Learning and earning

The folks at CIBC World Markets are getting a bit of media coverage from a new report that seems to show that the financial benefits of getting a degree in Canada are dwindling, and that young Canadians are not choosing to study the subjects that are likely to bring them the biggest earnings boost when they move out into the job market.

I've no doubt all the numbers in the study are accurate, but the whole thing strikes me as unsatisfactory, on a number of levels.  Most basically, it's wrong both for society and for individual students to see education as nothing more than a road to riches.  

Let's look at the idea that students are failing to gravitate to the courses of study that will maximise their earnings potential.  The CIBC study specifically contrasts engineering and medieval history.  (Are you reading this, Linda???)  The truth is that the skill sets and interests of people choosing university courses don't allow them to pick from anything on the curriculum.

There are very few people who, even by the age of 18 to 20, would see themselves as being equally competent to study for a degree in either engineering or medieval history.  I was pretty good at scientific subjects when I was at high school, and I knew that doctors made good money, but it never occurred to me for even a nanosecond to apply for med school.  I simply had no interest in doing that for the rest of my life. In fact,  if my only choices back then had been engineering or medieval history, I would definitely have chosen the "wrong " one.  

I think it's reasonable to postulate that the reason why doctors and lawyers out-earn the average Canadian, and the reason why more young people don't pursue those subjects at university, are one and the same. Law and medicine require longer and more difficult courses of study than most other subjects.  That in itself deters many people from entering them, which serves to push up the rewards for those take on the challenge.

Turning back to the CIBC study, we learn that

The proportion of adults in Canada with a post-secondary education is the highest among all OECD countries, and the cost of that education is roughly double the OECD average. Yet, more and more of  those degree holders fall behind in the earnings scale. The share of Canadian university graduates who make less than half the national median income is the largest among all OECD countries. 

The first thought that comes into my mind when I read that is "I guess that means we're sending too many people to university".  The study shows that it's not quite that simple.  Many of the graduates looking for work in Canada are immigrants, with degrees from foreign universities.  Those people are frequently unable to find work in their chosen field in Canada -- they're the taxi-driving PhDs that you sometimes hear about -- and that fact tends to pull down average earnings for all people who report themselves as graduates.

Along with that, though, there's the problem that always arises when you use averages and medians to draw conclusions.  Think about this: if every Canadian had a degree, then by definition half of all graduates would have to be making less than the median income.  The more graduates you produce, the more likely you make it that some will fall below the median in earnings terms.  It doesn't mean education is a waste of time and resources, unless (as this study's authors seem to do), you think knowledge and money are virtually equivalent.

This is not just a Canadian issue, by the way.  From no less a source than Mark Steyn,  quoting a recent piece in the WSJ, we learn that there are over 100,000 janitors in the US with university degrees!