Yes, there will be shrinkage

Are OSFI’s numbers right? Is enrollment really going to fall by nearly 200,000 students? Maybe not. But I tend to think that the thrust of OSFI’s numbers describes the most likely future, for a couple of reasons. First of all, OSFI assumes that a declining population of young people means that there will be fewer people available to go to university. COU and the Toronto-area universities argue that fewer young people will nevertheless translate into more students, due to a higher percentage of that smaller population going into higher education. The latter prediction might come true, but the OSFI assumption is the one that follows the path of least resistance. Two minus one equals one is the more likely outcome than two minus one will eventually add up to three because, trust us, we’re going to find another two, somewhere.

OSFI also assumes that, because of the retirement of the Baby Boomers in the coming decade, there is going to be a labour shortage. Again, this is a common economic assumption and with good reason. A labour shortage means additional incentives for young people to get into the labour force sooner, rather than forgoing income and staying in school. There are more jobs and higher wages, there for the taking. In a period of labour shortage, the market incentives don’t encourage people to take themselves out of the labour force; they encourage more people to get into the labour force.

We have lots of historical experience with this sort of thing: in recession times, you often see higher university enrolment; in tight labour markets, you have often had somewhat fewer new university and college students. An editorial a couple of weeks ago in the Calgary Herald complained that Alberta has a low university participation rate. “With all its oil wealth,” wrote the Herald, “[Alberta] has the lowest university participation rate.” What the Herald missed was that Alberta’s low university participation rate may be in part caused by that booming economy and the high wages, ultra-low unemployment and in some cases extreme labour shortages that have come with it. Alberta’s economy is drawing in a huge number of—young, working—immigrants. If a 21-year old from New Brunswick moves to Alberta for a $100,000/year job in construction, that pushes up Alberta’s population of young people. Same goes for a 21-year old from India. Their arrival pushes down the province’s post-secondary participation rate, because both are in the labour force rather than in school. And that’s not even counting all of the young Albertans who are similarly forgoing post-secondary or leaving early to enter the labour market, because of the jobs available to them in a boom economy.