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IN MY OPINION

Graduates’ labour market outcomes remain strong across the board

Students deserve to have reliable information when making choices about what to study.

By ROSS FINNIE + ALLAN ROCK | FEB 09 2015

An era when the value of a university degree is being challenged on many fronts, new research carried out at the University of Ottawa offers a unique, long-term perspective on how graduates fare in the labour market. The results may surprise those who question whether a university degree is worth the time, money and effort.

There are many good reasons to pursue postsecondary education – knowledge for its own sake, self-discovery, desire to contribute to society. But for many, it is primarily a stepping stone to a career and a good livelihood. We feel strongly that those students should have the best information possible in deciding what to study.

We partnered with Statistics Canada to link data on students to their tax records so we could follow the earnings of bachelor-level graduates on a year-by-year basis after graduation. We did this for all who graduated from 1998 to 2010, and followed them to 2011. We analyzed results by area of study as well as year of graduation.

We found surprisingly strong outcomes across the board. For example:

  • Social sciences grads had average earnings of $40,000 right after graduation, but this almost doubled to just under $80,000 13 years later.
  • Humanities graduates had similar starting levels and experienced steady earnings growth, finishing just under $70,000 13 years later.
  • Health graduates (including nurses, physiotherapists and related fields) started higher, but had slower earnings growth over time.
  • Math, computer science, engineering and business grads earned more than others but faced much more volatile outcomes. Notably, graduates of information and communications technology areas started as high as $75,000 when the sector was strong, only to plummet to about $42,000 by 2004, once the bubble had burst.

These findings show the importance of accurate data on student outcomes, especially over a longer horizon. Most provinces’ Key Performance Indicators for universities and colleges look at earnings six months to two years post-graduation. These reports miss a critical part of the story that is evident with longer-run outcomes.

Why is this kind of work important to universities and why should more institutions participate in it? We see four reasons:

  1. Young people deserve to have access to reliable information when making choices about what to study. While the average earnings of past graduates are no guarantee for the future for any individual student, those patterns are probably as good a predictor as any.
  2. All areas of study tend to lead to earnings levels that reflect successful careers. So advising students that they should follow their passion isn’t just rhetoric, but can be founded in empirical evidence. To study what you love may be a wise choice after all.
  3. PSE institutions can use information based on studies like this to improve what they do. We have just started to link schooling experiences to post-schooling outcomes. But the more we do this – as we will – the more we can learn about which experiences lead to better outcomes. For example, do co-op placements have an impact on career success?
  4. Our first study involved U of Ottawa graduates, but the project has moved to a second stage involving six colleges and six universities of various sizes and profiles across the country. We’ll soon see whether the U of Ottawa results hold true for universities in other regions and how college students fare. Other related projects are in the planning stage.

The results of this research should not be used for just another “rankings” exercise. To be sure, labour market outcomes will vary across students from different institutions. But that will occur for a range of reasons that have little to do with the quality of student experience that particular institutions provide – the characteristics of incoming students and local labour market conditions are but two of these.

The information produced by this research can, instead, be used for more important purposes. Prospective students and their parents can use it to guide their program choices. PSE policy makers – including those inside PSE institutions – can use it to improve and strengthen programs. And the PSE sector as a whole can use it in responding to those who question the value and worth of higher education altogether. As we pursue this research, our knowledge of PSE student experiences and labour market outcomes will be broadened and deeply enriched. We now have the opportunity, and perhaps the obligation, to continue the work.

Ross Finnie, a professor in the graduate school of public and international affairs, is director of the Education Policy Research Initiative at the University of Ottawa. Allan Rock is president of the University of Ottawa.

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