{"text":[[{"start":5.7,"text":"It’s a no-brainer that any teenager should aim for university because a degree carries substantial economic value. Degrees are also very useful for employers because they signal that a young person has advanced skills that are in high demand."}],[{"start":19.1,"text":"Both of those statements have been taken as gospel for decades, but their legitimacy is increasingly in question. A closer read of economic history suggests they should always have been seen as more contingent than fixed. As US economists Claudia Goldin, Lawrence Katz and David Autor showed in their work on “the race between education and technology”, there is nothing inevitable about more education being met with more demand for those skills — it all depends on how the supply of particular skills interacts with the technological paradigm of the day."}],[{"start":50.04,"text":"The 1800s transition from artisans to larger and more complex businesses created demand for educated workers and delivered them a healthy wage premium, which the expansion of high school education in the early 20th century then eroded. The information revolution then exploded the scale and complexity of work, fuelling a long boom in knowledge-work jobs that buttressed the college wage premium over the past 40 years even as the numbers obtaining a degree expanded."}],[{"start":76.84,"text":"But we now appear to be moving out of that long phase. A striking new analysis by economists José Azar, Mireia Giné and Javier Sanz-Espín finds that, after climbing for decades, the wage premium for college graduates in the US has fallen in every one of the past four years. The total drop is almost 10 per cent — its first sustained decline since the 1970s."}],[{"start":null,"text":"
"}],[{"start":99.7,"text":"Extending their analysis, I find a similar picture in the UK, where the long-run erosion of the graduate premium has accelerated in the past four years. Notably, it is falling even for groups whose outcomes had until recently been holding up, such as those with Stem degrees and graduates in London’s knowledge-intensive labour market."}],[{"start":null,"text":""}],[{"start":117.66,"text":"What makes this most noteworthy is that the college premium has declined just as the supply of college graduates began to level off in both countries. Typically, we would expect a supply slowdown to put upward pressure on prices (wage premiums) but here we see the opposite."}],[{"start":null,"text":""}],[{"start":130.38,"text":"Azar and his co-authors interpret this as evidence that demand for graduates is falling for the first time in more than a century, driven in part by weak wage growth in the white-collar jobs most exposed to AI. One could arguably turn this on its head: the AI revolution, like those before it, is making knowledge work even more complex and plentiful, but this is up against a much larger increase in the supply of knowledge workers — it’s just that many of them are AI agents."}],[{"start":null,"text":""}],[{"start":158.42,"text":"Either way, it’s clear the economic premium that employers are willing to pay for someone with a degree is falling sharply, not because of a glut of graduates but because of economic and technological change."}],[{"start":169.72,"text":"In a lucid article on the implications of this, US commentator Matt Bruenig argues that just as in a previous technological regime someone’s physical attributes once played an outsized role in their economic productivity and broader societal status, so we might come to think of the association between academic achievement, economic value and “merit” as the relic of an era that is now beginning to wane."}],[{"start":192.2,"text":"In a more immediate and straightforward sense, employers and officials have long argued that as the numbers attending university have ballooned, a degree has ceased to be a good proxy for job-relevant abilities outside of elite institutions and vocational subjects. Today it points to a much wider range of skill levels in domains whose value in tomorrow’s labour market is uncertain."}],[{"start":213.1,"text":"Giné tells me she expects hiring to become based much more on job-specific aptitude tests and interviews, pointing to firms, including US tech giant Palantir, which now specifically look to hire skilled non-graduates (alongside plenty of grads) and give them some on-the-job training."}],[{"start":229.76,"text":"I share the view of Google economist Alex Imas that human employment is likely to remain high even in an AI-dominated future, but the abilities that will be rewarded (and the routes to developing them) may look very different to those of the past half century. We may be a long way from settling into a new normal, but it’s increasingly clear the link between academic credentials and career prospects is weakening."}],[{"start":230.26,"text":"john.burn-murdoch@ft.com, @jburnmurdoch"}],[{"start":257.5,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1788751494_7787.mp3"}