We are all (average) Graduates now

Or Why the law of averages means you end up paying more

A banker, a doctor and a headmaster are in a room discussing their average earnings. The headmaster was pleased to see it was higher than he thought. The banker was rather miffed that it was lower than his professional aspirations had led him to believe. When the banker walked out of the room in a huff, something odd happened. The average fell. If Bill Gates, Li Ka Shing or Laxmi Mittal were to inadvertently walk in, the “average” would soar.
This variation on an old joke illustrates neatly the pitfalls of talking about average graduate earnings. Yet the OECD in Paris has this week been trumpeting the “graduate premium” in its flagship Education At a Glance report, a fat book of statistics from rich countries that comes out once a year.
The graduate premium is the average salary an average graduate earns over an average working life in an average country in the OECD (richer countries so that statistics from Africa don’t mess up the averages) compared to the average non-graduate. The OECD computes this as £113,000 for men. For women it averages out at £81,000.
Some of that goes in taxes so its not like having £81,000 to spend on Jimmy Choos. But spending power apart, it is worrisome the way governments use this to predict average earnings of future graduates.
Using future averages based on a past that is rapidly disappearing (known in the jargon as extrapolating), the government justified its last vast increase in university fees. You’ll pay, they insisted “because its worth it”.
Asian parents want their offspring to be doctors and bankers for good reason, but the overall graduate premium is a lie that is growing like Pinnochio’s nose. Many graduates find themselves in “non-graduate jobs” because there are simply too many graduates. Graduates in non-graduate employment were around 15% of UK graduates a few years ago. Now it is almost 25% and rising. It may not all be due to recession.
The government has already had to downsize its “graduate premium” figure in recent years. Simple maths tells me the graduate premium will drop as fees rise so they won’t be able to use this argument forever.
Recent stats suggest that men with humanities degrees may not even be better off than (average) non-graduates. That is no reason not to study history or literature. But it is a good reason to fight fee rises that are based on bankers still being in the room.
What I want to know is that if my daughter currently embarking on a 7-year degree in Architecture does not earn £81,000 more than a gardener over a life time, will we get our fee money back?