One thing that virtually all economists agree on is the importance of education and its implication for a person’s life long income and employment potential. You will routinely hear that university graduates will earn two to three times as much as a high school graduate over the course of a career. Further, economists point to the low unemployment rate among university graduates relative to those who only graduated high school as more evidence of the importance of post-secondary education.
The historical evidence is very clear that a person with a university degree will earn much more income and have less risk of unemployment compared to persons with lower levels of education.
But I completely disagree with those that suggest university education as a panacea for labour market challenges. I have heard economists infer that if we could flip a switch and transform people from high school graduates to university graduates it would dramatically improve their income and employment outcomes.
The reality is more nuanced.
Take the example of British Columbia. According to Statistics Canada’s Labour Force Survey, from 2000 to 2010 the province saw a very impressive 79 per cent increase in the number of adults with a university degree. The overall provincial population grew by 16 per cent in the same period.
The percentage of adults with a university degree in British Columbia grew 40 per cent faster than the country as a whole. There were 257,000 more people with a university degree in 2010 compared to 2000.
Despite this rapid increase in university educated people in B.C., the average weekly wage for all workers increased by the second slowest rate among the 10 provinces in Canada over the same period.
Conversely, the provinces of Saskatchewan and Newfoundland and Labrador only saw about half the rate of growth of their university educated population from 2000 to 2010 compared to British Columbia but achieved well above average wage growth.
Of course there was a lot going on over the decade driving these trends beyond education levels. We know from Statistics Canada’s Survey of Employment, Payrolls and Hours that British Columbia saw a steep drop in high paying but relatively low education level industries such as forestry.
The province also saw rapid growth in sectors of the economy that are not known to require university education. Retail trade added 65,000 jobs and the accommodation and food services sector increased by 39,000 jobs. Construction employment grew by nearly 40,000 people. Administrative and support services added almost 39,000 jobs over the decade. Other than construction, the rest of these sectors pay well-below-average wages.
While we will have to wait for the 2011 Census to really drill into the data (assuming we can compare 2011 accurately to 2001 given the change in methodology), it looks like university education hasn’t been the panacea for income growth after all -- at least in the aggregate.
From the 1999/2000 to 2008/2009 school years, British Columbia saw the fastest growth in university enrolments of any province in Canada -- by a wide margin. Total enrollment more than doubled from 74,000 to 157,000. At the same time, total college enrolments across the province dropped by 18 per cent.
I am certainly not denying the importance of university education. I spent a total of seven years in the hallowed halls of academia and never regretted a single semester -- even though I subsequently spent 11 years paying off my student loans.
However, it is important for policy makers to align education and training opportunities to the needs of the work force.
Author's note: To see a chart showing the growth in average weekly wages compared to the university educated population across Canada, click here.
David Campbell is an economic development consultant and columnist based in Moncton. He also authors a daily blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.