The AI boom may reduce the return on higher education, with a fascinating bifurcation emerging.
Abbie May (left) and Pascal Zoghbi (right) have told Yahoo Finance they had regrets about their uni degree and the debt incurred. · Supplied
Australia's job market is demanding. Education has, for a long time, been the major predictor of success.
But could that be changing? Office work is set to be eaten alive by artificial intelligence, while tradies are setting their own prices.
Computers, it turns out, are amazing at the sort of tasks that humans have generally classified as hard. Complex calculations, recall and synthesis of information, composing text. Computers find that easy.
What computers, or robots, are not so good at yet are things that feel to us, more fundamental. Like climbing into a roof cavity, shining a light around, and figuring out where the leak is. Chopping branches off a tree. Cutting hair. Minding children.
And those are the industries with the biggest growth.
The AI boom may reduce the return on higher education. And in fact, young Aussies seem to sense that already, because they appear to be increasingly bypassing it and just entering the labour force.
As the next chart shows, the share of 15-to-24 year-olds in jobs is close to the highest it has been since records were collected back in 1986.
Kids are working. Even those who didn't do that well at school.
The ABS measures unemployment among people whose highest level of education is Year 10. If education was more and more important in the modern economy you'd expect to see increasing unemployment in this group.
Now, the Bureau has data going back to 2015 only. The unemployment rate among that cohort is admittedly volatile. But it hit its lowest level on record late last year, briefly touching 6.0 per cent. Dropping out of school is not a good plan, but there have been much worse times in history to do it than now!
Skills are still necessary. Literacy and numeracy are helpful to get by in our modern era. But long periods of formal training may not provide great bang for buck, especially as the cost of a university education rises, leaving many with big HECS-HELP debts.
What we see is that Aussies aren't so keen on dragging out their education any more. This is partly just a result of recent strength in the job market. Getting more education makes sense when jobs are scarce, and is much less important when jobs are abundant.
The trend to getting away from full-time study as soon as you can is especially strong among males for whom trade apprenticeships are a more traditional path.
This trend is not just about Australia. A recent piece in the Wall Street Journal revealed a record bad job market for college graduates was matched with a record-strong job market for those who had no degree.
That exact pattern can also be found in Australia. Unemployment for people with a year 12 education has been below its pre-Covid levels for years now, while if you have a degree or postgraduate degree, your current job market is similar to the pre-Covid situation.
The future growth of employment is likely to be in jobs where computers and robots can't compete. Tradies and carers who do tasks involving complex movements in uncontrolled spaces, (e.g other people's homes, or outdoor areas). They will be safe. Anyone creating an abstract output – words and numbers, for example, is in danger.
But the trend against education appears to already be in place. We probably have an oversupply of university educated people and an undersupply of jobs to suit that kind of training.
The era of mass higher education may be receding.
That said, there still needs to be someone to train the language models, oversee the capital market algorithms etc. So there will be, as they say, always room at the top. In that context, it is no surprise one Sydney private school now offers A-levels, the British educational qualification. No longer is Sydney University or UNSW prestigious enough! The school website boasts of year 12s that finish up and head to Oxford for their undergraduate degree.
