Issues run in cycles. Remember the skills gap? It was a big deal back when the price of oil was over $80 a barrel. We haven’t heard so much about it since – and judging by the way oil futures markets are behaving, it may be awhile before we hear it again.
But don’t be dismayed: as one cycle disappears, another pops up somewhere else. With the dollar having dipped slightly below 70 cents US on Tuesday, I think it’s almost certain that we’re about to replay a number of the seriously banal discussions from the late 90s.
So, without further ado, here’s a quick primer on what a low dollar means for Canadian higher ed institutions, and how all the major players will react.
Things are going to Cost More. Most of the material costs in higher education – materials, equipment, and pretty much everything in the library – are priced in US dollars. So a low dollar means costs rise, which means even if budgets stay stable (an iffy proposition) institutions are not going to be able to afford as much as they used to. Libraries have had enough difficulty over the last few years dealing with parasitical journal publishers endlessly raising prices; with the drop in the dollar over the last 12 months we’re looking at another 20% jump in price in Canadian dollar terms. Expect lots of cuts – and please, just don’t blame underfunding, OK?
People are Going to Leave. Remember how in the 1990s we all cared about Brain Drain? Yeah, that issue’s back. I give it maybe six weeks before one of the big university presidents – or maybe AUCC – starts writing op-eds about how terrible it is that bright people are heading south, and so of course something has to be done… like maybe give universities more money so they can pay profs more.
Problem is, we’ve seen this movie before. Last time we had a sub-70 cent dollar, it was tough to keep top STEM talent in Canada. However, when governments started giving money to universities, the salary increases were spread quite widely. We needed to spend big to keep STEM talent, but we ended up giving money to all staff (mostly a consequence of unionization), which was an expensive way to keep top people.
I don’t actually think Brain Drain will be as severe this time. We’re still going to lose people, but the scale will be more modest; the state of the US economy is nowhere near as hot now as it was in the 1990s, and public universities aren’t in much of a position to hire. But that doesn’t mean old arguments won’t get pulled out. Caveat emptor.
International Recruitment Strategies Will Be Under Pressure. I guarantee you that at many institutions, the low dollar means there will be pressure to shift geographic strategy and go after the US market. “Of course they’ll come north”, people will say. “Look how cheap we are in comparison! And who doesn’t love a bargain?”
(You know how to spot a Canadian at a party? They’re the ones telling you how little they paid for what they are wearing.)
Let me be blunt: Americans willing to pony up mid-five figures annually are not interested in bargains. They are interested in prestige. If you try to sell them based on “everyday low prices” they will assume you are like Wal-Mart. This is a flat-out disastrous strategy.
The discount strategy will likely work better in developing countries, where price sensitivity is more prevalent. There, it is very much worth trying to talk up Canadian universities as affordable alternatives to US institutions (which will be rising in price for just about everyone around the world, not just Canada). But if you’re after a more developed world clientele, my advice would be this: raise your prices. Keep them constant in US dollar terms, to show that your product is as good as what they’re pushing down south. Yes, you might lose a few students, but net revenue per student will rise nevertheless, and that’s a good thing.