Category Archives: employment

May 21

Post-Graduation Employment

The meme on “underperforming universities” these days revolves around the idea that specific fields of study – usually Bachelor’s degrees in the humanities – do not lead to good jobs. But this depends in no small measure on what one means by a “good job”, and over what time frame one chooses to measure success.

The graph below shows data from Ontario, six months after graduation. Between 2003-2007, the employment rate of graduates in the labour market (i.e. excluding those who chose to study) bounced around between 92 and 94%. In 2009, the rate fell by about 7%, to roughly 86%, more or less equally across all disciplines. Some fields of study were consistently below the average – specifically, fine arts, physical sciences (which seems to include biological sciences), and engineering. Some fields of study were well above the average, notably education and nursing. Humanities and social sciences ended up half way between the two.

Employment Rates of Ontario Graduates Six Months After Graduation in Selected Fields of Study, 2003-2009

The science figure is especially interesting, isn’t it? Makes you wonder why there’s an S in STEM.

Now, some of you will surely be scratching your heads at this point. Aren’t STEM graduates supposed to be in high demand? How are both getting beat by Arts grads? Three quick answers. The first is that these figures exclude people who have gone back to school (unhelpfully, the Ontario data doesn’t tell you how big a number this is). Two is that Engineers may take longer for a job search because they are secure in the knowledge that their eventual job will pay pretty well (see below) – the pattern we see after six months is also the pattern after twenty-four, as the chart below describes. And three is that the picture does change a bit after two years.

Employment Rates of Ontario Graduates Two Years After Graduation in Selected Fields of Study, 2003-2009

The classes of 2003 and 2005 had 2-year employment rates of about 96.5%. That fell to about 95% for the class of 2007, and 93% for the class of 2009. The fall was concentrated in education, humanities, social science, fine arts, and physical sciences; other disciplines saw less change.

Finally, there is the issue of income. Here you see the real knock on studying in the humanities; it’s not that they don’t get jobs – it’s that they end up in some jobs that don’t pay well. Now, their incomes do increase about twice as fast as others between six months and two years (in the midst of a recession, they jump, on average, by 21%), but they start from a lower base. An interesting point here, which I have made before, is that the difference in outcomes between students in the sciences and the social sciences is negligible.

Income of Ontario University Graduates Six Months and Two Years Out, Selected Fields of Study, Class of 2009

Clearly, jobs aren’t the issue – students of all stripes find work soon enough. The issue is the rate of return. We should focus on that.

May 06

The Changing Employment Picture: Old vs. Young?

I was playing around with CANSIM data on the weekend, when I saw something quite interesting regarding employment rates by age. Check this out:

Figure 1 Employment Rates by Age Group

Although it’s common-talk to say that we’re still in hard times, in fact, employment rates among the core working-age population are near an all-time high – 81.6% is the highest rate on record, apart from 2007 and 2008; it’s a full eight percentage points ahead of where we were in the recession of the early eighties, and six percentage points ahead of where we were in the recession of the early 1990s.

Among youth, it’s not quite the same story. Youth employment rates are a bit hard to interpret because their engagement with the labour force is attenuated by their attachment to the education system. The drop in employment rates for 20-24 year olds has a bit more to do with a drop in the student employment rate than the graduate employment rate – but regardless, news isn’t great on this front. Nothing fundamental has changed in the relationship between youth unemployment rates and core working-age unemployment rates, when compared with the recession of the 1990s (see Figure 2); however, it is taking longer for the youth labor market to rebound than it is for the rest of the labour market.

Figure 2 – Unemployment Rates by Age Group

But look at that first graph again. What’s absolutely stunning is what’s going on in the 55-64 age group. Until the mid-90s, their employment rates were falling, regardless of the economic cycle, as people took retirement earlier (I blame London Life). But since 1996, the employment rate has been rising by a percentage point per year, and this at a time when the number of people in that age group is exploding. There are currently – hold onto your hats – nearly 1.7 million more employed Canadians aged 55-64 than there were in 1996. That’s equivalent to the entire population of Nova Scotia and New Brunswick.

You don’t have to buy into the lump-of-labour fallacy, but you have to think that the change in labour market composition is having some kind of effect on the ability of young people to get a foot into the labour market. Had older workers continued retiring at the rate they were in the 1990s, workers aged 25-54 would have moved into senior jobs faster, and youth unemployment would almost certainly be lower than it currently is.

Overall, this is good news: more older workers lowers the burden of the demographic transition we are currently undergoing. But in the short term, it may be keeping young workers from sharing in the modest upswing we’re currently enjoying.

