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Better-educated workers are starting at the bottom – but is that so bad?

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Here's a trend, you decide whether it is a good one or a bad one: Employers are increasingly using college and university graduates to fill positions that were traditionally held by high school graduates. Think about it before deciding on your answer.

According to a survey by website CareerBuilder.com, 36 per cent of surveyed employers are now looking at employees with post-secondary degrees for positions that were historically held by high school graduates. That is not exactly a surprise; it is a tough job market out there for younger people, and employers can pretty much pick and choose who they want working for them. The unemployment rate for those aged under 24 with university degrees was a hefty 10 per cent in 2012, compared with 6 per cent for those at all educational levels aged over 25. That's a buyers' market for employers.

For the post-secondary graduates, it is not much of a deal, although certainly better than unemployment. Three or four years past university, with the debts to prove it, they apparently have to take jobs that are pretty basic in nature. One can only assume, too, that if these are jobs traditionally associated with a lower level of education, they also come with a lower level of compensation.

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For high school graduates, the deal is even worse. For those who manage to find work (and by the way, the unemployment rate for 15-to-24-year-olds with a high school degree is 12.7 per cent) presumably the work is at a pretty limited level, particularly in the sense of what it pays. Even if they did get one of the entry-level jobs, they are pretty stuck, apparently. The Careerbuilder survey found that 41 per cent of employers would be hesitant to promote someone without a post-secondary degree.

But is all this bad the economy as a whole? Here is where things get a bit murkier.

If you assume that the university and college graduates as a group have some skills (reading comprehension, organizational skills, math abilities) that are superior to what high school graduates have as a group, then the trend is certainly a win for the companies, and presumably for the economy. All things being equal, the shift should boost productivity for the companies and in a larger sense for the economy as a whole. And indeed, that's what the employers report. Seventy-six per cent of employers say they get a higher quality of work with the higher educated group, 45 per cent say they get higher productivity, and 23 per cent say their revenues are higher as a result of hiring the group with more education.

Years ago, to get to the top at a company might have meant starting at the bottom after high school and working your way up. More recently, it has meant grabbing a post-secondary degree, starting several steps from the bottom and starting your climb. Now the formula has shifted again: You still need the degree, but you might need to start lower down and go through more steps. In a macroeconomic sense, that might be the best formula of all.

Linda Nazareth is the principal of Relentless Economics Inc. and a senior fellow at the Macdonald Laurier Institute

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About the Author

Linda Nazareth is the principal of Relentless Economics and senior fellow for economics and population change at the Macdonald Laurier Institute. More

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