The bust then boom in tertiary education student employment under COVID-19

In the major 2020 and 2021 lockdowns tertiary student employment in the 24 years and under age group fell by over 100,000, or 20 per cent of the pre-lockdown total. Yet these losses proved to be temporary. As I discuss in a new paper, student employment rates and earnings recovered to record levels. While the strong Australian labour market is obviously a major factor, the sometimes significantly overlapping employment markets for students and temporary migrants made closed borders beneficial for students as workers.

Tertiary student employment rates

The strength of tertiary student employment is most obvious in employment rates, the percentage of the total student population with a job. Tertiary student employment levels and rates vary during the year, driven by movements in and out of both employment and enrolment. Comparisons of the same month in different years can help distinguish a trend from a normal seasonal change. December is not necessarily the peak month for total student employment, since course completions reduce student numbers. But student employment rates typically reach annual highs in December, as seasonal spikes in retail employment coincide with a summer holiday increase in student capacity to work.

As the chart below shows, employment rates fell sharply in April and May 2020 as lockdowns hit, but by August 2020 student employment rates were back at 2019 levels. In 2021 employment rates were consistently higher than in 2019, despite lockdowns in NSW, Victoria and the ACT causing a significant dip. In early 2022 student employment rates remain 10 percentage points or more above their 2019 levels.

Source: ABS Labour force detailed, table LM3

A record high number of working young adult tertiary students

In July 2021, before lockdowns in the ACT, NSW and Victoria, full-time tertiary student employment in the 24 years and under age group hit a record high of 519,200 in the ABS labour force survey, which has data going back to 1986. My paper goes through possible reasons for this peak number.

Most obviously students benefited from economy-wide trends. Fiscal and monetary policy stimulus pumped up demand for labour. For students turning off the flow of temporary migrants is likely to have produced more benefits than for other groups, since many temporary migrants also seek jobs with low qualification barriers and flexible hours. The chart below shows the top ten student jobs as of 2016 by how reliant those occupations are on students and temporary visa holders. Especially in hospitality-related occupations domestic students are likely, pre-COVID, to have faced significant labour market competition from temporary migrants.

Source: ABS, Census 2016 TableBuilder, ABS, Australian Census and Temporary Entrants 2016 TableBuilder. Note: Ordered in scale of reliance on students and temporary visa holders rather than level of student job holding. Sales assistant is the most common student occupation.

Student employment is affected by the availability of jobs that suit not just their skills but also their schedules. With lockdowns students could not go to campus and classes moved online, saving on commuting time and giving more flexibility in when academic work was done. The proportion of students saying that studies affected their workforce participation fell slightly from 31 per cent in February 2020 to 28 per cent in February 2021. However, this trend was evident prior to COVID.

Although it was also a trend pre-COVID, student employment is diversifying across occupations and industries. In 2016 the top 10 student jobs accounted for three-quarters of all student employment. I expect this to be lower when we get the 2021 Census results. Although caution is required because August 2021 was a lockdown month, student employment in hospitality and retail, the two biggest student employers, was down 1.6 per cent on August 2019, while employment in other industries was up 7.1 per cent. Especially hospitality, but also retail, have histories of being bad employers with high rates of paying under-award wages. It would not be surprising if students who could find other work did.

Employment rates are driven by both the employment numerator and the population denominator

In early 2022 the absolute number of full-time students aged 15 to 24 years in work is only moderately above the same months in 2019. However, the population of full-time students is shrinking due to fewer international students. Consequently, the employment rate is up.

With employment rates one statistical quirk should be noted. Historically, as the chart below shows, international students have lower workforce participation rates than domestic students (although my paper discusses a likely under-count of international student employment). As domestic students increase their share of the ABS student survey sample total student employment rates would go up, even without domestic students increasing their rate of employment.

The monthly labour force survey does not distinguish between domestic and international students, but the ABS Education and Work survey does each May. As of May 2021 both domestic and international student employment rates were up on historical levels.

Source: Calculated from ABS Education and Work TableBuilder. Note: Due to inconsistent identification of permanent residents, domestic students is citizens of Australia and NZ only.

Working hours and income are also up

As we would expect given strong demand for labour, the working hours of students are also up. In August 2021 more than half worked 20 hours a week or more, up from a fairly stable 35 per cent between 2015 and 2019.

Source: ABS, Characteristics of Employment TableBuilder. Tertiary students are not specifically identified but only full-time students who had completed Year 12 were included.

Increased work hours are reflected in income, up 29 per cent between 2019 and 2021. The higher number in 2020 is due to JobKeeper, which in August 2020 paid $750 a week to students who would otherwise have earned much less. There is no official data on how many tertiary students received JobKeeper, but my rough estimate in the paper is just under 100,000.

Source: ABS, Characteristics of Employment TableBuilder. Tertiary students are not specifically identified but only students who had completed Year 12 were included.

Can it last?

The already error-prone field of labour market forecasting did not do well with COVID (I plead guilty). But the case for medium-term doubt:

As the government tries to bring budget deficits down and the RBA lifts interest rates this should reduce demand for labour. And although there has been no rush of returning temporary migrants, a cumulative increase over the next couple of years is likely.

In the short term, however, vacancies in occupations suited to students remain very high. Having secured employment, current students will benefit from incumbency. While official wage increases remain low for a strong labour market, the employers who used to pay students below-award wages won’t find many takers at the moment.

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