April 15

A Tool To Strengthen the Economy

A persistent sore point within higher education is the complaint that politicians want higher education to be, “more geared to the needs of the economy” – the implication of this being that higher education is a public good in and of itself, which should hold itself above mere utilitarian concerns.

This is a puzzling argument. The arrival of state funding in the early nineteenth century was explicitly predicated on higher education being used as a tool to help strengthen the economy of the state. This fact was as true in Europe (e.g. the rise of chemistry in German universities to assist the rise of the German chemical industry) as it was in North America (the Morrill Acts, the rise of A&M universities, etc).

Critics of this notion point to a period from the late 1950s through to the early 1970s, when a different logic seemed to apply. Higher education was expanding very quickly then, and so too did the humanities and social sciences. Lots of new public money went into these disciplines with nary a word about the “needs of the economy”. From this, some conclude that this was a more enlightened era to which we should return.

Unfortunately, this argument is perfectly wrong. The reason that the “needs of the economy” argument wasn’t used against social sciences and the humanities back then wasn’t because the rules of the game changed; it was because, for a brief moment, degrees in social sciences and humanities were actually in high demand.

Think about it: what was the #1 growth industry in the 60s and 70s? Government. And which field of study did civil servants traditionally have? Humanities and (to a lesser extent) social sciences. Partly that was for class reasons (Sir Humphrey’s degree was in classics, for instance), but partly it’s because broad training in human understanding and critical thinking actually does matter in at least some parts of government. But notions of society are less class-ridden today, government is no longer growing, and even within government the increasing complexities of modern regulation has led them to prefer specialists over generalists. As a result, these fields of study don’t have the same labour market cachet that they used to.

It’s not that students in these subjects don’t go on to good things – they do (albeit, increasingly, a dose of grad or professional school is necessary to get them there). But other areas of study seem to get graduates established in the labour market more quickly, and hence get the glory in a Humboldtian system.

Throughout the last 200 years, publicly funded universities have always had to deliver economically-relevant goods to their paymasters. The rules never changed; only the labour market did.

March 28

Enough with the Youth Declinism, Already

Can we please just stop with the “Generation Y are screwed” meme, already? It’s utterly without foundation.

Last week, the Canadian Press ran an article about a poll, which said that, due to inflated housing prices, 72% of Canadians aged 19-33 were pessimistic about ever owning a house. This sounds terrible – until you look at the actual data.

Census data shows that, in 2006, home ownership among 20-29 year olds was, in fact, at an all-time high. True, the Teranet House Price Index does show that average house prices went up 40% since 2006, but that’s been offset by 5-year mortgage rates declining during that same period, from about 5.75% to 3%. The result: although average housing costs have risen 40%, the cost of servicing a loan for an average house has only risen 6% (or, slower than inflation as a whole) since 2006.

Another big piece of youth declinism came via Rob Carrick of The Globe, who began his piece, “Young Adults really do Have it Tougher”, with the sensational claim that, “people aged 20-24 are 41% worse-off financially than their counterparts were in 1976”.

Here’s what the actual data looks like, going back to 1976.

Average and Median Incomes, 20-24 year-olds, Canada, in Real 2010 Dollars

It is indeed true that today’s students have it worse than those from 1976. But since all that change effectively happened prior to 1992, it’s also true that students today are no worse off than they were 20 years ago.

So what happened in the 80s that changed youth incomes so much? It’s not that employment rates have fallen; they’ve bounced around a fairly narrow range, in the high 60s and low 70s, for pretty much the entire past 40 years. But when we look at hours worked, the puzzle solves itself nicely.

Average Hours Worked, 15-24 Year-Olds, Canada

Average overall hours worked dropped from 35 hours-per-week, to 28 hours-per-week – or, by roughly 20%. In 1976, among 15-24 year olds (Cansim doesn’t break it down to 5-year blocks, unfortunately), over half were working 40 or more hours per week; in 2010, less than 35% were.

And why did working hours fall? The obvious answer is that PSE attendance in that age bracket nearly doubled in the period from 1976 to 1992, which left people with fewer hours available for paid work. According to The Globe, this large increase in access now has to be re-interpreted as a disaster for young people, because enrolment curtailed their income in the short-term. Yeesh.

For those of you still convinced there’s a generational crisis going on, have a look at this data from the Labour Force Survey.

Average Hourly Wage Rate by Job Status, 15-24 Year-Olds, Canada, in 2012 Dollars

A prize for anyone who can turn that graph into a convincing tale of generational woe.

