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New study shows strong labour-market outcomes for university grads

In an interview, study architect Ross Finnie tells anxious parents, just relax.

By ROSANNA TAMBURRI | JAN 21 2015

For all those students and parents wondering which university degree will yield the most financial success and which will doom you to a life as a barista, Ross Finnie has one piece of advice: Just relax.

Dr. Finnie is director of the Education Policy Research Initiative at the University of Ottawa and a long-time researcher on postsecondary issues. Recently, he and his colleagues at EPRI completed a major study that used income tax records to track the before-tax earnings of graduates from the University of Ottawa from 1999 to 2011, the last year for which tax data were available. Dr. Finnie’s group matched 98 percent of graduates with bachelor’s degrees with at least one tax year, resulting in a dataset of 82,000 students. (Those with advanced degrees were excluded.)

So who came out on top? Here, Dr. Finnie shares his findings and provides some advice to students and parents. (Hint: don’t write off the social sciences and humanities.)

If you would like to hear what Dr. Finnie has to say, please listen our podcast interview with him.

University Affairs: How did the graduates fare overall?

Finnie: One of the reactions of people that see these results are, “These look great.” The lowest group is making around $70,000 on average 13 years after graduation. So they are still just in their mid-30s.

UA: Were they largely working in their field of study? Were you able to tell?

Finnie: No. I always lean against that question a bit because on some level I don’t know if we really care. University degrees are sets of general skills. Communication skills, critical thinking, presentation skills. Those are the kinds of things that can get applied in lots of different job situations.

UA: You looked at earnings by discipline. Which graduates came out on top by field of study?

Finnie: I would say one of the interesting findings is that even in the much-maligned humanities and social sciences, they [students] do pretty well. So I think this whole idea that studying something in those areas is useless is largely based on anecdote. I always encourage young people to follow what they are passionate about, what they are interested in, what grabs them. That said, it’s good to know what those earning patterns look like so people are aware. Across the board, there’s no obvious bad choices.

UA: Can you tell me a bit more about how the different disciplines fared?

Finnie: Let’s start with the social sciences. We tracked different cohorts [of students]. The ones that finished in 1998, that was the earliest set of graduates that we were able to identify and work with, they started around at just under $40,000 and wound up at just under $80,000 [in 2001]. So their earnings more or less doubled. If you look at all the different cohorts, those that graduated in 1999, 2000, and all the way through, there is some variation but by and large they were all on the same trajectory.

If you look at the humanities, they start at about the same, just under $40,000 on average and then they finish somewhat lower, a tad over $70,000.

The third group, which is health graduates, they start higher. Average earnings are close to $50,000. But they don’t rise nearly as much over time. So they actually finish 13 years later lower than the other two groups. And that’s important to understand because if people are thinking about careers, a career is by definition something that lasts over a long time.

Then the last three groups – math and natural sciences, engineering and computer sciences, and business – they all had higher earnings but there is much more variability across cohorts. So depending on when you hit the market you’re fortunes may differ quite a bit from one group to another.

UA: Because the study spanned from 1998 to 2011, it captured the effects of some major economic shocks, including the dotcom bust of 2001 and the recession of 2008. Can you talk about the impact these events had on graduate earnings and who it affected the most?

Finnie:The dotcom bust is the most dramatic. The 1998 graduates [in the information and communication technologies sector], were making $60,000 right off the bat, more than that. Then, bang, the dotcom bust hits [in 2001] and their earnings drop significantly. They then recovered over time but nothing like that initial trajectory. By the lowest point [starting salaries] were down to the mid $40,000s. So starting earnings dropped by $35,000 over a period of three or four years.

UA: Wow. So when you graduate is an important factor in determining future earnings.

Finnie: Very important. In particular for those areas of study that are more susceptible to the things going on in the labour market. If where they are going to work basically hits the skids, their careers kind of hit the skids. Whereas in the social sciences and humanities there is no such particular sector that they are headed for so they are insured in some sense by precisely the general nature of their skills and the wide areas of employment where they might find work.

UA: So it’s largely a good news story. But one discouraging finding had to do with the wage gap between male and female graduates.

Finnie: That varied by area of study. It was particularly true among engineering and the math and natural sciences areas. In the areas of social sciences, humanities and health, there was no gap [initially] and then it grew over time. So there are different stories across disciplines. I’m not sure why that is. So for example, the engineering gap between men and women, is that because men and women study different areas of engineering? That could explain it. Or perhaps they [experienced] that gap right at the beginning, no matter what they studied.

UA: You don’t know that?

Finnie: Not yet. But there are two broad possibilities. One is that over time, men and women make different choices. They might make different choices with respect to hours worked, with respect to specific career possibilities that they pursue. Maybe they take time off, because women still tend to do that more than men, considerably so, when there are children [involved]. On the other side, though, it could just be discrimination and as careers evolve that discrimination comes into play more and more.

UA: I understand you plan to expand the project?

Finnie: Yes, we started with one institution, the University of Ottawa. And now based on those initial results we are now moving ahead with a total of 12 institutions.

UA: Can you say which they are?

Finnie: I’d rather not say. But there’s a nice selection of some large, research-intensive universities, some smaller universities, there’s some very large trade schools, there are some colleges. And we have diversity across the country, right from the west coast to the east coast.

UA: When do you expect to have the results?

Finnie: Certainly by this time [late December] next year, and possibly by summer or early fall [of 2015].

UA: How do you compile this data while maintaining the anonymity of the graduates?

Finnie: In a nutshell, the institutions send [Statistics Canada] the information needed to link to tax data. All identifiers are stripped off the data and that’s what is available for analysis. Everything has to be done according to the very strict protocols StatsCan has in place. Individual student confidentiality is guaranteed.

UA: In the study you mention that relatively little is known about the lowest income group across disciplines and that in the future you were hoping that having a broader dataset would help you look at that group. What are you hoping to find out?

Finnie: You hear all this discussion about how universities are failing students. One thing we could do is link how people do in the labour market after graduation to their grades while at university. We would also have information on their high school grades based on their admission applications. So, we could find out to what degree students who are not doing well in the labour market after graduation were not performing very well as students while in PSE and perhaps before they came into PSE. Maybe, it’s a hypothesis, those [graduates] were low-performing students while in school and it’s just a continuation of this. Conversely, maybe they’re good students and they just got dumped out in the labour market in a way that they did badly. And that would be one of the next things we hope to get at.

UA: How many students do you think you’ll have at the end of this?

Finnie: There will be hundreds and hundreds of thousands. And this feeds into a broader [study]. Statistics Canada hopes to use data already being sent to them from the institutions to actually expand a similar tracking of outcomes for all graduates from all institutions across the country, probably going back to 2005 or 2006, [although] not as in-depth as we hope to do.

UA: This is the data that everyone has been clamouring for, correct?

Finnie: I would say so. And that comes back to, in a nutshell, that young people looking at areas like social science and the humanities and seeing you can actually make a decent career in those areas of study. It’s been that way for a long time and it seems to continue to be the case.

UA: They won’t end up as baristas?

Finnie: By and large, no. Or they might for a little while, but that’s part of the process.

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