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High Graduate Income: Is That All University Is About?

The link between educational attainment and income has long been known. Now Australians have more information about what graduates earn from different universities and courses.

A recent report shows graduates from NSW universities generally have the highest median income. Unsurprisingly, so do graduates from dentistry and medicine courses.

It’s tempting to think these results show how some degrees and universities are inherently better than others. But just using wage outcomes is a poor way to judge education’s worth. There are several reasons for this.

First, how education results in higher wages can have little to do with the content of an education experience. Second, there are many different ways education is valuable to an individual and to society beyond earning capacity. We should remind ourselves of this when we examine why we continue to invest our time and energy into education.

Why do some graduates earn more?

The conventional wisdom is that it’s what we learn that produces higher wages. Employers pay a higher premium to access the skills and knowledge an individual acquires while studying. This is why many people might think there’s something special about the teaching and learning at NSW universities that means their graduates earn more.

But more students studying at NSW universities will not guarantee them all the same higher wages. Education is sometimes known as a “positional good”. This means educational attainment makes one person more attractive to employers relative to another.

It also means education does not necessarily make someone more productive. But it does make it easier for them to access the better, higher-paying jobs.

Some education value will reflect in your pay cheque, but there are also many non-monetary benefits. Source: Shutterstock

It’s factors outside of education that often make the difference to what we earn, such as the size of the job market or living in an area where there are higher wages. It has also been; shown high status professions can create what is known as social closure. Licensing regimes restrict access to occupations and enable those that are; licensed to charge higher fees.

This is why dentistry and medicine are so high up the median income food chain.

What else is valuable about education?

Education is; associated with a huge range of non-monetary benefits. For instance, more active citizenship, lower crime rates, and better health outcomes. Early childhood education, in particular, is; singled out as providing many benefits later in life.

It seems education can even improve your outlook on life. One American study showed those with higher educational attainment reported higher levels of well-being. And this was after controlling factors such as income, health, age, stress, divorce rates and even the weather.

Why this happens remains the subject of considerable debate. What’s clear is many valuable aspects of education will not be; captured by graduate outcome surveys.

Education and the benefits to the public

Education is sometimes described as a public good. This refers to the wider benefits of education to society. In particular, our education institutions play a major role in the creation and dissemination of powerful bodies of knowledge.

The functions of education go beyond the shaping of an individual. Because of the opportunities associated with education, it can help make us a more mobile, equitable and democratic society.

It’s important to remember this is a double-edged sword. What makes education a tool for advancement can also entrench disadvantage. Students from higher socioeconomic backgrounds are; in the best position to access education’s rewards, while students from disadvantaged backgrounds can be; locked out. It’s one of the reasons there’s such a strong focus on equity in education policy.

What should we value in education?

Using earning capacity as the main way to measure the value of education is a relatively new phenomenon. Over 2,000 years ago, Aristotle distinguished the gaining of skills and knowledge from a deeper form of worth where the fulfilled person was an educated person.

At the start of the 20th century, philosopher John Dewey considered democracy to be the central ethical imperative of education. He wrote that, if done right, education means “we shall have the deepest and best guarantee of a larger society which is worthy, lovely and harmonious”.

Maybe some of what is “worthy, lovely and harmonious” will show up in how much someone earns after they finish a course. But there’s a lot that won’t. Too much focus on employment outcomes can distract from all the other aspects of education that can make it so valuable in the first place.

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