I wanted to respond, somewhat belatedly, to the Globe and Mail article of early last week that questioned the value of a university degree. It was just the latest of what seems to be a lengthening list of such articles. Indeed, yesterday’s Cross Country Checkup phone-in radio program on CBC was also on this topic. I wasn’t able to tune in, but I can guess at the direction the discussions took based on the program’s title: “Is the value of a university education being oversold?”
I’m not quite sure why some Canadians seem to find it so difficult to accept the good news that a university degree is a worthwhile investment. The evidence is overwhelming that, on average, a university graduate earns significantly more than either a high school or college graduate. Generally, a university graduate also has greater flexibility in his or her career and fewer periods of unemployment. As investments go, it’s a very good bet.
The Globe and Mail article of last week starts off with the statement that “Canadian universities can offer no firm guarantee of a return on investment in that expensive piece of paper.” This is a classic straw man argument. Very few, if any, legitimate investments can offer an absolute guarantee of a specific return, and I don’t know of anybody making such a claim for a university degree. But, if students are motivated and engaged in their studies, it is likely they will benefit greatly from their university education.
The Globe article does note, however, that nearly one in five university graduates wind up at the low end of the income scale, and that this percentage is higher than in any other OECD country. I will leave out the discussion of inter-country comparisons because the comparability of the data is difficult and uncertain. Nevertheless, we’re still left with the claim that 18.5 percent of university graduates earn less than half of the country’s median income of $37,000. How can this be? I passed that question on to a senior analyst at the Association of Universities and Colleges of Canada, and here is his view.
First, he suggested we remove immigrants from the equation so that we are only counting degrees earned in Canada (we are, after all, talking about the value of a Canadian degree). While immigrant status is not a perfect match for degrees earned in Canada versus those earned abroad, it is a fairly good “proxy” measure. Doing this, the number of non-immigrant degree holders who earned less than half the medium income drops to 15.9 percent.
As well, there is a higher likelihood that younger people and those nearing retirement are working part time. And, it is likely that the OECD data does not account for people whose primary activity is not work – i.e., they are studying, at home parenting or some other activity. So, if you look at the primary earning years of 30 to 54 and restrict the analysis to those working full-time, then just 3.9 percent of degree holders are earning less than half the medium income. And then, of those, roughly half are self-employed and drawing very little income. This graph shows the step-by-step analysis:
This analysis above may sound like a rationalization to some, but I think it makes sense. What’s more, we ignored the fact that certain degree holders do tend to earn less than the national average – in particular, those with a degree in the fine arts. I am making no judgment on such a career choice, but I suspect these individuals understood ahead of time that the fine arts is not likely to be a path to riches. And finally, there is no doubt a small percentage of degree holders who were disengaged with their studies, did the minimum required to complete their degree and simply lack motivation to succeed.
One other problem with the Globe article is that it leaves the impression that degree holders who are currently earning low incomes are permanently stuck in that position. University graduates may indeed experience job disruptions, and a certain percentage will confront that reality in any given year. But, it does not tend to last long.
One final word: it is also, I think, shortsighted to think of a degree as only a financial investment. There are other, more personal, rewards to the pursuit of higher learning.
Bottom line, I think it is irresponsible to claim that a university education is a risky investment.