White collar or tradie’s tools: Is a university degree still worth the paper it’s written on?

ANALYSIS: This week’s Budget mirrored an anxious conversation happening across New Zealand, as families attempt to divine whether or not a university education still delivers the return on investment it once did.

Much of this centres on the impact artificial intelligence is likely to have on the workforce in the coming decades. Depending on who you ask, the impact will either be catastrophic for white-collar work or the dawning of a new age of opportunity.

Stuck in the middle, young Kiwis and their parents must now guess which way the wind will blow.

The National-led coalition has revealed some of its cards in recent weeks, confirming the end of the University fees-free policy and distributing some of those funds to nearly double the number of places in secondary school Trades Academies to 20,000 by 2030.

At the same time, the Government has also spoken about replacing public servants with AI as it looks to slash 8,700 roles from the public sector workforce in the coming years (provided they are re-elected).

This tension isn’t limited to the Beehive. Research from Plumbing World suggests artificial intelligence is reshaping the way parents (and their children) think about careers – and this is important given that our salary is the single most important source of revenue most of us will have to build wealth over the course of our lives.

The nationally representative survey of more than 1,000 Kiwis found that almost three-quarters (72%) are concerned AI will reduce the number of entry-level office jobs in the next decade, including one in three (33%) who are very concerned.

Three-quarters of us now believe a specialised trade offers better long-term job security and stability than a corporate-focused university degree. Seven in ten now say they are more likely to encourage a young person into a trade than they were five years ago. Brett Cruickshank, the CEO of NZPM Co-operative (the parent company of Plumbing World), says he’s seeing a renewed appreciation for hands-on, highly skilled work that is often essential to our communities.

He notes this stems from the perceived risk of certain roles being automated. And these fears are now being weighed against the more traditional idea that a university degree offers an earning premium, which justifies the upfront investment.

Does university still deliver?

A 2025 OECD report on New Zealand showed that tertiary-educated adults between the ages of 25 and 64 tend to earn 32% more than those with only upper secondary education – well below the OECD average of 54%.

The premium on a university degree has been squeezed significantly since the early 2000s due to the rapid expansion of degree holders in the country. More competition simply means more options for employers. This was happening even before the whispers of the AI apocalypse started circulating.

One thing to note is that a career in the trades can offer a stronger financial start than a university pathway. Tradies will often earn while conducting their apprenticeships and training, meaning that they’re fully qualified and experienced after four years. University students will also face a hefty debt burden, which could exceed $30,000 by the time they enter the workforce.

However, that advantage tends to fade over time, as university graduates see their salaries increase.

A 2016 study from Universities New Zealand showed that a typical bachelor's graduate will earn around $1.37 million more over their working life than a non-graduate, master’s degree holders $1.72 million more and PhD holders $1.92 million more.

The reason for this is that the median income for degree holders increases steadily and overtakes that of those working in the trades in most instances. There are, of course, exceptions to this general rule when it comes to specialised plumbers or electricians (especially those working on big construction projects), but the university premium still exists.

Will that premium hold?

This question is more complicated, and it’s contingent on how you see the AI future playing out..

It’s also important not to take all the doomsday prophets at face value. Take the legal industry as an example. We’re often told that entry-level jobs are disappearing, but that doesn’t bear out (yet) in the data.

Research from the New Zealand Law Society in 2025 showed that 5,808 of the country’s practising lawyers were at the junior to intermediate level with fewer than seven years of post-admission experience.

The largest subset is those one year post-admission, with 941 lawyers, followed closely by 813 lawyers who are newly admitted.

New Zealand Law Society CEO Katie Rusbatch tells me these entry-level numbers signal growth from previous years. And it’s not a case of New Zealand lawyers falling behind in the adoption of AI.

She says 60% of lawyers are already using AI, particularly for document drafting, research, and summaries. “These tools are changing how legal work is done, particularly routine tasks, but they do not replace core legal skills like judgement, ethics, client relationships, and advocacy,” says Rusbatch.

“Our message is that they are a tool for lawyers and not a replacement for them, and there will continue to be meaningful career pathways for new lawyers.”

There are many anecdotes and theories from a range of sectors but what it comes down to is that people are being asked to make a six-figure life bet on their future wealth while AI, government policy and the labour market are all shifting under them.