Australia’s increasingly worthless university degrees

By Leith van Onselen

The Australian’s Judith Sloan has joined the conga line hitting out at Australia’s demand-driven university system:

It’s called degree inflation in the US but we tend to use the term credentialism. It refers to the phenomenon in which jobs once filled by non-graduates increasingly are filled by graduates.

In the case of the US, it has been estimated by academics at Harvard University that more than six million jobs are at risk of degree inflation. By way of example, in 2015 two-thirds of production supervisor vacancies specified a college degree as a requirement even though only 16 per cent of production supervisors had a degree.

For Australia, Andrew Norton of the Grattan Institute has suggested almost a third of employed graduates are filling jobs not needing degrees.

The core issue is the extent to which university education has become just a sorting mechanism, giving graduates a headstart over non-graduates in securing jobs rather than actually raising the productivity of workers with degrees…

Is the government allowing too many young people to enrol in higher education only for them to secure jobs that don’t require those years of study as well as lumbering them with debts to be repaid?…

Note that the number of Australians with bachelor degrees increased by 57 per cent between 2006 and last year, whereas the overall labour force grew by 19 per cent across the same period.

If we look at the proportion of graduates in full-time employment four months after graduation, the deterioration in their job prospects has been stark: from close to 85 per cent 10 years ago to about 70 per cent.

In terms of graduate salaries, it is clear that starting salaries as a proportion of male average weekly earnings have been falling for some time. From a peak in 2009 of 83 per cent, the most recent figure (for 2015) records a proportion of 76 per cent.

More detailed analysis conducted by Norton points to a longer-term decline in graduate salaries, with graduates from the 2001 to 2005 classes earning more five years after graduation than more recent graduates.

In other words, it’s not just a case of relatively declining starting salaries but a trend that also persists after graduation…

The government-induced increase in graduate numbers has damaged the prospects of those without university qualifications.

It has also come at the cost of driving down relative graduate salaries and damaging the job prospects of graduates, particularly in terms of securing full-time employment…

The US calls it “degree inflation”, whereas MB has called it “university quantitative easing”. Either way, a university degree has lost its value as graduate numbers have exploded, despite the significant cost to both students and the Budget.

Thanks to the uncapping of university places, allowing universities to recruit as many students as they can fit in order to accumulate HELP/HECS funding, actual tertiary entrance scores have plummeted, meaning every person and their dog can now get a degree, devaluing their worth in the process.

In turn, higher education in Australia is no longer about boosting the nation’s productivity, but rather teaching as many students as possible to accumulate fees through the Commonwealth government’s HELP/HECS scheme, as well as from overseas students.

Indeed, the Productivity Commission’s latest report showed that employment outcomes for full-time graduates “have been getting worse”:

For those who do complete their degrees, post graduation outcomes have been getting worse. Full-time employment rates for recent graduates have been declining, even as the Australian economy has continued to grow (figure 3.3). Many of those who do not work full-time are not in that position by choice, with the underemployment ratio among graduates at 20.5 per cent in 2016, compared with about 9 per cent in 2008. Graduate starting salaries have also been growing slower than wages across the broader economy (declining from nearly 90 per cent of average weekly earnings in 1989 to about 75 per cent in 2015)…

Further, over a quarter of recent graduates believed they were employed full-time in roles unrelated to their studies, to which their degree added no value. To the extent that someone without a costly university education could have undertaken these roles, this can then have cascading employment and income effects down the skills ladder.

Many employers are also not satisfied with the quality of recent graduates, with about one in six supervisors saying that they were unlikely to consider or would be indifferent to graduates from the same university…

University students are also not satisfied with the teaching in their courses…

Degrees will continue to lose their value as long as the universities continue to lower education standards and  ‘print’ degrees en masse, flooding the labour market.

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Comments

  1. Australian universities are Harvey Weinstein!

    They say “give me your body/money and I will advance your career” with no intention of advancing our career.

    The unis ought to be charged with fraud and deception.

  2. Not to mention all the foreign students competing for jobs with local graduates, who are prepared to work for practically nothing in order to secure a job that will get them a permanent residency visa.

    • The foreigners are starting to realise they’re being conned.

      International students win power in USyd election
      ‘Panda Warriors’ won and had eight candidates elected to the Student Representative Council at elections.

      Panda Warriors are demand:
      * Multi-lingual support for housing, academic, and tenancy.
      * Concession fares on public transport
      * Discounted fees for International students

      • Concession cards – which allow Aussie students to get discount train tickets – are issued by state government. No uni has the authority to issue concession cards. Unless there is more corruption in the wings?

  3. > Degrees will continue to lose their value

    That’s all that has to be said. To elaborate, all indicators show that degrees will continue to lose value.