March 20

Skills Shortages (Part 2)

As I noted yesterday, much of the talk about skills shortages in Canada is data-free, and factually-challenged. What, for instance, are we to make of claims that we have a huge shortage of people in the construction trades, when even a simple look at Labour Force Survey data tells a very different story?

Unemployment by Industry, 2007-2012

Yeah, that’s right: workers in the social sciences, education, and government fields (mostly university graduates) have unemployment rates of about 3%, compared to 9% for workers in the construction trades.

But what about those huge pay increases we’ve been hearing about for skilled trades? Well, they do exist – if you happen to be part of the 1.5% of the total workforce involved in resource extraction. Otherwise, wage increases in trades pretty much mirror wage increases in the wider economy.

Wage Growth by Industry (selected industries) 2003-2012

Now, none of this is to deny that in some parts of the economy (skilled trades and health care, in particular), in some provinces (mainly Alberta and Saskatchewan), skills shortages do exist, and the inability to fill these positions creates a bottleneck to growth in some booming industries. But, then, what’s the right policy response? I haven’t got the answers, but I do have some thoughts:

1) Be skeptical about “better labour market information” schemes. Do we really think the unemployed don’t know that things are booming out west? The problem is that retraining for in-demand jobs takes 3-4 years, by which time they may no longer be in-demand

2) Be very skeptical about financial incentive schemes. In February’s Policy Options, Ken Coates and Rick Miner proposed giving scholarships to students who go into particular, “in-demand” trades. This, frankly, is bizarre: if jobs are going begging, shouldn’t wages rise to attract demand? What business is it of government’s to subsidize particular occupations?

3) Focus on Completion Rates. There’s much talk about needing to “make trades more attractive”. But new entrants to trades are close to all-time highs – more than double the rates of the late 90s. As a recent CGA report cogently noted, the problem is that new apprentices aren’t finishing their programs. Solve that, and the larger shortage problem is solved, too.

But my final thought is this: why can’t Alberta and Saskatchewan deal with this on their own? Why is this a federal issue? Cynics on the left may push the idea that it’s because Harper hates educated humanists, etc, etc., but I think it’s simply that this government listens to western business. If they have a problem, this government will bend national policy to suit, just as previous ones bent national EI policy to suit Quebec and the Atlantic.

That’s Canadian federalism for you.

March 19

Skills Shortages (Part 1)

OK, apparently this week I’m going to have to talk about skills shortages, because it seems that people in Ottawa have LOST THEIR EVER-LOVING MINDS on the subject.

The basics of the policy discussion are as follows: Canada currently has an unemployment rate of about 7.5%, which is deemed too high. Despite there being roughly 6 unemployed people for every job vacancy, there are some jobs which are going unfilled because of skills shortages. This, everyone can probably agree, is a Bad Thing.

Conventional wisdom would suggest that the problem is a lack of aggregate demand – that is, a lack of jobs. But there is an increasing drumbeat saying that the problem is one of aggregate skills – or, a “skills mismatch”.

So, which is it? A jobs challenge, or a skills challenge? And if it’s the latter, what kinds of skills are missing?

One way to look at the tightness of labour markets is to look at the ratio of unemployed-to-job openings. Statistics Canada has been measuring this over the last couple of years, and here’s what they’ve found:

Ratio of Unemployed-to-Job Openings, by Province

The major determinant of unemployment is, as it always has been, regional economic disparity. Everywhere outside the Prairies, the ratio of unemployed-to-job openings is over 6-to-1; the idea that skills mismatches are in any way driving unemployment in these areas stretches credulity.

That doesn’t rule out the skills mismatch hypothesis in other parts of the country, though. But what kind of skills mismatch is it? Is it true that, as one Conservative source allegedly said, “we have too many BAs and not enough welders”? That’s a common meme, stemming in no small part from the constant rhetorical confusion between “needing more skilled workers”, and “needing more workers in the skilled trades”, which is not the same thing at all.

This can be easily verified. Recently, CIBC put together a nice little report, which listed the 25 occupations showing signs of a skills shortage over the next few years. Here they are, in the table below, listed in no particular order:

25 Occupations Showing Signs of a Skills Shortage (Source: CIBC)

Maybe five of those require apprenticeships; most of the rest require university degrees. True, only one relates to BAs, but that suggests a need to put more money into expensive STEM problems, not shift students out of universities altogether.

But this isn’t the line we’re hearing right now from elected representatives. Why, exactly, is that? More on this tomorrow.

March 18

Comparing Outcomes Across Credentials

I was doing some random websurfing the other day and I came across the BC Student Outcomes Page, which makes freely available an absolute cornucopia of data on its graduates. BC has a seriously decent survey set-up, in that they do surveys of each graduating class, every year – universities, colleges, apprenticeships, you name it. Actually, it’s probably overkill, but for data nerds like me it’s absolute heaven.

