Young people and their parents do not generally have a great understanding of the earnings potential in a whole range of careers out there. This is the conclusion reached by the Edge Foundation in recent research carried out to mark the opening of nominations for their VQ Awards later this year. The study sought to find out how informed teenagers and their parents are about earnings in particular industries, and according to the results, the answer appears to be “not particularly well”.
The survey results show that young people are often totally in the dark about earnings potential, with wild underestimates made in some sectors, and equally wild overestimates made in others. For example, on average teens underestimated median earnings in the electricity, gas, steam and air conditioning supply industry by £15,000, whilst 18.6% of those surveyed thought that they could earn big money in the arts, entertainment and recreation — in actual fact one of the lowest earning sectors (this infographic that they have produced helpfully captures some of these points).
Nor is the problem confined to young people. To make matters worse, many of their parents are themselves often wide of the mark. For instance, 93% of those surveyed failed to recognise that mining and quarrying is in the top three industries in terms of salary.
Why is any of this important? The Edge Foundation point out that 60% of youngsters claim to make important career decisions based on their future earning potential, and 44% of teens say their parents are the single biggest influence on their education and future career choices. It goes without saying that if people are making career decisions based on the earnings factor, but their understanding of earnings is wide of the mark, it is unlikely that they are going to make effective choices.
As the CEO of the Edge Foundation, Jan Hodges OBE, put it:
“With the cost of education at an all-time high, future salaries are more important than ever to the majority of teens. But our research highlights a worrying gap in both theirs and their parents’ understanding around earnings. A skilled workforce is essential to the UK economy and high quality vocational routes need to be encouraged — not just for the personal fulfilment they bring but also the lucrative financial opportunities they offer.”
We are really pleased that this research has been carried out, and that it puts some figures to the problem. However, whilst we are in agreement that there is an Information Gap out there in the area of earnings, and that this is a problem in need of a solution, we would suggest that the issue is a little more nuanced than the Edge Foundation’s survey implies, and that any solution needs to take a number of other things into consideration.
To illustrate the problem, take a look at the following graph:
The graph shows the average earnings for industries across Britain in 2014, using the same level of data that the Edge Foundation have used in their survey (i.e. Standard Industry Classification Level 1 (SIC 1), which are high level industries, such as electricity, gas, steam and air conditioning supply, and arts, entertainment and recreation). However, we would suggest that even if young people and their parents were made aware of these figures, it wouldn’t actually help them understand earnings a great deal, and therefore their ability to make good decisions would not increase.
There four reasons why this is so:
1. As mentioned above, the data here is set at the high-level SIC 1 level. But within these industries there are a good many “sub-industries”, with many of these sub-industries having very different levels of earnings.
2. The data here is for industries, rather than occupations. Taken by itself, this information could be quite misleading to a young person looking for careers information, since all industries contain a wide variety of occupations with a wide range of earnings.
3. The figures shown in our graph and in the Edge Foundation survey are for the whole of Britain. Whilst this is useful, earnings can vary greatly in different regions throughout the country.
4. All the figures on our graph above show median earnings. Whilst having this knowledge is good, young people also need to be aware of entry level earnings and high-level earnings.
In the second part of this piece, we will be looking at the first and second of these points, showing how we can give young people information on occupation earnings rather than industry earnings, right down to the most specific occupation level. Then in the final part, we will look at the third and fourth points, showing how important it is that young people get information relating to their local and regional economy, and how showing them low, median and high-level earnings can be used as a great motivational tool.
For more information about EMSI data and tools, please contact Andy Durman at email@example.com