    This is a hard pill to swallow but it needs to be understood.

  4. with everyone cheering on the imminence of driverless cars, soon there’s going to be even fewer jobs. so we may need to open up some new universities for all those professional drivers to give them something to do and keep unemployment levels suppressed.

      • UBI is not going to fix the emptiness in men’s souls. that certified public accountant you know, his job is his life. many people are the same. people have to feel like they have purpose and their time needs to be occupied. work, and pointful, real, productive work, is a needed human institution. the relentless automation of human labor needs to be suppressed (to a degree).

      • How many of those CPA’s really want to be something else like and artist, novelist, researcher, micro-brewer but don’t coz they gotta pay the bills rather than achieve their real passions or interests……Does ANYBODY really genuinely want to be a CPA, do they really feel fulfilled by what they do?

      • Philly SlimMEMBER

        Jaccob, you could do with some wisdom of Carl Spackler: “A flute with no holes, is not a flute; and a donut with no holes is a danish.”

        Likewise, a UBI that only goes to the unemployed is actually the dole. The “U” stands for universal. Everyone gets it. The savings are from administration. As soon as you limit who gets it, you need a bureaucracy to administer it. And then you lose a lot of the benefits, and any support from folks like me. I am for a UBI, but a proper UBI.

      • @ stagmal, that really depends. The idea should be that automation = less work and far higher profits for corporates given low input costs. In that scenario some kind of UBI may actually work, but given our economic belief system what will actually happen is serfdom, where the corporates and their owners keep all of the productivity gain.

        When you have free time and money, you will find something to do. This could be growing your own organic fruit and veg, exercising more, catching up with friends for coffee, rebuilding car engines, photography, diving, surfing, fishing. Also with everyone in the same “predicament” mates to do all this with will be easy to find.

      • Likewise, a UBI that only goes to the unemployed is actually the dole. The “U” stands for universal. Everyone gets it. The savings are from administration. As soon as you limit who gets it, you need a bureaucracy to administer it. And then you lose a lot of the benefits, and any support from folks like me. I am for a UBI, but a proper UBI.

        A UBI is not supposed to be a welfare replacement.

        It cannot, for example, account for cost of living differences in different areas, children, disabilities, etc.

        You may remove some bureaucracy around welfare, but you won’t eliminate it.

    • But the right wing media love saying that voters love being on the dole.

      Did you see the video? The UBI recipient in Finland is much happier now compared to when he was jumping through hoops at CentreLink. And he makes drums and sells them. He is also raising 6 kids.

      Milton Friedman saw a construction project in Latin America and said “why are they not using bulldozers?”. The reply was doing so will increase unemployment. Milton’s response was “you may as well use spoons to dig”.

      Milton actually wanted helicopter money and a negative income tax to the poor.

    • They will still be talking about driverless cars in 20-30 years.
      Its not going to happen any time soon.
      Sure the technology will develop but the practicalities on the ground/road will be a huge stumbling block.
      For example. It will be a hoot to see all the safety and crash avoidance systems kick in every time other drivers cut them off etc. and the driverless vehicle taking twice as long to get someone to work.

  5. The core issue is the extent to which university education has become just a sorting mechanism, giving graduates a headstart over non-graduates in securing jobs rather than actually raising the productivity of workers with degrees…

    Talk about missing the forest for the trees.

    The core issue is not enough jobs. If there were enough jobs, people wouldn’t need to go and get useless degrees to get a leg up on those who don’t, when both are applying for the same job.

    • Smithy, think this through. In a service economy you increase your productivity at the expense of some one else’s job.
      a service economy does not generate income, (generally for the average punter)
      its the old turkey’s wish for xmas dilemma.

    • “… not enough jobs …”

      So, the answer is for Govt to ‘create’ jobs? Make-work schemes, perhaps?

      Z: “Hey, I demand a job!”
      G: “We don’t have any jobs.”
      Z: “I NEED a job! You owe it to me to create one.”
      G: “Alrighty. Grab that shovel over there and dig 6 two foot deep holes along the footpath out there.”
      Z: “WTF! I’m not doing that.”
      G: “But you just demanded a job and I’m giving you one.”
      Z: “I wanna better job than that. That has no purpose!”
      G: “Really … and precisely what job that I create for you is going to have any kind of purpose?

      See the issue here, smithy?

      • So, the answer is for Govt to ‘create’ jobs? Make-work schemes, perhaps?

        No, the answer is for us to employ people to do work that needs doing.

