

In 2006, Philip Isard was an accomplished undergraduate, with solid A grades from the University of Waterloo in Ontario and glowing letters of recommendation for graduate school. Earnest, hard working, intensely curious, and personable, he epitomized the talent and energy of a top Canadian university student. He went on to complete a master’s in history, picking up what he thought would be valuable research experience along the way. After finishing two degrees, he had exhausted his savings, and his student loans were piling up. Unsure whether a multi-year struggle to earn a Ph.D. would land him a job, he opted for the world of work. He hoped to find a stable career in the public service, with an NGO, or in the private sector. His career and financial aspirations were modest and, he thought, attainable.

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He applied for numerous jobs in and outside his fields of interest, dozens per month. With every rejection, he adjusted his expectations and widened his search, bolstering his resumé with volunteer work, short-term research contracts, and unpaid internships. Finally, about a year and a half after graduation, he landed a promising position with a newly established NGO in Toronto. After five months, though, his job was reduced to an unpaid volunteer position when the organization’s funding dried up.

For the next month, he travelled back and forth between Vancouver and Toronto, searching for entry-level jobs and tapping into a wide network of peers, colleagues, teachers, and friends. Equipped with a cellphone and a laptop, he arranged information interviews with businesses and non-profits across Canada. After weeks of travel, with an empty bank account and no real prospects, he returned to Toronto.

Isard is among the more than 254,000 graduates produced by Canadian universities each year, and a member of a new class whose education is poorly matched with the national economy. Undergraduates face various options. Thousands continue their studies at the graduate level, hoping the additional credential will generate better opportunities. Others exchange their mortarboards for admission to a trade- or career-oriented program; in 2005, about 13 percent of university graduates continued their studies at a college, while the rest headed into the workforce. But those who choose the latter route can encounter surprising difficulties, struggling as Isard did to find paid employment or, increasingly, accepting unskilled, low-paying jobs to stay afloat.

The majority of Canadians believe in the value of a university education—if not to strengthen the economy, then simply for personal gain. Surveys show that most Canadian students and their parents believe that high school graduates should go on to post-secondary education. A 2010 study, “Youth Decision Survey Report,” by the Nova Scotia Department of Labour and Advanced Education, showed that 60 percent of high school students believed their parents wanted them to go to university. According to Statistics Canada, 67 percent of parents wanted their children to go to university, compared with the 15 percent who hoped for a college or CéGEP diploma. A mere 2 percent wished for their kids to get a trade certificate.

According to a 2001 Conference Board of Canada report, a shortage of a million workers is expected in this country by 2020. Even now, thousands of skilled trades and specialized technical jobs go unfilled: the Merit Contractors Association’s Saskatchewan branch reported in June 2012 that 74 percent of its members had trouble hiring tradespeople when they needed them, and 42 percent couldn’t find them at all. Firms have begun recruiting in other countries, as far away as Romania and the Philippines, and classified ads across the country advertise jobs in advanced manufacturing, IT, skilled construction work, and health care. But for those with a basic bachelor’s degree in English, chemistry, outdoor recreation, or psychology, jobs that fit their qualifications seem impossible to find.

Watching the emerging employment crisis is like following a first-year economics lecture on supply and demand. University degrees originally derived their value from two elements: specialized expertise (medicine, engineering, law), and scarcity. When only 5 to 10 percent of high school graduates went on to university, a bachelor’s degree promised good value and job prospects. In effect, the graduates of the 1960s represented the workforce elite: highly employable, with great career potential. They did well economically in the following decades, giving rise to the often repeated but seldom examined statistic that, on average, university graduates would earn $1 million more over their careers than those with only a high school diploma.

If a degree carries such high returns, then more graduates, it would seem, must be better. Governments urged greater numbers of young people to continue their studies, believing (with more faith than evidence) that a tsunami of post-secondary graduates would produce a generation of high-income-earning and wealth-generating Canadians. We now have one of the world’s highest rates of residents with post-secondary degrees and diplomas, second only to South Korea’s. But not all degrees are valued equally in the job market, and as additional students graduate each year the university degree’s earning potential has, in some fields, fallen significantly.

