Graduates still good for the economy shock

When I looked at the evidence back in the 1990s, the value of the 'graduate premium', the average lifetime earnings advantage that graduates have over non-graduates, was about £250,000. The supposition since Blair expanded the HE sector has been that this is now about zero, but a new study by the IFS apparently shows it's still there - though shrunken to £130,000 for men and £100,000 for women. This is good news for a number of reasons.

I say apparently because the study is not, at time of writing, on the IFS website, and I must rely on newspaper reports of their advance copies. 

The research I did for my Masters back in the '90s looked at the lifetime earnings of a non-graduate occupation, a second fix joiner, with a level 3 - 5 BTEC. Hanging solid-core doors of 30kg - 35kg each, on piecework, from age 18, our chippie would progress from 4 or fewer doors a day to an average of 8, peaking at times at 10, and would maintain a level of about 6-8 until his early 50s, when the number would start to decline, at age 60 to the same level as the new entrant. Peak piecework earnings in their 20s and 30s could fund an extravagant lifestyle and consumerist consumption, but would decline rapidly as physical strength and stamina decreased.

Graduates on the other hand, from 1990s data, suffered low earnings in their teens and 20s but enjoyed sharply increasing incomes from their 30s onwards which did not plateau but continued to increase incrementally until well into their sixties, then tail off only slowly, unlike the sharp drop-off for manual occupations. The shape of the graphs seems to have stayed the same, with some useful additional refinements.

The new study shows differences between the sexes. Women's earnings grow more slowly than men's in their 30s and tend to plateau, whilst male earnings continue to climb. This is almost certainly due to childbirth and childcare effects - again, as I have reported previously, this also accounts for much of the 18% average overall earnings gap in the economy, only around 4% of which is attributable to taste discrimination.

The study also points out the benefits to the economy of the graduate premium -

Overall, the IFS found the government benefited from extra tax revenue and national insurance contributions of £110,000 per man and £30,000 per woman, over and above the costs of study to the government.

And importantly, whilst the top 10% of male graduates enjoy a lifetime premium of £500,000 or more, the bottom 20% can actually lose money, their lifetime graduate premium being lower than the cost of their university maintenance and tuition costs.

This is all very bad news for Labour leadership candidate Kier Starmer standing right now on a platform of abolishing tuition fees - at a annual cost to the economy of £7.2bn - which would just make the rich richer, and even the incapable and mediocre in the bottom 20% come out evens. It would discriminate hugely against manual and non-graduate occupations, Labour's traditional voting base, and favour Labour's metropolitan elites of arts and media graduates. It is a suggestion that would fill the 'B' arks with graphic designers and telephone marketeers. And lose the next two elections.

Covid Update
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Whilst there is a sort of mild hysteria in the media (metropolitan based and therefore liable to contract the virus themselves) about government unpreparedness and lack of special measures to protect journalists and BBC staffers, in Germany there is a sort of despair at the dreadful state of their own health readiness - and, as Der Spiegel writes

 Enjoy!

Britain's booming 'austerity' economy

Two charts that bear close study form the base of today's post. The RSA's Fabian Wallace-Stephens (who with a name like that should probably be standing for Kier Starmer's Deputy in the Labour leadership hustings) has looked at the fastest growing and shrinking occupations from the Labour Force Survey - here are the charts (clicky) and my comments below.

The first thing to note is the degree of substitution - occupations having the same skill sets and that enable workers to migrate from one category to another. This includes for example workers who move from sales and retail assistants jobs to call-centre jobs. Secondly are the changes in the structure of the labour market away from permanent employment by a single employer to a melange of self-employment and short term and temporary gig work; the full-time waiter is being replaced by a new breed of actress/waitress/whatever who may supplement their instagram enabler role with a few evening sessions carrying plates at the local pizza parlour. Without the counterpart to these charts - the charts that map the rise and fall of business and commercial activities - some changes are misleading.

However, a few trends are noteworthy. Supporting the Prime Minister's undertakings and undermining the NHS Cassandras, we have seen about 70,000 more nurses between 2011 and 2019 and an equivalent additional number of nursing auxiliaries and assistants. We have seen almost 80,000 additional care workers and 65,000 nursery nurses and assistants. Just those four categories have gained some 285,000 additional workers, demonstrating the growth in demand. What we must do now is work out how to pay for it.

The internet impact on retail is clear, with significant losses in shop and retail jobs offset by the growth of some 100,000 delivery driver jobs, and I suggest many more amongst the huge 4159 admin class gain* (nec = not elsewhere classified) are part of the internet shopping logistics tail. I'd suggest the one anomaly in class 7111 - massive female losses in retail sales but a modest increase in males - may be due to the blokeyness of mobile phone shop staffing.

The clear gainer though is what we used to call IT. As one would expect as we transition into the next wave of an AI economy. And the most visible impact is on central and local government - both clear losers, and not as the unions would have you believe from 'austerity' but from, well, change.

And one overall change that is inescapable - and confirmed by an unemployment figure that has dropped substantially during this period - is that employment growth overall greatly exceeds shrinkage; obvious in the images even given the exaggerated job-shrinkage scale in the graphics. And that really is good news.

Evening Standard, 21/01/2020 - * another increase for SOC 4159

Are these kids tomorrow's coal miners?

Are these kids tomorrow's coal miners?

Not a referenced post, but picking up on Steve's comments, which are worthy of a whole series of posts, on the replacement of substantial numbers of jobs in the economy by robots. But surely it's not all negative? I'd far rather send expendible robots 3,000' underground to mine coal, for instance, than men. Methane, silicone dust, explosives, flooding, rock falls, risk and injury all avoided - and mines that can work 24 hours a day without needing a town full of people built on top of them.

Well, a bit of googling found a mine robot prototyped in 2013. They must be working somewhere by now. 

Not just coal, but tin, copper, rare earths. Robot miners can exploit small seams deeper and more hostile than men can. Even underwater - what about mining the seabed within the 200 mile economic zone? Just another post-Brexit asset we've got. 

It may also be worth compiling a running list of those professions most at risk from robots. At the top of mine are fighter pilots; it makes no sense building fast jets half the tech of which are pilot UI & life support systems. Drones with just weapons and avionics can have greater endurance, greater speed, tighter G and in direst emergency can be flown into a target, all at a tenth the cost of a conventional fast jet with no risk to the highly trained pilot. RAF fighter pilots of the future can also be fat, middle aged console-kings downing Chinese Migs in their underpants, reserving our lean, fit risk lords for vital gardening, cooking and bar-service roles for which robots can never replicate human skills.