or maybe impossible) to break down HMRC data by occupation. We may be stuck with salary data as the only available long-term information on graduate careers unless universities track their own graduates for much longer than at present.

 

 

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