Stay in school, it pays: study
Millennium Foundation says a degree is a great investment, but other studies raise a few caveats
If you have a university degree, you can expect to earn $746,000 more over your working life than someone with only a high school diploma. The information is contained in a study released today by the Canadian Millennium Scholarship Foundation, authored by Joseph Berger and Andrew Parkin. The authors also found that Canadians with only a high school diploma are two and a half times more likely to be unemployed than a university graduate. College graduates enjoy higher earnings than those with only a high school education, but the earning gap is not as wide and their lifetime payoff is only about half that of university graduates.
Bergin and Parker say they wrote this report in in order to counter “a series of recent suggestions that somehow we have too many [post-secondary] students in Canada, not too few.” They write that “the evidence about the positive returns to post-secondary education is so well-known that it seems unnecessary to review it again.” There’s pretty much no refuting that, if you take the income levels of all those with a university education and compare it to the incomes of all those with only high school, university looks is one heck of a good investment. College similarly looks like a good investment, but university appears to be a much better one. A few years ago, I opened our annual Rankings issue with an article entitled “The Best Investment Money Can Buy.” I estimated, based on a less thorough analysis of Statscan data than Berger and Parkin offer, that the return on a university degree was about $1 million dollars in extra lifetime earnings.
I still hold to the view that university offer serious economic benefits to students and society — but I have some caveats. Education is the fount of progress: social, scientific and economic. A more skilled society will be a more prosperous and successful society. But the more I look at our higher education system, the more frequently I see disconnects between the true statement “our society needs more educated people” and the not necessarily equivalent statement that “our society needs more people with university degrees.” The latter should equal the former, but unfortunately that’s not always the case. There’s lots of evidence that an increasing number of kids are simply being pushed through the system: they may get a university degree (and before that, a high school diploma) without having learned anywhere near as much as the credential suggests they should have. A few weeks ago, a chemistry professor told me about how some students in his third-year and fourth-year classes — students who are majoring in chemistry — never learned the most basic elements of the first-year material. He’s not sure how they made it in to upper-year courses; they’re not educated enough to be called scientists. But they’re going to get a B.Sc. What exactly is their degree worth? Somewhat less than the ideal.
A number of commentators, such as professors James Cote and Anton Allahar, authors of this book (and a related blog) have said that we are lowering standards in order to raise enrolment, devaluing higher education in the process. I’ve got a lot of sympathy for Cote and Allahar’s argument that we are putting too much emphasis on getting more people into higher education, and too little emphasis on what they do once they get there — what they actually learn. Cote and Allahar similarly point to a focus on credentials over learning in some high school systems — which deal with weak students by shoving them through the system regardless of actual performance or learning, raising everyone’s grades, raising graduation rates and giving the illusion of educational progress. More knowledge/skill/education are good things, for the individual and for our society and economy. However, we can’t just assume that more schooling, of whatever type, in whatever field and of whatever quality, equals education/learning/skills. Our system should aim to make those linkages — and this is where Parkin/Berger and Cote/Allahar surely agree. We can’t automatically assume that more people with credentials (whether that is a high school diploma or a B.A.) equals more people with knowledge and skills that lead to higher returns to themselves and to society.
Tony, these two ideas seem to be at odds, don’t they?
“A number of commentators…have said that we are lowering standards in order to raise enrolment, devaluing higher education in the process.”
“it’s also true that only the best students go to university”
Is it really possible for both of these to be true?
Interesting post. Two points.
1) That Statscan article raised the question of whether the reason Canada has a disproportionate number of university grads with earnings on the low end, is because we have too many university grads, but did not delve into the question. I would have liked to have seen a comparison of participation rates from other countries. It wouldn’t necessarily answer the question but it would be another bit of data that could be useful. Similarly, if you look at what Canadian students study compared to their counterparts in Europe, Canadians are more likely to major in the social sciences and humanities than others, and we graduate fewer science and business grads. Given your data on the earning potential of people with various degrees, this could be a factor.
2) When we talk about the social benefits of education, it is rarely mentioned that the big post-war expansion in university students coincided with the expansion of the welfare state. Governments have always drawn heavily from the universities to staff the bureaucracy, but the demand for government employees was much greater at the time governments began pushing ever increasing numbers of Canadians into higher education.
@Reasoned and Measured:
Good question. And yes, it is possible for both of those statements to be true.
Look at it this way: let’s say that in the not too distant past, in a class of 20 high school students, only four went to university. Those four were among the very best students in the high school class. Today, six or eight members of that high school class of 20 students go to university. Though the percentage of high school grads going to university has risen over the past couple of generations, it’s still the top students who are being admitted. Only now it’s the top 30% or 40% or 50% of the high school class, instead of the top 20%. We’re reaching deeper into the pool — but we’re still casting the net in from the deep end of the pool, not the shallow end.
Yes, there are lots of people who did poorly high school who attend and graduate from university, and yes, there are some top high school students who never earn a B.A. (see Bill Gates, Steve Jobs). But on average, its the students with better high school grades who go to university, and those with below par high school grades who don’t.
@Tony Keller
Uh, yeah, the problem is that it’s not anywhere near 40-50% of high school grads who are going to university. Maybe not even 30%. Last good set of numbers was about 25%, so we’re really not sending that many new people to university, proportionally, despite increasing enrollments. Furthermore, even within that enrollment, gaps in participation along income, SES, ethnicity persist. In other words, for any new enrollments we’ve achieved in Canada we have done little to increase participation rates and almost nothing to close achievement gaps among different groups of Canadians. The Millennium Scholarship Foundation has released some of this analysis in the past, maybe you should ask them if they have any new, good data.
Reasoned and Measured
@Tony Keller
Also – Gates and Jobs are great examples of people without BAs who became successful and rich. They both graduated high school, of course, and enrolled in highly selective universities (Harvard and Reed, respectively). Here’s my question: would you encourage your kids to follow their educational/career path? If not, why not? Clearly there share characteristics that made them successful, but can they be replicated?
Reasoned and Measured
@ Reasoned and Measured:
University participation rates have gone up substantially in the past two generations, and there’s even been a jump in the past decade or so.
For example, looking at the most recent participation rate stats I could quickly grab from the Council of Ontario Universities (see their “Facts and Figures 2006″, here http://www.cou.on.ca/_bin/publications/onlinePublications.cfm), they report that in the decade after 1995, undergraduate participation rates increased from 35 per cent to 44 per cent. That’s from Table 1.4 of the report. Some of the jump was due to the double cohort. And if we traced the stats back further, to the 1960s, 70s, and 80s, you’d see a number of other increases in university participation rates.
(And given falling youth population, the only way that university enrolment can remain stable or rise will be even higher participation rates in the years to come).
A sense of how much university applications and enrolments have increased since the 1970s can be gleaned from the charts in section 2, page P2-2 of the above report. It shows that the number of registered applicants at Ontario universities have more than doubled since the early 1970s.
One other interesting and controversial figure: on the next page, section 2 page P2-3, there’s a chart showing the average high school grade of Ontarians who applied to university. The average grade has gone from a 76 per cent in the early 1980s to close to 82 per cent early in this decade. This is the sort of stuff that interests Cote and Allahar, and with good reason. What is at work here is either (a) grade inflation, such that even as we reach deeper into the student pool, the average magically rises or (b) proof that students in 2003 are, on average, considerably better educated and better prepared for university than students in 1983.
Another interesting tidbit from COU: its “Application Statistics 2007″ report, which has the most recent Ontario application and enrolment stats, shows that the number of registrations at Ontario universities increased by 52 per cent from 1998 to 2007, or quite a bit faster than the underlying population.