More grads leaving university with degrees that are not leading to jobs: Report

More and more graduates are leaving university with a degree that is not helping them to get a job, according to a new report by CIBC.

The results found that students have not gravitated to “more financially advantageous fields” and run the risk of getting lower paid jobs with a degree in humanities or social sciences, as opposed to fields such as business, engineering, or health.

“Across subjects, the biggest bang for buck comes from specialized and professional fields such as medicine, law and engineering,” says CIBC Deputy Chief Economist Benjamin Tal who coauthored the report with CIBC Economist, Emanuella Enenajor.

“Narrowing employment and earning premiums for higher education mean that, on average, Canada is experiencing an excess supply of post-secondary graduates.”

As a result, the unemployment rate among university graduates is now just 1.7 percentage points lower than those with only a high school education.

The report notes that the proportion of adults in Canada with a post-secondary education is the highest among all the countries in the Organisation for Economic Co-operation and Development (OECD), and the cost of the education is roughly double the OECD average. However, more of the degree holders fall behind in the earnings scale as most grads make less than half the national median income among the largest of the OECD countries.

“Those underperforming sectors comprise just under half of all recent graduates,” says Tal. “In other words, Canadian students are continuing to pursue fields where upon graduation, they aren’t getting a relative edge in terms of income prospects.”

“Most Canadians are aware that on average, your odds to earn more are better with a degree in engineering than a degree in medieval history. The field-of-study premium isn’t just a Canadian phenomenon—it’s been observed in the U.S., Sweden and other industrial nations. But it’s not clear that students, armed with that knowledge, have been making the most profitable decisions. With the exception of commerce, in the last 10 years we haven’t seen a meaningful influx of students into degrees with more advantageous earnings outcomes.”

The report finds that while higher education overall still translates into better wages, the premium is also narrowing. Real weekly wages of high school and college graduates rose by 13 per cent versus eight per cent among undergraduate degree holders and more than double the rate seen among MA and PhD holders.

“For students shelling out thousands in higher-learning costs, a university degree can be viewed as an investment with upfront expenses, and a stream of future benefits,” says Tal. “And with roughly half of all Bachelor’s degree students graduating with debt, a significant share of the population is starting their career one step behind in terms of financial health.”

“Improving participation rates in these fields will likely require some combination of developing an information infrastructure system designed to identify emerging trends in labour market needs, improved quality and equity of learning opportunities, increased resources, improved system efficiency and increased private investment, in part, in the form of corporate investment.”