The Labour Market for Students and Graduates:
More Questions than Answers
The shifting of post-secondary costs from governments to university students is often justified using the argument that students are the primary beneficiaries of university system, bringing them more in personal income than society gains as a whole.[i] Students pursue higher education in part because they recognize its financial value, but the distribution of costs and benefits from universities cannot be easily reduced to a simple earnings estimate. Thought there is no consensus over who benefits most from our universities, some economists propose “the non-market and social benefits of education appear to be substantial, perhaps as large as private market returns to education from higher lifetime earnings.”[ii]
Though it is often framed as an individual investment choice, PSE is increasingly not a choice at all:
- 70% of new jobs will require a PSE credential in the next 10 years.[iii] A majority of people will have to invest in PSE to pursue careers in their chosen fields, and meet shifting demands for workers in various sectors.
- Canada has the world’s second most highly educated workforce: 51% of 25-64 year olds hold a PSE credential (OECD average = 31%).[iv] But, at the same time, our PSE earnings premium relative to a high school graduate is more modest in Canada (38%) than in the rest of the OECD (55%).
- Since 2005, Canada has had the highest percentage of PSE graduates who earn less than median income: 18% of university degree holders and 23% of college diploma holders earned less than $37,766 (in 2009).
The OECD points to a relatively high percentage of PSE graduates that are not fully participating in the labour market to explain this mismatch between educational attainment and labour market outcomes: 43% of the highly educated and low-earning population reported something other than employment as their main activity for the year. Individuals from Atlantic Provinces were more likely to have lower earnings than in other provinces.
A wealth of other data indicate that recent cohorts of Nova Scotia university graduates face a combination of gloomy economic and social realities, relative to historical trends.
- As of December 2012, Nova Scotia’s youth unemployment rate (17.8%) is well above the national average of 14.1%.[v]
- While 25,000 new jobs have been created for university graduates in Nova Scotia since the 2008 recession, only 2,000 of those jobs have gone to recent graduates (i.e. those under 25 years of age).[vi]
- Since the 2008 recession, young people have lost an estimated $10.7 billion in wages due to unemployment and are expected to loose an additional $12.4 billion over the next 18 years[vii] because of the long-term impact of career un/underemployment on job prospects, leading to ‘wage scarring’ that can persist over one’s entire career.[viii]
- Young Canadians (ages 25-44) are far behind their counterparts from the Boomer Generation.[ix] Compared to 1976, members of this group are twice as likely to have a university degree but work longer hours for 11% less pay.
- Finally, local and global economies continue a slow and uncertain short-term recovery[x] just as Canada’s aging population is expected to exert downward pressure on growth over the next 50 years.[xi]
Data suggests that Nova Scotia students will find it difficult to self-finance their educations (through summer/part-time employment) and that they will face many other new challenges upon graduation. Combined with the impact of student debt,[xii] these challenges will inhibit many students from making important investments or life choices such as where to live and seek work, whether to buy a home, start a business, or save for retirement, and even whether to start a family.