Higher Education Strategy Associates

Category Archives: recession

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.

September 06

A (Not Very Good) Sign of Things to Come

So, Dalton McGuinty has released the Ontario Liberal Party’s platform and its associated costing document.

What’s drawn everyone’s attention so far is this idea of “30% tuition rebates” – understandably so since the cost of the this one is almost a third of all new proposed spending (the miserly sums are a nod towards the fact that the province is essentially broke and can’t afford any new spending).  I’ll go into more depth about these rebates tomorrow in my Globe blog, globecampus.tumblr.com; suffice for the moment to say that the vagueness of some of the wording suggests that this item was a very last-minute inclusion and that there a lot of potential landmines – really big ones, actually – in implementation.

But ignore that for a moment, and take a gander at page nine of the costing document.  It suggests that if the McGuinty Liberals are re-elected then Ontario post-secondary institutions can expect to see their budgets grow from 7.2 billion to 7.9 billion over the course of the next four years.  Now, if you’re thinking; “10% over four years isn’t bad in tough times,” think again – that $700 million increase includes the $486 million set aside for the tuition grants, which of course doesn’t benefit institutions one bit.  It also presumably needs to cover ongoing funding for the 60,000 new places the government has announced  (capital costs for these students are included in the cost estimates but the ongoing operating funding isn’t).  Assuming a nice round $5,000 subsidy per student per year, that’s another $300 million, at which point we have used up the entire budgeted increase.

So, no rise to account for inflation.  No rise to account for increasing salaries.  No rise for anything, really – it’s a straight nominal freeze for institutions regardless of what’s happening to them on the cost side.  And this is from what is probably the most pro-PSE of the three parties in the current legislature.  Any other deal institutions might get is likely going to be worse.  And there’s no get-out on the tuition side.  If anything, the Liberals look set to reduce the annual 5% increase to something closer to 3%.

That means there’s no getting around the need for some serious belt-tightening.  Administrations at Western and Carleton are almost certainly wishing they could get a do-over on their faculty settlements from last year, and I can guarantee that this is going to make a resolution of the current Ontario colleges support staff strike a lot more difficult.  There simply isn’t money around anymore to fund the kind of settlements to which people have become accustomed.

Expect strikes.  Expect hiring freezes.  Expect an exodus of Ontario talent to better-funded universities further west.  This is what a $15 billion deficit will do to you.

August 19

Recession Not Going As Planned

About two-and-a-half years ago I (along with my colleague Ryan Dunn) wrote a piece called On the Brink, which considered the then-looming recession and its effects on universities. Looking back on it now, I think we were mostly correct, with two exceptions.

First, I think we overestimated most governments’ desire to stay out of the red. Clearly, as a country, we may not have learned the lessons of the early 1990s as well as we might: governments have proven more willing to borrow – and more willing to keep spending high, including on higher education – than we expected. That’s been good for universities and colleges so far, though the prospect of large and swift cuts may have been delayed, not avoided.

Second, we overestimated the likelihood that governments would turn to tuition fees as a way to supplement revenue in the manner they did in the 1990s. Governments are choosing to couch this in the language of “preserving accessibility,” though the research on accessibility suggests tuition caps do considerably less than is asked of them: basically, every piece of serious research on the subject conducted during the last decade has suggested that modest tuition increases have little effect on accessibility. Nevertheless, university is such a common factor of middle class life that raising fees is considered a tax hike on the middle class, and has similar political consequences. We see this phenomenon at work in many U.S. states as well as Canadian provinces.

This attitude encourages governments to think of universities essentially as utilities. For institutions that had their sights set on something more – “world-classness,” say – this is a significant, long-term, strategic problem, if and when government funding tapers off. For research-intensive institutions, it may even be the defining problem of the next decade.