Everyone who’s finished high school in Canada knows the common wisdom that to get a high-paying career, you need to continue on to college and get a degree. A new report from the CIBC, however, makes it clear that the facts aren’t quite so simple. In fact, while a college degree can be the ticket to a good career, making sure that postsecondary education is a wise investment requires careful planning, the kind of planning that labour market data makes possible.
The CIBC report, by Benjamin Tal and Emanuella Enenajor, begins with a surprising fact — Canadian university graduates aren’t all doing so well:
The proportion of adults in Canada with a post-secondary education is the highest among all OECD countries. … Yet, more and more of those degree holders fall behind in the earnings scale. The share of Canadian university graduates who make less than half the national median income is the largest among OECD countries.
Not only are a surprising number of graduates earning low wages, many of them are unemployed:
[T]he unemployment rate among university graduates is 1.7 percentage points lower than among those with only a high-school education, but that gap used to be much larger in the 1990s and has stabilized during the past decade.
Why is this? Tal and Enenajor draw a connection with the high percentage of Canadian graduates who received their credentials elsewhere before immigrating to Canada, and who have had difficulty getting recognition for their accreditation. But by far the biggest problem the report recognizes is that Canadian students are choosing a major without considering the financial consequences.
While an unparalleled number of Canadians are continuing their education after high school, many of them are doing so with more of an eye towards personal enrichment than return on investment. In other words, while there are education programs that directly prepare students for well-paid careers, it appears that Canadian students are continuing to ignore the data and instead pursue majors that may appeal more to them, but that can render them powerless in the job market.
This has two major implications. First, as the report suggests, graduates from different majors have very different median incomes. Graduates from, say, business majors are unlikely to earn less than the national median income, as the graph on the right shows. Psychology students, on the other hand, are running a major risk by choosing that major. Over half of them end up in jobs that earn less than the national median.
This is related to the second aspect of the problem — the so-called “skills gap,” and the problem of too many workers being available for some jobs and not nearly enough being available for others. To put this in context, we looked at the Canadian education data in EMSI’s Analyst tool, to see how the connections between popular majors and related careers actually look. The data bears out the CIBC’s assertions.
Looking nationwide, a number of the educational programs with steadily increasing job prospects have low completion numbers. For example, construction managers (NOC-S A371) have grown by a notable 14.1% since 2009, having added over 4,000 new jobs. There are hardly any specially trained candidates for those new positions, though; in 2011 (the most recent year for which StatCan has released data), specialized construction management programs had only 195 graduates, while the broader category of building/construction finishing, management, and inspection (which is also linked to the construction management occupation) had 747 completions. That left the majority of those 4,000 added jobs to be taken by workers with other, less directly applicable educations. With median pay for construction managers at $35.48 an hour, students with any interest in the area would be well advised to train towards those new openings.
Contrast this situation with the way things look in fields like psychology, which the CIBC report singles out as a field with a dubious return on investment. In 2011, there were almost 12,000 completions from 87 different psychology programs in Canada. This is a curious fact, given that psychologists, as an occupation, accounted for a mere 12,442 jobs in 2011 — and declined to 11,108 the next year. The vast majority of psychology majors are being forced to try to apply their education to another field; as a result, psychology degrees are associated with a wide variety of occupations, from biologists to social policy researchers.
Similar disconnects between the education Canadian students are receiving and the actual careers that are available to them show up again and again in the data. With Canada’s job market continuing to recover from the recession, Canadian employers need all the skilled labour they can find if they are to contribute to a healthy economy. But they’re going to continue to struggle to do so if Canada’s students are unaware of the educational options that can connect them to good jobs and, by extension, help them build a successful economy.
There are already efforts underway, in both Canada in the US, to show students how their education directly connects to their career prospects — and also, as this article from The Wall Street Journal shows, to integrate more “practical,” job-market-oriented elements into humanities and liberal-arts degree programs. There will always be a place for humanities and psychology degrees in the economy. But to serve their students well, universities need to show them real, data-driven facts on the long-term results of their education choices. The data they need to use, in order to show prospective students the pathway to actual careers, is available. It’s up to them to show it to students, to ensure that they make the best choices for themselves and the economy.
Data for this post came from Analyst for Canada, EMSI’s unique online labour market information tool. For more information about occupation and education data for Canada, and to learn about Analyst, contact Fraser Martens. Follow us on Twitter @DesktopEcon. Illustration by Mark Beauchamp.