The graduate gender pay gap
Why are female graduates paid less than males?
Many young people in England will now have finished their A levels and will be hoping to go to university.
Going to university has long been viewed as a route to a better standard of living. The latest data from the government's Graduate Labour Market Statistics (GLMS) shows that people of working age in England (ages 16-64) who have a degree earn around £11,500 per year more than non graduates. That advantage diminishes once student loan repayments are taken into account but even so, graduates will be paid more than non graduates over their working lifetime.
The gap between graduates and non graduates has been fairly consistent over the last few years. Also consistent, however, is the salary gap between male and female graduates.
The graduate gender gap
GLMS data for the calendar year 2022 shows that there is a gap of £9,000 in the median salary of working age male graduates compared with working age female graduates. Some of this difference can be explained by part time working and the imbalance in child care duties between women and men.
But this doesn't wholly explain why a gender pay difference exists for younger graduates, aged 21-30, for whom child care and part time working may have less of an impact (the average age of a first time mother is just over 29).
The graphic below shows the difference in salaries for male graduates aged 21-30 and female graduates of the same age. It highlights a long established pay gap between younger male and female graduates.
Median annual gross salary for male and female graduates aged 21 to 30, 2012 to 2022
Source: Graduate Labour Market Statistics, June 2023. Figures are not adjusted for inflation.
Female graduates aged 21-30 have consistently earned less than male graduates of the same age. Between 2015 to 2019, the gap increased steadily year on year to £4,000. It came down sharply in 2020 but increased again to £3,000 in 2021 before coming down slightly to £2,500 in 2022.
Why do younger female graduates currently earn less than their male counterparts?
As noted above, part time hours and an imbalance in child care responsibilities are important factors but they not the only ones. Research in 2021 by the Institute for Fiscal Studies identified that differences in degree choices also help to explain the gender pay gap, particularly early in the career of a young graduate. The IFS research found that women are overrepresented in degree subjects, such as psychology, creative arts, English, education and social care, that have lower financial returns.
What is not clear though, is what is driving lower salaries in jobs that psychology, creative arts, English, education and social care graduates go into. Is it something to do with the value society places on these jobs and therefore they pay less? Or is it because these jobs are mainly taken up by women and therefore they pay less? In other words, is discrimination a factor?
Looking at median salaries by industry type for graduates aged up to 30, it's clear that the gender gap runs across a wide range of industrial sectors.
Median salaries by industry for male and female graduates aged 21-30, England, 2022
Source : GLMS, June 2023. Salaries are rounded to nearest £500.
Younger male graduates in Manufacturing are paid, on average, £6,000 per year more than females, £5,500 more in Transport and Communications and £4,500 more in Banking. Female graduates earn more in Energy & Water, Distribution,Hotels & Restaurants, and Other Services but the gaps tend to be lower. In addition, the median salaries for females in Distribution, Hotels & Restaurants is the lowest for females in any sector.
The IFS research identified having children along with adversity to risk, lower propensity to bargain over salary or to ask for promotion and a lack of recognition for a woman's contribution to group work as factors that lead to female graduates earning less than male graduates. Discrimination could also be a factor.
Over the last few years gender pay gap reporting has helped to reduce the gap between men and women in the workplace. But the GLMS data shows that younger female graduates can still expect to be paid less than their male counterparts.
This is simply wrong.
