Children Can’t Eat a Promise: Rethinking the Education-to-Employment “Silver Spoon”
“We recognise that child poverty is a long-term issue and our strategy of tackling the deeper causes of poverty, including reducing long-term benefit dependency and lifting education and skills, will make a big difference in driving down child poverty rates.”
Louise Upston (Minister for Social Development and Child Poverty Reduction), 20 February 2025
Successive governments often say that “the best route out of poverty is work”, with tertiary education framed as the surest path to better jobs. On averages, that’s partly true: degrees tend to lift earnings and reduce unemployment.
But averages hide who misses out. Returns vary hugely by field of study, gender, and ethnicity; many graduates are overqualified for the jobs they can get; and in-work poverty remains common when wages are low and costs (especially housing) are high.
Meanwhile, New Zealand’s user-pays tertiary model shifts risk onto low-income families via student debt and high effective tax rates, especially for student parents. If we want fewer children in hardship now, education and work must be paired with policies that raise family incomes, job quality, and fairness in the labour market.
Why this matters now
Government messaging continues to treat the education-employment pathway as the primary antipoverty lever, often summed up as “work or education is the best way out of poverty”. That story is incomplete. The evidence shows education improves prospects on average while reproducing large inequalities. A job is not a guaranteed shield against poverty when wages are low, or hours are insecure. A child centred strategy must address those realities, not gloss over them.
Claim 1. Education helps on average, but the gains are wildly uneven, sometimes furthering inequalities
The good news: higher qualifications are associated with higher earnings and lower unemployment over a lifetime. That validates part of the government’s narrative.
The catch: the payoff depends heavily on what you study and who you are. Five years after graduation, a human welfare studies and services typically earns around $77,000 versus $104,000+ for civil engineering. Women and Māori/Pasifika graduates also see smaller returns on average, even with comparable qualifications, because of occupational sorting and persistent pay gaps. In several professions, most of the gender pay gap remains unexplained by education or experience, pointing to structural bias. These disparities mean the “silver bullet” can misfire for exactly the groups policy most needs to reach.
Nuanced evaluations of adult education find modest average gains and non‑uniform impacts: completing a degree tends to lift earnings, but lower‑level certificates often deliver little or no gains for some groups, especially men. Pushing debt‑financed study that doesn’t shift earnings is a risk poor families should not have to carry alone.
Claim 2. The user‑pays model shifts risk and cost onto low‑income families
New Zealand’s loan‑based tertiary system asks young people – including parents – to borrow now on the promise of higher future earnings. Hundreds of thousands carry student loans; the median balance for a graduate is roughly $24,000, with typical on‑shore repayment times of 5–6 years. That slows wealth‑building and delays milestones like secure housing and starting a family.
Debt also does not fall evenly. Students from low‑income families borrow more for living costs, are more likely to work long hours while studying and are less likely to complete their study, which delivers debt without the earnings bump. Student parents face high effective marginal tax rates and lose access to key family credits if their full‑time study is not counted as “work”, tightening budgets in households already doing it tough. The result is stress, poorer wellbeing, and sometimes recourse to high‑cost lenders – hardly the foundation for children’s thriving.
Bottom line: user‑pays amplifies downside risk. If the labour‑market payoff doesn’t arrive (or arrives slowly), families – not the state – are left holding the bag.
Claim 3. Labour‑market frictions break the chain from degrees to decent living standards
Even when the qualification box is ticked, the job market doesn’t always cooperate:
Mismatch/over‑qualification: A third of workers employed below their skill level in New Zealand and almost half (43%) are in jobs that don’t match their study. Degrees don’t guarantee degree‑level jobs, and over‑qualified workers earn significantly less (14%) than peers in matched roles.
In-work poverty: Thousands of children live below the poverty line even when a parent is employed. In some years, around one in eight children in working households were still in poverty, after paying rent. A job helps – but low wages, unstable hours, and high housing costs can keep families in hardship.
Pay gaps and discrimination: Large gender and ethnic pay gaps persist; for Pacific and Māori workers a big share of the gap is unexplained by education or experience, indicating structural bias. That means equal study ≠ equal pay, which directly limits the anti‑poverty impact of “get educated, get a job”.
What the government’s framing misses
Treating education and employment as the solution individualises responsibility and normalises private risk taking (“borrow now, it will pay later”). It also sidelines demand side problems – low pay, insecure work, discrimination – and underplays the need to lift family incomes today so children aren’t hungry while we wait for long-run benefits to arrive. There is no single fix; poverty falls when we move on all fronts at once.
What CPAG recommends
Make work pay a family wage.
1) Make work pay a family wage – lift the statutory minimum towards the Living Wage (adult minimum $23.50 from 1 April 2025 vs Living Wage $28.95 from 1 September 2025), and phase Living-Wage rates through public procurement and contracted services.
2) Promote pay equity and pay transparency – protect the Equal Pay Act pay-equity process and reinstate paused or cancelled claims; extend pay-gap reporting beyond the Public Service’s Kia Toipoto so gaps for Māori and Pacific women close faster.
3) Strengthen predictable hours – fully enforce the ban on zero-hours contracting and tighten rules on availability clauses and short-notice shift cancellations so incomes are steadier week-to-week.
Raise children’s incomes now.
1) Lock in child-centred support
a) Make the child component of WFF unconditional so payments don’t fall when parents study, re-train, or face unstable hours.
b) Expand coverage and index payments so no child is left in deep poverty.
2) Stop creating debt for families
a) Simplify WFF settings to prevent overpayments and clawbacks.
b) Reduce administrative debt risk so support is stable and predictable.
3) Fix abatement so work pays
a) Lift thresholds and lower abatement rates to cut punitive effective marginal tax rates.
b) Align rules with variable and multiple job patterns so extra shifts add to family income.
Derisk study for low-income families.
1) Expand grants and allowances – Increase student allowances and hardship grants (and widen eligibility) so low-income families can cover essentials without adding to loan debt.
2) Fix rules that exclude full-time student parents from key family tax credits – Make child-centred payments available regardless of a parent’s study status or variable hours, so kids don’t lose income when parents upskill or re-train.
3) Raise the student loan repayment threshold be above the median income – Fresh graduates need their earnings to progress on their life milestones like home ownership and starting a family. Raising repayment threshold provide grace period to allow graduates to use their income on most immediate needs.
4) Universal reduction to loan balance during economic slowdowns/turmoil – High repayment rate during economic recession, high cost of living, unemployment and under utilisation affects the lower income earners the most. Universal reduction to loan balance during economic turmoil reduce financial relieve the household budget and can recover confidence.
Assess every policy through a child poverty lens.
Ask, for each change in education, employment, tax or welfare: what does this do to the disposable income and stability of the lowest‑income families this year?
Closing & call to action
Education and jobs matter. But they’re not a magic bullet. Children can’t eat a promise. If government wants the rhetoric to match reality, pair investment in skills and employment with income floors, fair pay, and rules that make decent work the norm. That’s how we turn a precarious pathway into a reliable route out of poverty – not in ten years but starting now.
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