Rapid growth in university enrolment helped to define Canada after World War II. In 1930, Canada had 33,000 graduate and undergraduate students. By 1950, fuelled by a federal commitment to reintegrate returned servicemen through university education, the nation’s student population jumped to nearly 69,000. Ten years later, it had reached 114,000. At the University of British Columbia, postwar demand for campus facilities was so great that abandoned army and air force camps were dismantled, relocated, and pressed into service as offices, labs, classrooms, and residences.

As late as 1960, universities remained the domain of white men; only one-third of full-time undergrads were female. Between 1965 and 1975, total enrolment leaped forward again, from 200,000 to 370,000. Almost every corner of the country shared in the post-secondary education boom. New campuses opened in places as diverse as Sydney, Nova Scotia; Prince George, BC; and Thompson, Manitoba. The country’s participation rate (the percentage of the population between the ages of twenty and twenty-four), which had been 2.8 percent in 1930, multiplied nearly nine times; by 2009, it had reached 25 percent.

There are now 1.1 million students on campus, nearly 60 percent of them women, and the expansion is self-replicating. University graduates are far more likely than other parents to send their children to university. Among young adults aged twenty-five to thirty-nine, 56 percent of those who have one parent with a degree also graduated; of those whose parents did not, only 23 percent completed their studies (although the latter number is growing quickly).

On the positive side, people who had once been excluded from university by gender bias (women), racism (people of colour and First Nations), or income (immigrants, the working class) are more likely to obtain a degree. On the negative side, this means that in the three generations since World War II, Canadian universities have shifted from being preserves of the rich, the gifted, and the intensely ambitious into the academic equivalent of intramural sports, where the premium rests on mass participation rather than on high achievement.

In the ’60s and ’70s, university expansion worked in concert with the needs of our labour force, as the Canadian economy began to shift its emphasis from the basic manufacturing, construction, and resource sectors toward more government employment, finance, middle management, and service. Today fewer than 2 percent of Canadians work in the agriculture sector, down from 40 percent in 1900. Between 2000 and 2010, manufacturing declined by more than 28 percent, or 571,550 jobs. The shortfall was made up in large part by a shift to service-based employment, by 2011 fully 78 percent of the jobs, and the market seemed primed for the surge in university graduates.

In his provocative 1995 book, The End of Work, Jeremy Rifkin outlined the mechanization that has displaced many industrial and white-collar workers while improving their employers’ productivity, profitability, and competitiveness. Those jobs may never come back, and the associated decline of trade unions has eroded the wages, benefits, and working conditions of the manufacturing jobs that remain. The solution, argued proponents around the globe, lay in building a “knowledge economy” and a science- and technology-based society that would favour brains over brawn.

In response, both Prime Minister Jean Chrétien and President Bill Clinton made university attendance and advanced education cornerstones of their national innovation strategies, and Canada placed universities at the centre of its economic planning in the late 1990s. Expanding post-secondary education and research, so the thinking went, would bring widespread prosperity. The federal government poured billions of dollars into the Canada Foundation for Innovation, the Canada Research Chairs program, academic funding councils, and other support for research and higher education. John Manley, a former Liberal deputy prime minister, remains a key advocate for such strategies. “Innovate or perish,” he was quoted as saying in a 2009 Maclean’s article. “The world is changing so quickly that the inability to find ways to adapt to the changing environment is detrimental, not only to the business sector, but to the country’s prosperity as a whole.”

The greatest fans of these expansion plans were the country’s universities; no one believed more strongly in the potential of the knowledge economy. They would have preferred cash grants, unconnected to enrolment (provincial funding is typically linked) and sufficient to match the escalating costs of running research-intensive institutions, but they quickly came to terms with the core message of twenty-first-century education policy: if you want more money, take in more students. So they did.

Changes to the world of employment, however, did not always align with these policies. Manufacturing and industrial jobs were indeed disappearing, but the technology boom’s white-collar jobs turned out to be far fewer and more specialized than originally predicted. White-collar employment has also been threatened, both by high-profile outsourcing activities—the transfer of call centres, accounting, and medical jobs such as reading X-rays—to south and Southeast Asia; and widespread technological developments such as online banking, Asian animation institutes, computer-assisted design and programming, and automated financial systems. Tech-based innovation is affecting other professional categories, too; for example, lawyers are just starting to feel the effects as companies adopt more streamlined electronic services.

