When I was fresh out of university, a book that was making the rounds at the time was Do What You Love, The Money Will Follow. I can’t say I actually read the book, but I think that as a general principle, it’s not bad advice (unless what you love is to make really lots of money, which in that case you’ll probably do whatever it takes).
This brings me to the new report by CIBC World Markets, released on Monday. The report starts with a nice genuflection to the value of postsecondary education, saying it is “still the best route to a well-paying job in Canada.” But, it adds, this education premium “is dropping as too few students are graduating from programs that are in high demand.”
I have problems with both assertions in that last sentence. The first assertion is that the premium is dropping, and there are two components to this: employment and income. As for the income premium of university graduates, I don’t have too much to say here because we should get a better picture of the situation when Statistics Canada releases income and earnings data from the 2011 National Household Survey on Sept. 11. However, from the 2006 census, the Association of Universities and Colleges of Canada calculated that the lifetime income premium of university grads over those with no postsecondary education was, on average, $1.3 million.
As for employment, according to data released earlier this year from the 2011 National Household Survey, just 3.7 percent of 25-to-64-year-olds with bachelor’s degrees earned in Canada were unemployed. This compares to 6.9 percent unemployment for all others in this age group (the relevant data table from Statistics Canada is table 99-012-X2011037). How much lower can the unemployment rate get than 3.7 percent?
I also challenge the second assertion that too few students are graduating from programs that are in high demand. The CIBC report gives data from the past 10 years, concluding that “we haven’t seen a meaningful influx of students into degrees with more advantageous earnings outcomes.” But if you look at the last five years for which we have meaningful data from Statistics Canada (between 2005 and 2010), the picture doesn’t look so bad. Enrolment in health sciences, law, business and engineering – all high-earning fields – has increased, in some cases substantially (see chart, below).
Either way, I don’t think we’ll necessarily resolve this issue with a battle of one set of statistics over another. It’s more the overall message here that irks me. Sure, I would counsel any student to consider employment and earnings prospects when looking at program options. But, one’s working life is very long indeed and individuals will likely be happier, and hence more prosperous and personally fulfilled, doing something they enjoy. As the CIBC report acknowledges indirectly, fine arts graduates likely are quite aware they’re almost certainly not going to make anywhere near as much as, say, an engineer, but they pursue their passion anyway.
Finally, in the press release accompanying the CIBC report, one of the report’s authors, Benjamin Tal, asserts that it is crucial to Canada’s economy that we start producing more graduates in growth areas of the economy. Who, exactly, can say for certain what sectors of the economy will be the big growth areas and what the labour needs will be five or six years down the line (roughly the time it takes for universities to expand a program and for students to pass through it)? Remember the cautionary tale of all those students who entered teaching programs, only to find out after graduating that we had way too many teachers.
All of this has echoes with the issue of the purported skills gap in Canada, where some people suggest that Canadian labour markets suffer from a shortage of workers in certain industries, coupled with mismatched skills among the available labour supply. But there are those experts who disagree that a skills gap exists or who feel there is simply not enough data to make a conclusion.