(Source: University of Manchester)
Growing up, we all chuckled at our elders' tales of first jobs that paid only in "experience." Now, as we navigate the job market, those stories resonate more than ever. Perhaps it's the harsh reality of today's job market that's changing our perspective, or maybe we're finally understanding what elders meant.
The idea of being paid in 'experience' might have seemed far-fetched once, but now, it’s increasingly the norm. Work shadowing and virtual experiences, prominently featured on sites like Graduate Prospects, illustrate how these traditionally unpaid roles are gaining traction among graduates. In the fierce scramble for a foothold in the job market, these unpaid stints could well be our golden ticket, or at least, a foot in the door. And that's not a bad deal in today's competitive job landscape.
However, there's a twist in the tale that even our predecessors didn't see coming. From the days of unpaid internships and being rewarded with experience, we've shifted to a new norm—paying for the privilege of work experience. Yes, you read that correctly. Paying. For. Experience. As graduates increasingly find themselves battling to secure jobs and the 'wage premium' for degree holders continues to decline—a trend noted by the Financial Times since 2015—the stage is set for the rise of internship agencies.
What's the deal with these agencies? They offer internships for a fee, and surprisingly, clients are satisfied, indicating the services provide real value. This emerging trend is sparking debates about the evolving job market landscape.
Do you believe that academic degrees are as valuable for securing a job today as they were in the past?
Yes
No
Unsure
Would you be willing to pay a fee to secure an internship?
Yes
No
Unsure
Initially, job market signalling—highlighting skills to employers—relied on demonstrating a strong work ethic and hands-on experience. However, as the job market tightened, this was no longer sufficient. Degrees became crucial, signalling a candidate’s productivity and capabilities and emphasizing the importance of formal qualifications.
Do university degrees really signal productivity to employers? Recent research from 2022 tells us the answer isn't simple. It turns out the type of degree really does matter—a lot more than we previously thought. According to the findings by Britton and colleagues (2022), degrees in medicine, economics, and law lead the pack with the highest earnings returns. On the flip side, degrees in social care and creative arts are at the bottom, delivering the lowest returns compared to history degrees (Figure 1). So yes, while all degrees signal something to employers, some shout louder.
We decided to dig deeper and find out if people really believe their degrees will help them land a job in the future. We surveyed 95 students—44% from economics, 18% from STEM fields, and 38% from other disciplines. Whopping 82% expressed confidence, either strongly or somewhat, that their degree would benefit job search (Figure 2). Breaking it down, 81% of economics students felt their studies would pay off in the job market (Figure 3). More optimistic were the STEM students, with 94% backing the value of their degrees (Figure 4). Meanwhile, 78% from other fields also saw their education as a plus (Figure 5). Clearly, most respondents view their degrees as crucial tools for market signalling and securing a job.
The latest figures from the Higher Education Statistics Agency (2023) dramatically underscore the trend towards further education. Flashback to 2001: out of 504,410 graduates, 146,850 were aiming higher with postgraduate studies, making up about 30% of the graduating class. In 2022: a total of 919,940 graduates, with a whopping 390,585 of them holding postgraduate degrees—that's an astonishing 166% jump in postgraduate numbers since 2001. These numbers not only highlight a marked increase but also reflect a growing zeal for advanced studies, showing that more graduates are seeing the value in sharpening their academic skills, even if that means spending more time and money on education.
The latest data isn't just about numbers; it highlights a major shift in how students from various fields perceive the value of a master’s degree today. As Figure 6 shows, an impressive 59% of students are planning or already applying to pursue a master's degree after their undergrad. Meanwhile, 25% are still undecided, and only 12% have opted not to continue. This isn't just a passing trend; it's a clear move towards heightened academic and professional goals.
In today's competitive job market, further education isn't just a step up—it's a strategic leap forward. Figure 7 supports this, showing that 81% of respondents believe a master’s degree will boost their employability. Clearly, for many, advanced degrees are essential to showcasing their capabilities and ambitions to future employers.
Market signalling isn't just about degrees anymore—internships are the new must-have for job seekers. Our survey found that a whopping 64.2% of respondents are open to taking unpaid internships if they offer relevant experience and networking opportunities (Figure 8).
It appears university degrees have become the baseline, but it’s the hands-on experience that truly turns heads in today’s job market. And brace yourselves—internship agencies are upending the status quo by offering paid placements.
Yes, that’s right—people are actually forking over cash to secure internships in a fiercely competitive market. It clearly indicates that traditional credentials like degrees might no longer suffice. Here’s the real shocker: 43% are considering using an agency to snag their ideal internship, with another 18% still undecided (Figure 9). Furthermore, 53% of students surveyed are willing to invest over $100 for these services (Figure 10).
The surge in internship agencies and the growing trend of paying for work experience reflect an increasingly crowded and competitive job market. Traditional markers of talent are losing their distinctiveness, pushing individuals to seek unique and sometimes costly experiences to stand out.
This dependency on paid signalling is reshaping the job market, raising concerns about accessibility and fairness. As the costs associated with signalling rise, there's a real danger of excluding talented individuals who cannot afford these expenses. In the UK, it might take up to five generations for a low-income family to reach average income levels (OECD, 2018). This economic barrier threatens the effectiveness of the job market and poses serious questions about the future of employment opportunities. Are we moving towards a future where only the wealthy can advance? The shift towards economic gatekeeping necessitates urgent attention to ensure the labour market remains based on skill, not financial capacity.
Has this article changed your opinion on either the value of academic degrees in today's job market or the willingness to pay for an internship?
Yes, it changed my opinion on academic degrees
Yes, it changed my opinion on paying for internships
Yes, it changed my opinion on both topics
No, it did not change my opinion
Bibliography
Borret, A. (2023) Is a degree worth it. Financial Times. Available at: https://www.ft.com/content/490b8aa2-99c2-497f-ab75-1f8c74215803 [Accessed 12 March 2024].
Britton, Jack William and Dickson, Matt (2022) How much does degree choice matter? Labour Economics.
Higher Education Statistics Agency (2023) What are HE students' progression rates and qualifications? HE Student Data, 31 January. Available at: https://www.hesa.ac.uk/data-and-analysis/students/outcomes [Accessed 13 April 2024].
Oates-Miller, S. (2022) 7 Things To Do Before You Graduate. Available at https://manunicareersblog.wordpress.com/2022/04/04/7-things-to-do-before-you-graduate/ [Accessed 18 April 2024]
OECD (2018) A Broken Social Elevator? How to Promote Social Mobility. Available at: https://www.oecd.org/unitedkingdom/social-mobililty-2018-GBR-EN.pdf [Accessed 20 March 2024].
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