One little rhetorical trick you sometimes see anti-tuition types using is a comparison between tuition and minimum wage. Last year for instance, the Canadian Centre for Policy Alternative put out a piece saying that working at minimum wage (which is in fact relatively rare for students, who typically earn about 25% more than minimum wage), students today have to work more than twice as much as students thirty years ago in order to pay tuition. What should we make of this?
The most obvious thing to note, of course, is that any analysis of affordability that doesn’t take account of the $7 billion in non-repayable aid, which Canadian governments spend every year probably isn’t worth very much. But that’s not a complete response: even without data going back to the mid-70s, we can be reasonably confident that there is something to the underlying point: higher education is more expensive, relative to minimum wage than it was 40 years ago.
No, the better response is simply to say: yes, and that’s exactly why so many more people are attending post-secondary education these days.
If you go back forty years, the participation rate in higher education was about a quarter of what it is now, maybe slightly less. One of the reasons participation was so low was because the rate of return wasn’t very high. There were lots of opportunities to be had with just secondary education (or less). Indeed, the fact that you could live quite comfortably as a student after a summer in forestry or working on highway construction in the north was indicative of the fact that anyone could live pretty well working such jobs full-time.
What’s happened over the past 40 years is that the combined effects of technology and globalization have wiped out a large number of low-to-middle skill jobs – and (a few tech whizzes apart) summer students are nothing if not low-skilled. That’s put downward pressure on wages in those areas. Meanwhile, returns to skills have increased. That creates a demand for higher education that simply wasn’t there in the 1970s. One of the ways this shows up is rising real wages for professors; they’ve increased 35% in real terms since the 1970s, or about 1% per year over the long term. And that naturally affects the cost of higher education.
To sum up: the minimum wage comparisons do show a real change over time, even if it is exaggerated due to not taking student aid into account. But more importantly, this is a feature, not a bug. If the gap between the minimum wage and the cost of labour-intensive, knowledge-intensive goods weren’t increasing, we’d still have a 1970s size post-secondary sector.
Or, to put it another way: maybe that tuition fees as a percentage of minimum wage statistic doesn’t quite mean what some people think it does.
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Mr. Usher,
I accept your analysis: high-skilled workers are better rewarded now, low-skilled ones less so, compared to forty years ago. Still, there is a puzzle: the increased participation rate has brought many students into university that lack the abstract reasoning skills required to do university-level work, and there is more than anecdotal evidence that many of our graduates leave our universities with little in the way of additional skills. Is the trend you identify in the last forty years starting to break down, as seen in the differential wages of recent university graduates? Are universities losing their virtual monopoly on teaching well-remunerated skills?
I always feel frustrated when I encounter ROI arguments that use broad statistical data to justify the time and money required for PSE. Alex I think you neglect very important considerations: the fact that sector specific returns can vary greatly and skew averages; the poor preparation that young people receive for career planning; the lack of employer investment in training that forces students to pursue more and more education just to get a foot in the door; and the precarity of much work even if it is well-paying. Calculating “ROI” for education is no straightforward task; there is no straightforward relationship between investment in education and labour market outcomes.
This problem still exists in Alberta where a high school diploma can still allow you to get work in the oil patch. They’re labour intensive, but unless you plan to become a foreman or manager of some kind, you generally don’t need additional education and can still clear over $100K, especially if you’re willing to put in overtime. Years ago, I used to recruit students in the province for the U of A, and many of the post-secondary institutions stated how difficult it was to interest youth from rural areas in post-secondary, even for technical diplomas, because the temptation for a high paying job without any type of post-secondary education was just too great. I don’t believe this has changed much, though perhaps people are starting to think differently since those types of jobs are more unstable when the province’s economy crashes, but people are still willing to take the chance because they’re able to make far more than minimum wage, and far more than many of us with university degrees (and in my case, multiple ones).
So by implication here I’m taking away the message that you don’t see the PEI election as an important one.