PhDs hit hardest as inflation erodes value of graduate salaries

Department for Education figures also show that UK course with highest average salary after five years pays seven times more than the course with the lowest

June 20, 2024
Source: iStock/ kappaphoto

Continued inflation means that UK graduates are earning less in real terms than they used to and those with PhDs are particularly affected, figures suggest.

The Longitudinal Education Outcomes (LEO) data set for the 2021-22 tax year shows that the median salary for UK first-degree graduates five years into their careers was £29,900 – up 3.8 per cent from the 2020-21 tax year.

Median salaries also rose to £36,100 for graduates of master’s degrees, and to £41,200 for PhD graduates.

However, when wages are adjusted for inflation, 2021-22 graduate earnings actually decreased compared with the previous tax year across all levels.

The real-terms value of first-degree graduates’ salaries fell by 2.3 per cent, and by 2.8 per cent for master’s students – but the biggest decrease of all came for the most qualified students.

When adjusted for inflation to 2015-16 prices, the median PhD graduate salary five years after graduating was £35,600 – down from £37,100 in 2020-21. This 4 per cent drop was the largest in the seven-year period of research.

This meant that obtaining a PhD was worth £9,800 more in median earnings than an undergraduate degree and £4,400 more than a master’s – both of which are the lowest on record.

The real median earnings of PhD graduates also fell by 5.8 per cent for those 10 years after graduation – to £38,700.

The Department for Education cautioned that the 2021-22 tax year overlapped with the pandemic, when some support programmes such as the furlough scheme were coming to an end.

Previous studies have suggested that doctoral graduates will only start to benefit financially from their PhD more than 30 years after embarking on their studies.

Researchers found that the costs of taking a PhD – including doctoral fees, the years of lost income and the loss of accrued experience in employment – could mean that PhD graduates are worse off financially for decades.

Separate figures published at a provider level reveal that the course with the highest average salary five years after graduating is seven times larger than the course with the lowest.

University of Sunderland graduates in allied health were earning the lowest of all courses and higher education providers – taking home a median salary of just £14,600. This was followed by £15,300 for creative arts graduates from the University of the Highlands and Islands, and £16,100 for health and social graduates from Plymouth Marjon University.

In contrast, computing graduates of the University of Cambridge earned an average salary of £99,600, and those from Imperial College London, £86,100.

RankMedian salary (£)CourseProvider

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Reader's comments (2)

I have always viewed doing my PhD as a "mountain climbing" exercise in that I did it because it was there and I wanted a comprehensive challenge. The link between earnings and qualifications was never a thing when I grew up in the 70s and then completed my degrees in the 80s.
I think the link was favourable back then though. Setting aside politics (good luck with that), the shift in the added financial value would have made it a thing regardless.