        Like, say, repairing all the potholes down the road. Or laying fibre optic cable everywhere. Or cutting the grass and repairing the facilities in our local park more often. Or reducing emergency room and hospital waiting times to zero. Or reducing class sizes to single digits. Or picking up the rubbish in the streets. Or giving food to the homeless. Or building houses for the homeless. Or regularly checking on oldies so they don’t die in their houses and sit undiscovered for six months until too many unpaid bills stack up. Or researching cures for cancer, MS, et al. Or building a solar farm and distribution network to power the country.

        Etc, etc.

        See the issue here, smithy?

        Yes. Your “example” is stupid and small minded.

      • Crikey, did you just not notice that Communism has failed everywhere it’s been tried? Why not nationalise all industries (what little there is left) and put everyone who wants a job to work? Why employ 2 people to do a job when you can employ 5?

        You’re a genius, smithy. We need more like you

      • Yeah, i mean its not like thats how most of the modern western world (as we increasingly wistfully refer to it) was built.

        You guys are always keen to get lots of people working when it involves enslaving the many to the sole benefit of a few. Tweak the parameters slightly to make it benefit the many, however, and suddenly it’s a catastrophe.

  6. the sorting mechanism only comes into play in securing work placements / internships. degrees are valuable in that they allow an increasingly small number of students a limited window to secure work placements and acquire work experience, which when coupled with a degree *might* lead to employment.

    i think smithy is right. the core issue here is there’s not enough work. its twisted but it doesnt even matter if our unis are letting so many people into them, bc if they weren’t we’d just have more people sitting around on centrelink instead.

  7. As I said the other day, The job market is simply adjusting to the clear excess numbers of degree qualified candidates.
    The job market will use all available information to create a sorting mechanism for job recruitment, it probably won’t be anything that anyone calls sensible but it will happen. Mindless sorting is the one task which markets do exceedingly well, you certainly don’t need regulations to instruct markets on how to sort.
    This all sort of suggests that 18 year olds have the wisdom of 40 year olds to fall back on when making expensive Tertiary education decisions, clearly they don’t. If we really need to regulate the Tertiary education industry I’d focus on forcing them to eliminate courses / aspirants where less than X percentage of their graduates find appropriate in-field employment within some time frame say 6 months.

  8. There’s another way to look at this problem especially wrt Jobs.
    this is to ask: are we creating an economy which creates viable long term jobs?
    IMHO Australia is a huge failure in just this area. Yesterday we had discussions about Driverless cars and all anyone could see is Taxi/Uber drivers loosing their jobs. That’s an incredibly narrow POV wrt to employment in such an important emerging tech sector. Forget about the drivers and instead focus on the opportunities, especially opportunities for STEM degree qualified candidates. These emerging industries are the job creators of the future, yet we want to ban them.
    Go figure: you ban jobs where these jobs create value and create jobs (make work) where there is zero intrinsic value.
    Yeah I forgot, you then ponder why your “make work” jobs economy doesn’t scale in anything like the same way as jobs that have real value. (ratios of support economy jobs to core capability jobs within the region)

  9. Well done big government. Stop interfering in the education market. Let people decide on degrees based on investment value. Let market forces force universities to innovate on delivery to bring prices down to affordable levels. Stop enslaving kids with debt.

  10. What do readers think of a “scaled” form of subsidised university education based on what’s important for Australia?

    For example, students who get into Med, Law, Engineering, certain science degrees get their degree for free, on the condition that they must work in Australia for at least 5 – 10 years upon completion. Agriculture, computer science, vet science etc get a 50% discount, then useless degrees such as Arts, Philosophy etc have to pay the full amount. That way, we encourage the best and brightest to work hard and stay in Australia, creating and supporting industry?

  11. Most technical degrees here (Germany) require at least 6-12 months part time employment to gain the qualification, strongly connecting the academic side with employment. (not sure of numbers but a high% would remain after completing degree).
    Given most degrees are directly connected to employment of some form, why is business not encouraged or forced to be more closely connected to the places of workforce training (eg apprenticeships for uni degrees)? Instead of a perceived lack of workers being used by business to keep wages down via visa rorts. Why not force business to be more closely connected to the qualification provider so that they have enough workers in the pipeline. Wishful thinking I know.
    The idea of applying market forces to universities, which are a closed shop is going about it the wrong way. The incentive becomes skewed to lower standards, pipe people through the system, limit inputs/quality and max profits (like it is now, but worse). The closed shop nature of Unis, previous endowment of Government largess, Government certification means that it cannot be a free market/level playing field (look at the VET debacle for evidence – incentives are skewed).
    Encourage competition by all means, but take the incentive away from pushing students through the system – compete for government and research funds, as is currently the case for postgrad. Lower fees, make degrees harder and strongly link the degree with employment – some kind of learn on the job, apprenticeship component. Maybe monetary incentives for Unis that get students into degree related work? The goal should be highly skilled, well paid working taxpayers (employees, or entrepreneurs).

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