University enrolments plummet as school-leavers choose jobs

The Australian Bureau of Statistics (ABS) reported that the number of full-time university student enrolments fell by 8.7% in the year to May.

Higher education expert Andrew Norton says the ABS data is just one of a range of recent indicators that an increasing number of people are electing not to study when they finish school and are instead electing to enter the job market. However, Australia Institute research economist Eliza Littleton suggests that the decline could also be the result of universities having put up charges for some courses as a result of changes to funding places under the Jobs Ready Graduate program.

From The Australian:

Mr Norton said other evidence came from the federal education department, which shows that lending for student loans has declined 4.3 per cent for 2022. The number of people receiving Youth Allowance also dropped by 40,000, or 18.6 per cent, in the year to May.

“Just as universities benefited from a weak labour market in 2020 and parts of 2021, now they are losing students as they take jobs instead,” Mr Norton said…

There is no evidence yet that some young people are choosing to leave school early to take up job opportunities, but advertisements on jobs websites and community noticeboards reveal there are plenty of employers enticing them to do as such.

The phrase “no experience” was the 15th most common search term entered by jobseekers on seek.com.au over the past six months.

“Due to the labour-short market, many businesses are offering on-the-job training or no-experience required roles in order to lure quality talent that might not otherwise consider themselves a good candidate,” a Seek spokeswoman said.

I have never understood the obsession with going to university, nor the efficacy of having 40% of Australians aged between 25 and 44 years having a bachelor degree or higher.

Basically, a university degree has become a prerequisite to gaining a job not because of any particular need or skills learned, but rather because employers now use it as a ‘signalling’ tool to sort job applicants.

Bryan Caplan – a professor of economics at George Mason University – explained how this signalling process works:

“Why is it that employers would pay all of this extra money for you to go and study a bunch of subjects that they don’t actually need you to know?”. The answer is “signaling”…

Yet the system as a whole is dysfunctional, he argues, because the signaling game is zero-sum. He illustrates the point with another analogy: If everyone at a concert is sitting, and you want to see better, you can stand up. “But if everyone stands up, everyone does not see better.”

The advantage of having a credential, that is, comes at the expense of those who lack it, pushing them to pursue it simply to keep up. The result is “credential inflation.” Today a college degree is a prerequisite for jobs that didn’t previously require one—secretary, rental-car clerk, high-end waiter…

A college degree doesn’t signal the same intensity of work ethic as it did then, but because of the zero-sum nature of signaling, those without degrees look lazier than before…

So, a bit like racial profiling used by police, university became a sorting tool for employers, and one they don’t pay for.

The results were entirely predictable. The record number of people attending university degraded a degree’s value, since almost everyone now has one. In turn, even the more basic entry level job started to require a university degree, despite the fact that these jobs had traditionally been performed just fine by those with only a high school diploma.

Sure, a university education is needed in specialised skilled professions like doctors, nursing, teaching, engineering, and the like. But it is questionable for many generalist professions that in earlier generations never required a degree.

Thankfully, the tightest labour market in 50 years looks to have changed the “signaling” dynamic (at least in the short term), with employers increasingly willing to employ Aussies without a degree and less experience.

Surely this is a good outcome, since it reduces the unnecessary process of “credential inflation”?

Unconventional Economist
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Comments

  1. pfh007.comMEMBER

    Another important reason to open the borders to loads of fake skilled labour.

    Drive up the unemployment rate so local kids feel compelled to take on a load of HECS debt and spend years getting a bit of paper from our venal degree mill universities.

    Nothing like fear of the unemployment queue to drive demand for our teritery sector.

    Plus all that unemployment will hold down wages and allow the RBA to deliver cheap money for the upper middle classes to speculate on asset prices (while munching on cheap pizza delivered by international PhDs)

    #chortle

  2. Anecdote.
    We have two family friends doing social work 3 yr course at RMIT Melbourne- well thought of, hard to get into previously.
    Over 2020, 2021, 50 % of the students dropped out.
    One friend( who is continuing) was in a zoom tute group last year- it started with 30 students, and ended the semester with 2.
    The friend who is continuing was asked to a faculty meeting to give her views on what they could do to improve the retention rate.( apart from smaller tute groups one presumes).
    I think the drop out rate across RMIT is pretty stratospheric too.
    So it’s not just new students deciding to go to the workforce instead.

  3. Australia probably only needs half as many of the courses and Higher Ed institutions we currently have.

    Skills training has been neglected for far too long

  4. And their HECS/HELP debt just went up by 3.9% on 1 June & most kids had no idea it was happening. (But don’t call it interest!!)

  5. “A college degree doesn’t signal the same intensity of work ethic as it did then” 🤔