Students who complete degrees in applied and specialized disciplines generally do fine; petroleum engineers are pulling in plenty of job offers and high starting salaries, and accounting students often have jobs lined up before they graduate. A strong market exists for accountants, certain kinds of IT specialists, economists, and environmental engineers, as well as nurses and other health care professionals, all high-demand areas with typical starting salaries of $45,000 to $60,000 a year. The same holds true for those finishing medical school or elite law and MBA programs (with post-MBA salaries ranging from $60,000 to $100,000), although there is currently a glut of aspiring lawyers. Doctors, especially, are often wooed with impressive start-up packages, which often include salary guarantees, and such inducements as assistance paying off student loans. For those who choose well—and circumstances can change in a flash if a sector of the economy tanks—university offers an impressive return on investment and attractive salary and career opportunities.

However, those with non-specialized degrees, bachelor’s in the arts and sciences (Rifkin calls them “garden-variety” graduates), face prolonged underemployment. According to James Côté, author of the 2007 journal article “The Hidden Crisis in the Canadian University System” and co-author of Ivory Tower Blues , the 1990s yielded some 1.2 million graduates, but only 600,000 new jobs that required undergraduate credentials. In other words, the system produced many more bachelor’s degree holders than the job market warranted. Since then, the number of these graduates has steadily increased, but—wracked by recession in Central Canada and the rapid growth of trades-based employment in western Canada—the demand has not risen along with universities’ output.

As Statistics Canada reported this past February, young Canadians bore the brunt of the continuing weak job market. The number of employed fifteen- to twenty-four-year olds fell by almost 27,000 in February, representing a total decline of close to 300,000 jobs since 2008. Although university graduates are less likely to be unemployed than those with only a high school diploma, this is because they end up accepting jobs that require a lower level of education. They are, in effect, underemployed, trading their degrees for the chance to compete for unskilled work.

Côté calls this the “downward cascading effect” of credential overproduction. The current unemployment rate among those holding undergraduate degrees is just 5.2 percent, though it is higher for recent graduates. As of June 2012, the unemployment rate for all Canadians age fifteen to twenty-four was 14.8 percent. More significant is the estimated underemployment rate: over one-third, according to the Organisation for Economic Co-operation and Development. This makes us second only to Spain in underemployment among OECD countries, as reported in a 2010 survey by The Economist. That statistic is key. Most university graduates get jobs, but more than a third accept positions that require no post-secondary qualifications, such as barista or car rental agent. Thus, universities can and do claim that their graduates find jobs, even while graduates complain that their career hopes have been dashed.

Markets, to return to our first-year economics lecture, are self-correcting, and so it is with unhappy graduates. One of the most common strategies for coping with the poor returns from a degree is to go back to college for practical, career-oriented training. Rick Miner wrote a startling 2010 report, “People without Jobs, Jobs without People,” that highlighted the growing gap between the skills of the Ontario workforce and the needs of employers. “There is a recent and interesting trend by which Ontario colleges are becoming ‘finishing schools’ for four-year university graduates,” he observed. “Students are increasingly completing a degree and then enrolling in a one- or two-year postgraduate certificate or diploma program in a college. [These decisions] reflect a recognition by students that an academic education is often not enough, that an employable skill is also required.” While the intellectual and even civic benefits of certification creep may be considerable, so are the costs and the strains on young adults and their families.

Other students cope with the underemployment problem by heading for graduate or professional school. The lucky and qualified find positions in medicine or other well-paying careers and do extremely well. Those who pursue a teaching certificate or a graduate degree in education are seeking a secure job, but find themselves running against the receding tide of opportunities. Harsh as it is to reduce graduate school to a financial calculation, Statistics Canada’s return on investment data from 2001 shows that the monetary benefit of advanced studies ranges from negative (for humanities students in Quebec) to marginal (for most social and basic sciences). Only the professional schools, particularly the top ones, show a solid return on time and money invested. In Quebec, the rate of return for a bachelor’s in history was about 5 percent, while it was more than 20 percent for medicine. One-fifth of bachelor’s degree holders had a negative rate of return.

