Think you’re overqualified? New research suggests it could be hurting your pay

More than half of New Zealand university graduates are working in jobs that do not require their qualifications, and many are paying a long-term financial price for it, new research suggests.

A study led by University of Waikato researcher Dr Min Bai found 54% of graduates were overeducated for the jobs they held, with the mismatch linked to lower wages that can persist for at least 10 years.

The research analysed census data from more than 510,000 New Zealanders collected in 2013, 2018 and 2023.

Bai said workers employed in jobs beneath their education level earned about 5% less than colleagues whose qualifications better matched their roles.

For university graduates, the penalty was even steeper.

“These graduates face a 6.7% wage penalty, while undereducated workers – those in jobs above their qualification level – earn a 2–4% premium,” Bai said.

Why your wallet will feel the squeeze in the near future

The findings challenge the commonly held belief that overeducation is a temporary stage in a worker’s career.

“Most workers remain mismatched across years, suggesting deeper structural issues in New Zealand’s labour market,” Bai said.

The study, published in the International Journal of Manpower, found many workers remained in the same mismatch category across multiple census periods.

Bai and co-author Ishari Madukala said the findings raised questions about the return on investment from higher education and whether graduates were being funnelled into areas where there were insufficient employment opportunities.

They called for better career guidance, stronger links between employers and universities, and reviews of tertiary funding settings to better align graduate skills with labour market demand.

The researchers said the results did not suggest university education lacked value, but highlighted the importance of matching qualifications to available jobs.

The findings come as the cost of tertiary education and student debt continue to be closely scrutinised, with many students weighing up the financial returns of a degree against entering the workforce directly.

According to the researchers, improving the alignment between education pathways and workforce demand could help reduce graduate underemployment and improve earnings outcomes for future graduates.