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Are poor students destined to earn less?

Study reveals why students from lower socio-economic backgrounds earn less

Posted by Rebecca Paddick | June 14, 2017 | Finance, legal, HR

Unpaid internships, geographical immobility and a lack of investment in Careers Services are driving the gap in earnings between students from higher and lower-income families, a new study has found.

The report, jointly produced by the UPP Foundation and the Bridge Group, builds on previous research that found students from wealthier socio-economic backgrounds earned around 10% more than those from lower socio-economic backgrounds.

The new study explores the link between socio-economic background and graduate outcomes, and how universities can support the outcome of students from lower socio-economic backgrounds.

Shining a light on the factors likely fuelling the gap in graduate outcomes, the study finds a marked link between a student’s participation in extra-curricular activities such as unpaid internships and work experience, and their earning power after graduating. Finding that students from lower socio-economic backgrounds participate less in activities that have ‘high-currency’ amongst employers, The Bridge Group calls for a four-week legal limit on unpaid internships.

It has been assumed that participation in higher education has a socially levelling effect – that once you’re in, you’ll get ahead. Instead, students for whom the cost is most significant often benefit the least in absolute terms.

A student’s understanding of ‘career-readiness’ before entering higher education is also shown to have an impact on earning power, with careers education in England described as a ‘post-code lottery’. The research finds that students from lower socio-economic backgrounds are less likely to move away from home to study and, if they do, are more likely to return to their home region upon graduating – and much less likely to move to London, where many of the most competitive graduate jobs are to be found. 

Also compounding the issue, according to the research, is a lack of institutional investment in careers services by universities. The study finds that despite some excellent practice happening in the sector, scale and reach are problematic at many institutions. Calling for a dedicated member of academic staff in each department to partner with careers professionals, the research recommends greater emphasis on careers education and management more widely.

The new report also acknowledges that whilst there has been much progress by some employers, with many removing ‘traditional’ entry criteria and deploying data-driven approaches to attract talent from across different groups, it calls on employers to do more. Describing the practices some employers use as ‘deeply unhelpful’, such as selection processes that show conscious bias towards more affluent applicants, the report encourages employers to undertake a ‘critical review of the way in which ‘talent’ is defined and identified.’

Dr Paul Marshall, Chair of the Board of Trustees at the UPP Foundation, said: “Graduate outcomes is an extremely important issue and the UPP Foundation recognises the unique difficulties that can arise for students with lower socio-economic backgrounds when it comes to employment after university. It has been assumed that participation in higher education has a socially levelling effect – that once you’re in, you’ll get ahead. Instead, students for whom the cost is most significant often benefit the least in absolute terms.

“However, it is heartening to see the education sector making excellent progress, especially in its use of data analytics to help identify students at risk of weaker graduate outcomes. We are extremely proud to have been involved in this project with the Bridge Group and are confident that our report will help to inform the sector and the labour market’s approach to improving graduate outcomes for students with a low socio-economic status.”

University careers services have an equally important role to play in helping students from all backgrounds to access these opportunities and build their networks to help them get ahead 

Nicholas Miller, Director of the Bridge Group: “Much good practice is being delivered by institutions, but a great deal more is required to close the gap in graduate outcomes by socio-economic background. It is unjust that background impacts on higher education outcomes, and it is also in the interests of the economy that all graduates can make best use of their qualification. The UPP Foundation’s commitment to understanding better why this should be, and what can be done, is encouraging, and we are delighted to have partnered with them on this important study.”

Stephen Isherwood, Chief Executive of the Association of Graduate Recruiters said: "Employers increasingly see tacking social mobility as a business imperative – over a third of our members now have programmes in place to hire more students from disadvantaged backgrounds. University careers services have an equally important role to play in helping students from all backgrounds to access these opportunities and build their networks to help them get ahead.”

Bob Gilworth, Director of College Services at The Careers Group, University of London said: "Social mobility through higher education has to be about getting on and not just getting in. This report shows the pivotal role university careers services can play in levelling the playing field, and helping students plan for the future."

Read the full report here.

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