Anyways, BC surveys all its graduates between 9 and 20 months after graduation (not ideal, I know, because a lot can happen in that period), and asks them about their satisfaction with their program, how they rate the usefulness of the skills they gained, and their employment status. Given all the talk going on about shifting labour markets, and the need for greater emphasis on skills training, yadda yadda, I thought I would line up the combined results for the 2009, 2010, and 2011 surveys – that is, the years that cover the recent period of elevated unemployment – to see how people with each of the three credentials rated their education. (DataBC released the pre-compiled results, here.)

First, satisfaction: how happy are Bachelor’s graduates, Diploma/Associate Degree/Certificate graduates (which, for the sake of convenience, I’ll call “Sub-Bachelor’s” graduates), and apprenticeship graduates, with the education they received? Well, the answer to that question is so dull I’m not even going to post a graph (lest I be accused of doing this). Across the board, 94% said they were satisfied or very satisfied. The only sub-group that stood out were Bachelors-level students in Education, where the percentage was 89%.

The percentage of students saying they gained useful skills and knowledge is a bit more interesting.

BC Graduates Rating Knowledge/Skills Received in Their Program as “Useful” or “Very Useful”, By Level of Credential, 2009-2011

That apprentices are most likely to rate the knowledge/skills obtained in their programs as being useful is unsurprising, but the other two sets of numbers are more interesting. In Bachelor’s programs, all programs except Arts/Science (78%) and Visual/Performing Arts (81%) are in the high-80s or low-90s. In sub-bachelor’s program it’s a similar story, with General Arts and Science (53%) and Visual/Performing Arts (63%) pulling down other averages, which are in the high-70s to low-90s. Takeaway: provision of useful skills in BC colleges is pretty uneven.

Now, here’s the killer stat: unemployment rates.

Unemployment Rates of Recent Graduates, By Level of Credential, 2009-2011

Yes, really. Break it down even further and you get even more interesting numbers: Visual/Performing Arts BAs – 8%; Arts and Science BAs/BScs – 9%; Construction trades apprentices – 11%.

Now, it’s great – obviously – that people are taking apprenticeships and skilled trades more seriously these days. But this meme about how undergraduate degrees are inferior to other forms of education in terms of skills and job outcomes? It’s factually incorrect. It’s got to stop.

January 15

Those “Lost Generation” Stories

I see Maclean’s is cashing in on the zeitgeist with yet another story about a “lost generation“. These stories always cover the same arc: Find a young, bright, hardworking, recent graduate whose career, for one reason or another, hasn’t hit lift off; blame this situation on the recession, even though that link can’t really be proven; provide some cod-economic arguments as to why this state of affairs is permanent; repeat.

But we should know it’s not true, because we’ve seen this film before; both the early 80s and early 90s also had “lost generations”. Each time the term crops up, there are reasons why “this time is different”, but they’re mostly hogwash. That Maclean’s article lists five such reasons, none of which stand up to much scrutiny.

i) The decline of central Canada’s manufacturing sector, and the union jobs it sustained;

True, but those jobs never went to university grads anyway – so how is this relevant?

ii) Relentless cost-cutting by corporations;

OK, but most of the people being profiled are actually looking for public sector careers. And private sector jobs are actually up over the past few years.

iii) The demographic bulge of older workers occupying high-skilled, well-paying positions;

Older people always have better jobs than younger people – that’s not news. And since the labour market is currently stable – new entrants are closely matched by new retirees - the “bulge” argument is simply not true.

iv) Parents who pressed their kids into university, hoping they’d get prestigious, white-collar jobs;

Ah yes, the over-supply argument. Problem is, there’s no good evidence that the pay of university graduates is falling; and as for youth unemployment, it’s about the same as its always been – twice the general rate of unemployment. That strongly suggests that problems are cyclical

v) and, Universities and colleges who indulged that urge, despite the changing demands of the labour market.

WHAT changing demands of the labour market? How have university degrees become less necessary in the labour market over the past twenty years? Or, if we’re just talking about grads since 2009, how exactly were universities supposed to be aware of the bust in 2005-7, when they accepted these students in the first place?

Here’s the deal: some cohorts – like the classes of 2002-7 – get lucky. They graduate into boom times and never really know what it’s like to struggle for a job. Other cohorts are less lucky. They graduate into periods of high unemployment and life sucks for awhile. But eventually things improve.

