Graduate early career earnings are trending down

The latest HILDA Statistical Report has some interesting cohort data on graduate earnings in the early years after graduation.

It shows that later cohorts of graduates are, on average, earning less at the same point in their careers than earlier cohorts. Five years after completing a bachelor degree, people who graduated between 2001 and 2005 earned on average $140 more than people who graduated between 2006 and 2009. In turn, the 2006-2009 graduates earned more five years after completion than 2010-11 graduates, by $75 per week.*

In the HILDA data presented, at least two trends contribute to these results. In all years except the year immediately after graduation, the 2006-2009 and 2010-2011 cohorts are more likely to be studying full-time than the 2001-2005 cohort, which means that their employment income is lower and they will have less work experience five years out.

Second, the younger cohorts are more likely to be working part-time even if they are not studying full-time.

How pessimistic should we be at the prospects of the younger cohorts? One thing we learned in last year’s HILDA statistical report is that the premium for a degree alone is small for men and modest for women. It is degrees plus experience that seem to make the financial difference with other qualifications.

For some of the younger cohorts, the latest HILDA earnings figures are showing the effects of careers delayed rather than permanently stalled. But we are seeing a decline in graduates in professional and managerial jobs, and it is these occupations that have the greatest potential for long-term earnings growth.
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* Only including graduates who are employed and not in full-time study.

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