B.C. Business Matters:
Jock Finlayson >>
Jobs, Income and Post-secondary Education: Some Key Facts
The current tough job-market facing many freshly minted university and college graduates is causing some people to question whether it still makes economic sense for young adults to pursue a post-secondary education. For the most part the answer is “yes.” The data indicate that those with post-secondary credentials generally do better in the job market and also have higher incomes over the course of their working lives.
Here are a few facts to keep in mind on the relationship between education, employment and incomes.
From 1980 to 2000 in Canada, the real weekly wages of full-time male workers with high school diplomas or trades certificates hardly budged. Over the same people, full-time male workers holding university degrees saw their real wages rise by 16%. The pattern changed in the 2000s, however. While men with only high school diplomas continued to experience stagnant/declining employment earnings, those with trades qualifications enjoyed an 8% boost. Meanwhile, men with bachelor degrees eked out just a 2% real wage gain – meaning that among men, the wage disparity between bachelor degree holders and those with trades certificates has narrowed since 2000. But a degree still pays off, particularly compared to a high school diploma. After controlling for the effects of differences in work experience, researchers at Statistics Canada estimate that the average weekly wages of a male bachelor degree holder in 2011 were 37% higher than for a male high school graduate; for women, the gap was larger – 55% (1).
American research points to an even bigger labor market payoff from a college degree. A recent Brookings Institution study concludes that the “economic returns” to individuals from attaining a university credential are higher than the returns available from other investments, e.g. in stocks, bonds and real estate. In the 1980s, a young US college graduate earned $4,000 more per year, adjusted for inflation, than someone of the same age without a completed post-secondary credential. Three decades later the gap had widened to $12,000 per year. In addition, a US college/university graduate is almost 20 percentage points more likely to be employed than someone with only a high school diploma(2).
That said, the economic payoff from post-secondary education varies greatly across disciplines and fields of study, particularly as measured by employment-based incomes. A new TD Economics report using US data shows a very high “net present value” from obtaining a bachelor degree in areas like engineering, computer science, mathematics and accounting. The returns to university education are significantly lower in the humanities, the arts, and most of the social sciences. The accompanying table provides further details.
Of course, there are many reasons to get a university education, apart from the job and income opportunities it can provide. But young people considering college or university are well advised to ponder how different types of degree programs are likely to position them in the labor market once they have graduated.
(1)Statistics Canada, “Wage Growth over the Past 30 Years: Changing Wages by Age and Education,” Economic Insights, catalogue 11-626-X, No. 008, 2012.
(2) Michael Greenstone and Adam Looney, “Brookings on Job Numbers,” www.brookings.edu/blogs/jobs/posts/2012/10/05-jobs-greenstone-looney