Women face greater earnings gap for not going to university

Graduate premium and ‘motherhood penalty’ could deter young people considering alternative routes into the workplace, says report 

Women who don’t go to university earn more than a quarter less than women with degrees, a report this week found, with experts warning the ‘graduate premium’ could deter young people from considering vocational routes into work. 

The report, published by the Institute of Fiscal Studies (IFS) in conjunction with the Department for Education, found that by the time they reached the age of 29 the average earnings gap between women who attended higher education and women who did not was 26 per cent. For men, the gap was just six per cent. 

When looking at those who actually graduated, the gap rose to 28 per cent for women, who earned an average of £6,700 more per year than non-graduate women. 

Graduate men had an earnings gap of just eight per cent, or £2,700, at the same stage.

The IFS attributed the earnings gap between women at the beginning of their careers to graduates working in jobs that demanded longer hours than non-graduates and the fact that non-graduates were more likely to have children at an early age.

Jack Britton, co-author of the report and a senior research economist at IFS, said the findings highlighted the ‘excellent investment’ higher education represented for women at the beginning of their careers.

“Going to university in the mid-to-late 2000s increased the earnings of women at the age of 29 by around 26 per cent, suggesting that in terms of their early-career earnings, university is an excellent investment for women,” he said.

But Lizzie Crowley, skills policy adviser at the CIPD, added the figures also showed women were being penalised for having children.

“Those statistics seem quite shocking when you first look at them, but when you dig down what is really happening is that women are being penalised for having children and having to look after them,” she told People Management

“IFS suggest that women who go to university are far more likely to delay having children than women who don’t, and that women who do have children at a younger age are more likely to be concentrated in jobs that have shorter hours and part-time work.”

Young women who don’t attend university can also suffer financial penalties when taking a vocational route into the workplace, according to a report published last week by the Young Women’s Trust.

The survey of young adults working in apprenticeships found earnings progression for female apprentices lagged significantly behind their male colleagues, with a third (30 per cent) borrowing money from their families each month. 

Crowley said the report pointed to evidence of the ongoing ‘graduate premium,’ in the UK workplace, warning the earnings gap was likely to dissuade people from considering alternative routes into work. 

“Financial returns still play a big role in young people’s career choices regardless of their gender, and a significant gap could be putting people off choosing an alternative pathways,” she said. 

“The findings highlight the need for much better careers advice and guidance for people when they are choosing their subjects, and an improvement in existing vocational routes into the workplace to ensure they bring high wage returns. Finally, we need to change employer practice regarding women who have children.” 

The government this week launched a funding consultation on T-Levels; the proposed technical alternatives to A-Levels that will seek to provide young adults with practical routes into higher level-apprenticeships and university. The new qualifications are due to be launched in the UK from September 2020.