22 May 2012

A university education: overrated and underpaid?

Last week Suncorp Bank released its May 2012 Wages Report. This report is a fascinating analysis of Australian average weekly earnings by industry, gender and state and territory. The data is drawn from official Australian Bureau of Statistics (ABS) reports (specifically 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, Feb 2012 and 6302.0 Average Weekly Earnings). 

The data summaries reported by Suncorp support some widely held beliefs and undermines others. 

Let's firstly have a look at trends that the report identifies with respect to earnings by industry, specifically the percentage increase in average industry wages for the 15 year period between November 1996 and November 2011. 

I would suspect that the popular view would be that both the mining and the construction industries would be right near the top of the list. The data actually reveals that mining came in an number 5 and construction at number 9. 

Ranking
Industry
% change in average weekly earnings between Nov 1996 and Nov 2011
% of the workforce without post secondary school qualifications
1.
Utilities
117%
30%
2.
Media & Communications
113%
34%
3.
Professional, technical & scientific services
109%
22%
4.
Wholesale trade
108%
47%
5.
Mining
102%
33%
6.
Real Estate services
94%
36%
7.
Financial services
88%
32%
8.
Public safety
86%
28%
9.
Construction
85%
39%

In considering this data, it's important to consider that each industry's earnings includes all employees within that sector. For example, mining companies employ many staff who are not working anywhere near an actual mine. Eg accountants, receptionists, IT staff etc, whose earnings are all included within that industry's data. 

Comparing average annual earnings by industry as at November 2011, mining easily tops the list. 

Ranking
Industry
average annual earnings as at November 2011
% of the workforce with a bachelor degree or higher
Ranking of industry by size (total employed) out of 19 industries
1.
Mining
$112 990
24%
17
2.
Utilities
$83 039
27%
19
3.
Financial services
$71 479
41%
13
4.
Media & communications
$70 990
37%
15
5.
Professional, technical & scientific services
$70 377
54%
6
6.
Construction
$67 974
8%
3
7.
Public safety
$66 035
40%
8
8.
Wholesale trade
$65 125
20%
12
9.
Transport & warehousing
$63 393
13%
9


Identifying the most female dominated industries, we find that using increases in average annual earnings over the fifteen year period November 1996 - November 2011, that the top four industries with respect to percentage of females employed, are all in the bottom half of the industries ranked by total annual earnings increases. 

Ranking
Most female dominated industries
% of industry that is female
% change in average weekly earnings between Nov 1996 and Nov 2011
Ranking against all 17 industries in wage growth over the stated 15 year period
1.
Health care & social assistance
79%
78%
11
2.
Education & training
70%
71%
13
3.
Retail trade
57%
77%
12
4.
Accommodation and food services
55%
49%
17
5.
Financial & insurance services
52%
88%
7


Finally, looking at each state in terms of average annual earnings per employee as at November 2011, we see the two most populous states (NSW and Victoria) doing relatively poorly in terms of both current average earnings and total wage improvement over the past fifteen years. 

Ranking
Highest earning state (per employee)
average annual earnings as at November 2011
% change in av weekly earnings b/w Nov 1996 -Nov 2011
% of the population aged 45 or older
% of the workforce without post secondary school qualifications
1.
ACT
$66 908
94%
36%
33%
2.
WA
$62 031
117%
38%
42%
3.
NT
$61 136
102%
36%
42%
4.
QLD
$53 924
95%
38%
42%
5.
NSW
$52 848
69%
38%
36%
6.
VIC
$51 870
73%
38%
38%
7.
SA
$48 318
79%
41%
42%
8.
TAS
$45 958
71%
43%
44%


My own conclusions from the above data are as follows: 

1.    Employees in the Utilities industry have benefited from massive industry deregulation which was previously keeping wages artificially below (free) market levels due to public service-style wage structures and annual wage increases.
2.    The average annual earnings for both of the top two industries are significantly boosted by Mining having the lowest proportion (out of 19 industries) of their workforce who work part-time (3%) and Utilities having the second lowest proportion (out of 19 industries) of their workforce who work part-time (7%).
3.    Mining and Utilities also have the second-highest and third-highest percentage (84% and 79% respectively) of male workers (out of 19 industries (Construction has the highest, 88%).
4.    Employees within mining, utilities, media & communications and financial services all benefit financially from working within relatively small industries where the supply pool of skilled staff with necessary ‘industry experience' is much shallower, hence salaries are pushed up faster than in larger sectors.
5.    The wage gap between the male dominated industries and the female dominated industries continues to get larger, not smaller, over time.
6.    Having ‘only' a technical or trades education is no barrier to earning an above average annual income.
7.    There appears to be little, if any, correlation between average industry wages and the percentage of that industry's employees having tertiary qualifications.
8.    If you can handle the relative isolation and more extreme weather, then head to WA, the ACT or the NT to find the best paying work.
9.    Tasmania has the unfortunate trifecta of the oldest, most unqualified and lowest-paid workforce in the country.
10. The ACT has the winning trifecta of the youngest, best educated and highest paid workforce in the country.
11. For unskilled workers (ie nothing more than high school education), construction and mining have the best paid unskilled work.
12. Are men better than women at negotiating themselves better pay or is it the more full time, physical and isolated nature of the work in the male dominated industries that makes those industries better paying?  

All in all, the most ideally positioned member of the Australian workforce is a young male, with post-secondary school qualifications, living in the ACT, working full time in the mining industry (mining  lobbyist?). 

The worst position to be in is an older female, without post-secondary school education, living in Tasmania, working part-time in the hospitality industry (waitress?). 

And, contrary to how much publicity is given to university degrees and how much funding is given to tertiary institutions as against trades, apprenticeships and TAFE schools, it appears that, at best, a university education is no guaranteed ticket to a high paying job. 

Note: All statistics in this article were taken from either the Suncorp Bank Wages Report: May 2012 or Australian Jobs 2011 

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1 comment:

  1. Interesting data, but a bit of a novelty? I wonder if it would be more valuable to take a modal approach by wiping off the top 10% and bottom 10% (of the stats in each matrix) in order to remove the outliers, giving us a better understanding of the mean of each set. I think you'd find they'd make a more boring read, and a lot of your assumptions/conclusions may become be moot. We know Mining skews WA NT and QLD, adn we know the well-educated public service skews the ACT.

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