Remember the characters in Douglas Copeland’s Generation X? They eventually became the people that today’s journalists say are hogging all the good jobs. It got better for them; it will get better for the present lot as well.

July 23

Student Summer Unemployment

Summer employment for students, being a vital source of both income and experience, is one of those things that everyone agrees is really important but almost nobody understands. What students actually do in the summer months is a messy mix of work, school, volunteering and (occasionally) bumming around. Today, we’re releasing the 2012 edition of our series on summer employment (co-authored by new HESA associate Jacqueline Lambert and yours truly), entitled Making the Most of It: Canadian Student Employment in Summer 2012.

Overall, the summer employment picture is a mixed one. Employment and summer school attendance are both down slightly, unemployment is up slightly – back almost to the level it was at in 2010 – but so too (among the employed) are average hours worked and total weekly wages.

Figure 1 – Student Summer Unemployment, HESA CanEd Student Survey

Why so high an unemployment figure? Didn’t Statscan just publish something saying it was 13%? Yes, but, (i) Statscan’s figure was for “students 20-24,” whereas we look at university students only but are more inclusive of age and (ii) Statscan’s definition of unemployment systematically underreports student unemployment, whereas ours doesn’t.

Here’s why. The Labour Force Survey defines anyone who was taking a full course load during the previous four weeks as being “not in the labour force.” That may make sense from September to April, but our data suggests that a substantial portion of students who are in school are also working full-time. Perhaps more pertinently, a large number of those who are in school are only “parking” themselves while searching for a job. Statscan may not see these students as participating in the labour market, but from their own perspective, they are. Our figures reflect that fact.

The Venn diagram below gives a sense of how complicated summer student labour force activity really is (the bubbles don’t add to 100% because we exclude the roughly 10% of students who are neither working, studying or volunteering… a group which is mostly composed of unsuccessful job seekers and students taking the summer to travel). Those who choose to work and do nothing else during the summer are certainly the largest group of students, but they are not the majority. Nearly a third of students are mixing some combination of work, study and volunteering. Among these students, the search for skills and experience seems to trump the search for more money.

Figure 2 – Students’ Labour Market and Educational Activities, Summer 2012

One final interesting point from our survey concerned student self-employment. Far from being the preserve of entrepreneurial engineering and business students, it turns out that those likeliest to be making money on their own are… visual and performing arts students. Music lessons, it seems, are both lucrative and flexible enough to fit around other paying work.

May 30

Core Curricula, Better Outcomes

The core problem of ensuring that university students get the general employability skills they want and need to succeed in the labour market isn’t that universities think it’s the wrong thing to do. Rather, the problem is that they think it’s flat-out impossible.

To be clear, this isn’t because they think that competencies acquired in general arts and sciences are antithetical to those in demand in the labour market (in fact they seem to believe the opposite). Rather it is because they think that curricula design makes it impossible to deliberately inculcate a specific set of skills. And no one, reasonably enough, wants to be held to account for something they don’t think they can achieve.

In The Marketplace of Ideas: Reform and Resistance in the American University (Issues of Our Time), Louis Menand noted that there are two basic models of general education. In a “core” model, the faculty work out a set of things that educated people “ought to know,” and then design and deliver courses to make sure students know these before graduation. This is basically the approach taken by Harvard and Columbia – it’s also what you tend to see in most of the rest of the world outside North America as well. In a “distribution” model – the one used by every institution in Canada – one is supposed to swim freely in the waters of liberal education, picking and choosing courses across a wide variety of areas subject only to requirements to ensure a certain breadth of selection.

Most schools use the “distribution” model because a) it ducks the politically difficult question of what students have to know and b) it allows faculty – particularly in the humanities – to teach more or less whatever they want. But, for obvious reasons, it make it unbelievably difficult to talk about “outcomes.” If a student can chose any 40 courses out of – say – 400 available in a social science program, that makes for a little under ~~2054~~20*10⁵⁴ possible combinations. With all those variations, ensuring measurable outcomes is like trying to guarantee a calorie-per-meal limit at an all-you-can-eat buffet.

Here’s a crazy idea: why not shift to more of a “core” model? More required courses and fewer electives would make it easier to ensure that individual courses build towards coherent program outcomes – including those that matter for employability. It’s hardly unprecedented – universities in fact looked like this before the 60s (and, indeed, most polytechnic programs are like this already). Added bonuses: it would also make the whole shift to a “learning outcomes” focus that much easier. And it’s probably cheaper.

It wouldn’t happen without some hard work and thoughtful program design, of course. But given the potential reward of more consistent and valuable outcomes, shouldn’t more schools be giving it a try?

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