Inreasing penalty for not having a degree

 Those without a degree are losing the social mobility battle, accordingly to new analysis to be published soon by the independent think tank the Resolution Foundation. The new research shows that, compared to those with a degree, those without a degree are more likely to move down the earnings scale during their careers and were at an even worse disadvantage in the 2000s compared to the 1990s.

The study follows the ‘peak’ earnings of two groups of people as they move from age 30 to their early 40s, during the 1990s and the 2000s, and looks at what determines their chances of moving up or down the earnings scale.

The results show the critical importance of higher education. Not only were those with degrees more likely to move up the pay scale, those with just A levels or GCSEs were more likely to move down, and increasingly so during the 2000s compared to the 1990s. By the 2000s, relative to those with degrees, those with A levels were 50% more likely to move down the earning scale and those with just GCSEs nearly 70% more likely to move down.

At present less than 1 in 5 adults in low to middle income households holds a degree compared to 2 in 5 of higher earners.

The full report, due to be published by the Resolution Foundation shortly will outline the significance of a range of factors on people’s earnings – including gender, where they live, the job they do and if they have been unemployed.

David Willetts MP will respond to a preview of the work at an event in central London on Tuesday this week.

An earlier social mobility report from the Foundation showed that overall, those just above middle earnings were most likely to be able to increase their pay, and those on the lowest earnings were most likely to be stuck.

Gavin Kelly, chief executive of the Resolution Foundation said: ‘We obviously already know that education is important for social mobility. But what is new here is what lies beneath – as more people get degrees, those without seem to be at an increasing earnings disadvantage. This is a worrying position for the majority of people in low to middle income households, who do not have a degree’.

Notes to editors:

The research follows two groups of workers, born in 1958 and in 1970. It examines their earnings during the 1990s and the 2000s respectively, focusing on their ‘peak earning’ period between the ages of early 30s to early 40s. Data on the group born in 1958 is from the National Child Development Study – sample size of 5,683. Data on the group born in 1970 is from the British Cohort Study – sample size 4,403.

The study examines hourly earnings and defines earnings mobility as moving up or down the earnings distribution by at least one quintile.

Key results are compared to those holding a degree:

Downwards movement

In the 1990s, compared to those holding a degree: those with A levels (NVQ level 3) were 20.1% more likely to move downwards, those with GCSEs (NVQ level 2) 42.2% more likely to move down, those with NVQ level 1 60.5% more likely to move down and those with no qualifications 90% more likely to move down.

In the 2000s, compared to those holding a degree: those with A levels (NVQ level 3) were 49.6% more likely to move downwards, those with GCSEs (NVQ level 2) 67.5% more likely to move down, those with NVQ level 1 95.3% more likely to move down and those with no qualifications 132.9% more likely to move down.

Upward movement

In the 1990s, compared to those holding a degree: those with A levels (NVQ level 3) were 37% less likely to move upwards, those with GCSEs (NVQ level 2) 36.2% less likely to move upwards, those with NVQ level 1 49.4% less likely to move upwards and those with no qualifications 53.8% less likely to move up. 3

In the 2000s, compared to those holding a degree: those with A levels (NVQ level 3) were 36.6% less likely to move upwards, those with GCSEs (NVQ level 2) 34.3% less likely to move upwards, those with NVQ level 1 46.6% less likely to move upwards and those with no qualifications 52.2% less likely to move up.

16% of people in low to middle income households hold a degree compared to 39% of people in higher earners (Resolution Foundation, ‘Squeezed Britain’ 2010)

The Resolution Foundation’s first report on social mobility Moving on Up? Social Mobility in the 1990s and 2000s, was published in March 2011. The next report is due to be published shortly. Lee Savage, research and policy analyst at the Resolution Foundation is the author of both reports.

The event previewing these and other results, with David Willetts MP, is 5.30-7.30pm at 1 Bird Cage Walk, London, SW1H 9JJ. Journalists must register in advance at external.affairs@resolutionfoundation.org

The Resolution Foundation is an independent think tank working to improve the lives of people on low-to-middle incomes. This includes 11 million adults in 6 million households with gross household incomes of between £12,000-£30,000 for a couple with no children and up to £48,000 for a couple with 3 children.