Making a university degree pay off

Everyone has heard the argument that education begets fortune and career success. But there are countless graduates who have invested tens of thousands of dollars in a university education, only to find themselves starting on a career path that barely covers their loan payments, or lining up with hundreds of other similarly qualified hopefuls for a job.

While university graduates in jobs in which their skills are barely put to the test might seem common, this is not a universal conundrum by any means. Certain degrees — especially in technology, sciences and engineering — are almost sure-fire entries to a lucrative career.

Yet even where skill sets are less clearly delineated, such as fine arts or philosophy, some analysts and human resource professionals will argue that the right combination of erudition and “soft” skills can put one on a better footing in the job pool.

The question that looms large for many is: When is the return on investment worth the effort?

The rhetoric holds that a degree is a guarantee of career success, says Watson Scott Swail, president and CEO of the Education Policy Institute in Washington, D.C., an international think tank studying educational opportunities. “The first thing statisticians will say is, ‘Look at the ROI’. People with BAs and higher degrees are more likely to have a job, get paid more and enjoy better health.”

While that may be true in theory, there are many people with university degrees who are underemployed

Trade-off between hard and soft skills

doing jobs that “quite literally high schoolers could do,” he says. “How many overqualified people is enough and at what point does that hit a saturation point? That’s a whole lot to do with ROI when university degrees cost so much more.”

A TD Economics study estimates that the average cost of an undergraduate degree in Canada is $84,000 (including tuition, books and living expenses). According to gencareershift. ca, the average starting salary for Canadian university grads is slightly more than $43,000 for men and $35,926 for women. That’s roughly double the annual salary of a minimum-wage fulltime job. Rough calculations therefore would support an argument that ROI could be achieved within four to five years.

The problem, however, is that education costs more and more, while graduates are getting jobs that pay less and less, Mr. Swail says. “The only things visibly increasing are engineering and medical degrees. Those do pay off. But, overall, society has done a poor job of linking the job market to what higher education is doing. More and more people come out of school asking, ‘What do we do now?’ ”

When talking ROI for education, skilled trade programs offer a viable alternative. “A skilled tradesperson may not make as much as a surgeon, but then the cost of entry is much lower,” says Shaun Thorson, CEO of SkillsCanada, a national, not-for-profit organization that promotes the pursuit of skilled trades.

For the most part, starting salaries for skilled trades are comparable for a far lower investment (typically less than half the cost of university tuition) over a shorter academic time frame.

A recent study of salaries for Calgary-based SAIT Polytechnic 2011 graduates conducted by Insightrix Research, Inc. for example, showed a median salary of $48,000 for fulltime-training-related employment. Eighty-four per cent had found training-related employment, and a vast majority of those had stayed in Alberta.

The apprenticeship model in particular can pretty much pay for itself from the outset, Mr. Thorson contends. “Typically these programs take four or five years to complete because they require a combination of on-thejob training and education. During that time they get paid a salary that is about 60% of what a certified journey person would make. In some cases, their employers also pay for the cost of the educational portion of the training. When certified, starting salaries range from $40,000 to as much as $100,000 depending on the market demand and skill.”

Better yet, demand is constant across the country, says Peter Harris, editor-in-chief for Workopolis in Toronto. “It’s pretty much guaranteed work for plumbers, electricians and carpenters.”

The liberal arts or social sciences may not score as well on the ROI spectrum. But that type of education does not go to waste, Mr. Harris adds. “There are tons of communication and research skills that come with any degree. Having that credential means you know how to take information, summarize and communicate it; and that’s incred- ibly valuable to employers.”

In fact, a recent Workopolis survey with senior executives reported that 67% had trouble finding candidates with the soft skills they needed: teamwork, a positive attitude and work ethic, and communications.

A University of Toronto study supports this, indicating the five core competencies employers seek are communications, collaboration/teamwork, continuous learning mindset, innovation/creativity and leadership.

For anyone that can demonstrate these transferable skills, the odds of a payoff increase, says Graham Donald with Brainstorm Strategy Group Inc. in Toronto, a specialist in transitioning students to the workforce.

Yet not all employers in Canada take that into account, he notes. “A lot of accounting firms hiring in Canada will not just look at business students, but only those with accounting for ex- ample. But it’s not uncommon to see similar companies in the U.S., the U.K. and Australia looking at arts students as well. They understand that skills such as innovation, leadership, collaboration and teamwork are clearly developed through a liberal arts background. So they put in programming around colleagues, internships, mentorships and training that will give them the concrete job skills.”

He believes these types of “experiential” programs will put employers at a competitive advantage when selecting candidates whether they’re engineers, business students or English majors. “It’s a trade-off between hard and soft skills and how much you are willing to educate employees.”

There is a growing number of employers, however, that understand the need for degree diversity. Nancy Moulday, manager of recruitment for TD Business Banking, says, “Thirteen years ago a student had to have a business degree. Over the years that has evolved. Now we look at individuals who have core competencies such as working well in teams, initiative and integrity. Those can be found with arts, engineering or business degrees.”

For their part, universities are taking the notion of transferable skills more seriously and finding ways to add relevancy to their curriculum to focus on career outcomes. The University of Regina’s UR Guarantee program, for example, promises graduates will get a job relevant to their studies within six months of graduating or they will offer another year of undergraduate study for free.

Last but not least, students play a part in developing their skills through volunteering and part-time work while at school, Mr. Donald believes. “It’s the stuff outside of the course work that decides your future. Often roads don’t look like they lead to a career, and direct lines often don’t exist. Career paths are never as straight as you think they are. But that’s not a bad thing.”