The changing spending power of graduates

New research illustrates that graduates in professional or managerial roles have seen the largest falls in pay after taking into account the rising cost of living.

Insight: Getting real about graduate earnings

Given steep increases in the cost-of-living within the UK over the past two years, researchers at HESA have assessed how this has impacted recent cohorts of graduates. Using Graduate Outcomes survey data from 2017/18 to 2020/21, they found that those in professional or managerial positions had experienced some of the highest falls in spending power.

One of the reasons for this appears to be the sizeable proportion of graduate jobs in these occupations that are based within the education or healthcare industries. Roles in these industries tend to be in the public sector, where wage growth has lagged behind other sectors.

For example, the vast majority of graduates in professional occupations within the health industry are employed in the public sector by the NHS. Our analysis shows that NHS workers within the health industry have seen greater falls in their purchasing power when compared to non-NHS workers in the same industry.

Lucy Van Essen-Fishman, one of the co-authors of the study, said;

“Our findings based on the Graduate Outcomes survey appear to mirror what we see in salary data collected directly from employers. That is, wage growth in recent years has been slowest in managerial or professional roles. Consequently, recent graduates working in these occupations have seen a fall in their spending power, as pay rises have not kept pace with higher living costs.”