In Canada, universities produce far too many graduates in some areas and too few in others, such as programs with a strong mathematical or applied science base. In British Columbia this year, roughly 25 percent of grade twelve students studied chemistry and 16 percent physics. This means the vast majority are not immediately eligible for the applied science and technology programs that are key to national economic development.

Such statistics call into question Canadians’ belief that personal choice trumps all other considerations when students apply to university. They are encouraged to study what they want, rather than to focus on what the economy needs. This means the shape and skill set of the country’s workforce is largely set by the decisions of tens of thousands of eighteen-year-old first-year students. If they choose the humanities or basic science when the market needs engineers and nurses, the economy suffers, and so do they.

Many countries, including India and Estonia, deal with this by directing students into fields with the greatest need. To use a little-known example, the Estonian government subsidizes all of the seats in high-demand areas; those wishing to study other areas discover that only elite students receive full subsidies. Students are not prevented from following their intellectual noses, but they may end up doing so at their own expense. “The Five Challenges of Estonian Education,” a key strategic report for all levels of education, stands in stark contrast to the Canadian approach, downplaying student choice and emphasizing the nation’s economic, technological, and socio-cultural needs.

In April 2012, Jason Kenney, federal minister of citizenship, immigration, and multiculturalism, introduced sweeping reforms of immigration regulations after authorizing tens of thousands of temporary worker permits while able-bodied, well-educated Canadian graduates searched for employment. He also launched a blunt attack on national assumptions about universities: “Tens of thousands of these Canadians go into universities every year, taking courses that will leave them with loads of debt and no realistic prospects for a decent-paying job,” he told the National Post. “One of the things that frustrates me is that it seems to me that culturally perhaps in our education system we have devalued basic work and trades.”

Students and parents have responded to the situation by demanding low tuition fees, particularly in Quebec, and more access to university—two conditions that will produce even more graduates and will further erode the quality and value of undergraduate education. By fighting for those outcomes, they are pushing on the wrong end of the rope. As many Quebec students will discover upon graduation, anger about a small increase in tuition will not solve their real problems, which rest with their adaptability to the workforce.

Those who graduate from university have a lower unemployment rate than those who do not, but the continued growth in the number of degree holders is causing problems. As Statistics Canada reported in June 2012, highlighting overall employment growth for those with degrees, “This growth in employment… was not strong enough to absorb the rapidly rising population who have these credentials. Between 2008 and 2011, the population with a bachelor’s degree or higher increased 10.7 percent. As a result, the employment rate for this group fell from 75.0 percent to 73.7 percent.”

As beneficiaries of the Canadian university system, as both serial students and employees, we feel somewhat uncomfortable in challenging the status quo and calling attention to the employment crisis facing graduates. For students who want to learn, a degree is, entirely on its intellectual merits, a wonderful achievement and a lifelong benefit. But the vast majority of students, and almost all of their parents, make it clear that they value university not for self-improvement but to guarantee a good job.

Universities are uncomfortable with the reality that for most students they are chiefly job training institutions. Until they accept this fact, the disconnect between the academy and the world of work will continue to grow, and so will public dissatisfaction. As Canada struggles to cope with a lost generation of university graduates, all the while encouraging hundreds of thousands more students to enrol, the misalignment of education and employment adds to the uncertainties of young Canadians struggling to find their way.

This appeared in the October 2012 issue.

Ken Coates Ken Coates is a senior fellow at the Macdonald-Laurier Institute and a faculty member at the Johnson-Shoyama Graduate School of Public Policy in Regina. He has previously worked at universities in British Columbia, New Zealand, and New Brunswick, and he served as dean of the College of Arts and Sciences at the University of Saskatchewan. He has published widely in such diverse fields as northern Canadian history, Aboriginal rights and society, and science and technology. Graham Roumieu Graham Roumieu ( roumieu.com ) is a National Magazine Award winner and a regular contributor to The Walrus. He draws for The Atlantic, the New York Times, and the Wall Street Journal.