Large swathes of overqualified graduates outside London are stuck in jobs not requiring a degree, the Institute for Fiscal Studies has warned. Some 42% of university-educated workers outside the capital are in this position, up from 31% since 1993.
The increase reflects that as better-paid jobs have grown in volume, the rise has been concentrated in London. In areas where the situation for graduates is most dire, like Lincolnshire and Cumbria, over half are stuck in professions they did not need university qualifications for.
The analysis suggests that many young people are racking up tens of thousands of pounds in student debt without seeing the expected dividends.
Xiaowei Xu from the IFS said: “The rise in high-skilled professional services jobs in the last 30 years has been very much focused on London, which means that graduates from other places need to move to reap the returns to their education.”
She added: “This is often not an option for those from poorer family backgrounds. The current economic geography of the UK limits both social mobility and the effective use of talent across the country.”
In London, around 37–38% of graduates end up in roles where a degree is superfluous, but this figure has remained stable over the past three decades.
The analysis found that employment in high-paid occupations has risen by 95% since 1993 on a national scale, although this growth was 240% in inner London compared with only 41% in an area like Chesire.
Over the same time, the number of graduates has increased evenly across the country, adding to a growing regional mismatch between skills and jobs.
Previous research has found that graduates from poor backgrounds are the least likely to move to London, meaning they are likely the most negatively affected.
It comes as separate research from the Resolution Foundation has found that British millennials’ finances are still scarred from the financial crisis, even as their US peers have long since recovered.
The think tank found that Britons in their early 30s have experienced over two decades of lost pay as wages have stagnated. In the US, early 30s workers are earning 21% more than those born a decade earlier at the same age.
In contrast, Britons in the same age group are making less than their predecessors did at the same age before the financial crisis.
While the US has had far stronger wage growth than the UK, it has also been more skewed towards boosting the incomes of younger people, with those 21–40 seeing higher-than-average gains since 2007.
For Britain’s youth, the opposite is true. The Resolution Foundation also pointed out that, simultaneously, homeownership rates have fallen by 20 percentage points for 30- to 34-year-old Britons in the UK since 1986. At the same time, this drop was only 3% in the US.
Sophie Hale from the Resolution Foundation said: “The lack of progress made by millennials in the UK shows how important it is to restart meaningful growth in the UK, but also to ensure that policy decisions recognise the need for the country to work for younger generations – breaking the established trend of income and wealth growth disproportionately benefiting older generations.”