The £2,800 annual pay gap that won’t go away
Even after beating the odds to earn a university degree, Brits who grew up in deep childhood poverty earn 13% less than their more advantaged classmates a decade into their careers – a persistent penalty that survives the same university, the same degree, and even the same employer.
That’s the stark finding from a new Resolution Foundation report released this month, which used the government’s Longitudinal Education Outcomes (LEO) dataset to track every university graduate in England born since 1985.
The analysis links school records, university outcomes, and HMRC tax data for hundreds of thousands of people, painting the clearest picture yet of how early disadvantage lingers long after graduation.
Ten years after leaving university, graduates who were eligible for free school meals at age 16, a standard proxy for deep poverty, earn roughly £7,590 less per year than those who weren’t.
The gap is larger than the headline gender pay gap and many ethnicity pay gaps in the UK labour market. It affects men and women alike, and it shows up for both White graduates and those from Black, Asian and Minority Ethnic backgrounds.
Education narrows the gap – but only halfway
Part of the problem is what happens (or doesn’t happen) at university itself.
Graduates from disadvantaged backgrounds are far less likely to attend the most selective universities and less likely to graduate with a First or Upper Second. Differences in subject choice are smaller, but still tilt slightly away from high-return fields.
When researchers control for university attended, subject studied, degree classification, sex and ethnicity, the earnings gap shrinks from 13% to 7% – still equivalent to about £3,800 a year.
In other words, even when comparing graduates who studied the same subject at the same university and achieved the same result, childhood poverty continues to depress pay.
Same degree, same job, still £2,800 behind
The report goes further, accounting for where graduates live and work and even the specific firm that employs them. After all those adjustments, a stubborn 5% earnings penalty remains.
That means that when two workers with identical degrees from the same university are sitting at the same employer ten years after graduation, the one who grew up in deep poverty is still earning more than £2,800 less annually.
The researchers describe this as the “residual pay gap” – the portion that can’t be explained by observable differences in education or employer.
It starts at about 15% in the first few years after graduation and narrows only slightly to 13% after a decade. Disadvantaged graduates do appear to climb the job ladder faster, closing some of the employer-quality gap over time, but the within-firm pay difference barely budges.
University no longer the great leveller?
University has long been sold as the great leveller in British society. The data show it delivers a big average premium, graduates earn nearly 50% more than non-graduates at age 31.
But for the minority of children from deep poverty who actually make it to graduation, the playing field is still far from level.
The persistence of the gap, even among otherwise identical workers, points to deeper mechanisms: differences in networks, confidence, soft skills, or subtle biases in promotion and pay decisions that aren’t captured by qualifications or employers alone.
