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Not all university degrees are equally valuable

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While meandering from lecture to lecture, there is one question that has undoubtedly crossed every McGill student’s mind: Why am I here again? The answer to that question for the young philosophers at McGill is likely to be something along the lines of ‘to become a more fulfilled and learned person’; the rest of us are probably just hoping for a job at the end. However, according to a Feb. 1 Globe and Mail article by Peter Caven, a Bachelor’s degree may no longer lead to a job. As of 2015, 40 per cent of university graduates were underemployed, per a Parliamentary Budget Office study. Caven tries to pin most of the blame for this on universities, but the institutions aren’t responsible for what degree their students choose to pursue. The reality is that in terms of employment prospects, not all degrees are equally valuable.

Regardless of a student’s major, the basic value of any university degree is to signal to employers that the graduate holds a certain level of competence and dedication. And this signal to employers is valuable: Bachelor’s degree holders still earn $745,000 more over a 40 year career than a high school graduate. However, there is a point where the signaling value of the degree is greatly diminished simply because there are too many people with university degrees; the supply of graduates vastly exceeds the demand. The consequence is that, in 2015, over 40 per cent of university graduates were underemployed, and 10 per cent of grads under 24 were unemployed.

These issues are magnified since there seems to be little value placed on most of the actual knowledge acquired in university. University drop-outs earn substantially less than university graduates, despite possibly only having marginally less knowledge. This only goes to show that the value of a degree is in its ability to signal to employers that the graduate is dedicated and competent, not in the knowledge learned. That’s certainly the case with most arts and even business degrees. In the U.S., the most underemployed majors are common arts majors like history, psychology, and anthropology, as well as business administration. The knowledge learned from these majors isn’t highly coveted in the labour market. Given the plethora of arts majors­—over 55 per cent of university students are liberal arts grads—the degree’s usefulness in distinguishing between candidates is quite low.

These patterns are hardly the university’s fault. Students choose their own majors, and each major has different labour market potential.

The reality is that in terms of employment prospects, not all degrees are equally valuable.

Universities do offer highly marketable degrees, but it’s up to students to choose them. A number of engineering majors have starting salaries of more than $65,000, which can grow to six figures later in their careers. In contrast, the average income for a Bachelor’s graduate in general was $55,000 in 2017. Of course, universities can’t force students into more employable programs, and it’s not obvious that they should do anything to encourage enrolment into those programs. However, if students do want high paying jobs with upward mobility post-graduation, they need to adjust their own actions.

If current students continue to face poor outcomes after their graduation, future students concerned by employment prospects will be incentivized to alter how they choose their field; they will place more emphasis on math and science in their pre-university learning, and stop choosing majors that have poor labour market prospects. The other adjustment that will likely occur is higher enrolment in master’s and doctoral programs, as they ensure on average $250,000 more in earnings over 40 years, according to The Price of Knowledge: Access and Student Finance in Canada.

Universities could also improve job prospects by increasing employer and university interaction, as Caven argues. There are already initiatives in this vein at McGill such as co-op and internship opportunities, but they aren’t degree requirements—all of the legwork has to be done by the students. Similarly, the ultimate responsibility for their job outcomes lies with students: They can’t choose their program without considering what employers need, and still expect to find stable employment immediately after graduating.

It is disheartening for students that the job they hoped for might not be there for them after graduation, but this is not universities’ fault. Universities never promised any student a job, nor are they responsible for the majors they choose. Ultimately, students should be more aware of labour market conditions if their goal is to get a good job after graduation.

 

Gabriel is a U2 Economics student at McGill and a columnist at the Tribune. He loves cooking and sharing his food with his friends and family.

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