Posted by Nick Falvo under education, employment, inequality, Job vacanices, labour market, post-secondary education, skill shortages, student debt, unemployment, user fees, wages, young workers.
July 3rd, 2015
What follow is a guest blog post from Glenn Burley:
If Science, Technology, Engineering and Mathematics (STEM) and professional fields like medicine, law, and dentistry are the so-called golden ticket to a good job in todayâ€™s labour market, what does that say about the current and future health of our economy?
The myth of the â€˜skills gapâ€™ in Canada is persistent. Along with increasing levels of student debt and a labour market in which good jobs are increasingly hard to findâ€”especially for young peopleâ€”this myth leads public discussion on employment to blaming individuals for their education choices. According to some, the only way to secure a decent job and address the labour marketâ€™s â€˜skills gapâ€™ is by studying in STEM fields.
Despite numerous contradictory reports, and even a degree of government back-pedaling, the skills gap narrative continues to hold considerable weight in public discourse. Most attempts to dispel the myth focus on general employment trends, noting a lack of wage evidence for a shortage of these qualifications, but not heavily focusing on the wage story.
The myth is also driving post-secondary education policies under the guise of encouraging students to study in fields that will â€œguarantee good jobs and high wagesâ€ and is used to justify significant year over year increases to tuition fees in STEM and professional programs (law, dentistry, medicine, etc.). In an attempt to dispel this myth, letâ€™s tackle both arguments by looking at the actual wages these fields have earned from 1997 to 2013, as this was the largest set of data available at that time from the Labour Force Survey (LFS).
I relied on custom LFS data, which provided the median hourly wages for the most specific and closely related National Occupation Classifications (NOC-S), from 1997 to 2013 to the STEM and professional fields I was interested in:
- C01: Physical Science Professionals
- C02: Life Science Professionals
- C03: Civil, Mechanical, Electrical, and Chemical Engineers
- C06: Mathematicians, Statisticians, and Actuaries
- C07: Computer and Information Systems Professionals
- E01: Judges, Lawyers, and Quebec Notaries
- D0-D1: Professional Occupations in Health, Nurse Supervisors, and Registered Nurses (more focused data for doctors and dentists were not available)
Starting out, I assumed both that incomes in STEM fields would be increasing fairly consistently and that these increases would be surpassed somewhat by increases in tuition fees. While I was largely correct in the tuition vs. wages assumption, it turned out the wage data on its own tells some very interesting stories.
Three clear points have emerged from the data:
- Tuition fee increases are outpacing wage gains
- There are cases where STEM and professional fields have seen their wages decrease when adjusted for inflation
- Income inequality within the STEM and professional fields is very significant, but the general narrative about these fields assumes that everyone ends up in the top 10%
Taken as a whole, I believe the data show that the push for more STEM degrees is not only exaggerated, but highlights the poor short-term and long-term employment prospects for Canadian youth.
As public funding for post-secondary is eroded, the costs have been downloaded onto individuals through user fees. In most provinces, tuition fees increase annually at rates well above inflation for STEM and professional programs.
Between 1997 and 2013, tuition fees for these programs increased by between 38% (general science) and 202% (dentistry). These figures are national averages that have been adjusted for inflation.
Tuition fees in math and technology remain among the lowest in the fields examined (59.4% increase), mainly due to their more â€˜coreâ€™ nature. Engineering, with one foot in the STEM pool and the other in the â€˜professional fieldâ€™ pool, has seen larger increases (69.8%) than the other STEM fields, but not nearly as much as other professional programs.
Medicine, dentistry, and law, with their largely unregulated tuition fees, have seen unparalleled increases. In 2013-14, the national average for a year of law school was just over $10,000 (up 156.4%); a year of medical school was over $12,000 (up 137.7%); and a year of dentistry school was over $17,000. These figures do not include ancillary, lab, or equipment fees, which can be upwards of $10,000 per year at some schools; let alone the cost of living.
Wages Since the Recession
We still often hear that if you get a STEM degree, youâ€™ve got a golden ticket in todayâ€™s economy. Professional fields are generally thought of as safe ways to earn high salaries. These ideas are used to excuse ever-increasing tuition fees for these programs, becauseâ€”the argument goesâ€”itâ€™s no big deal, youâ€™ll more than earn it back!
The reality is that, since the recession, wages in these fields are not that golden.
In the physical sciences, national median wages have increased by an average of 11.9% when adjusted for inflation. However, this figure hides two of the most surprising figures I encountered: Since 2008, median wages in the physical sciences have decreased in both Alberta and British Columbia, by 2.5% and 21.4%, respectively.
The changes to the national median wages for the remaining fields examined, from 2007 to 2013 (pre-recession), and 2008 to 2013 (during the recession), adjusted for inflation are as follows:
- Life Sciences: +1.2%, +2.8%
- Technology: -0.5%, -0.4%
- Engineering: +6.3%, +8.8%
- Math: +35.8%, +21.4%
- Medicine: +6.1%, +4.2%
- Dentistry: +6.1%, +4.2%
- Law: +6.8%, +8.1%
Stagnation and decreases in wages since the recession donâ€™t necessarily mean the wages are low. The Canada Job Bank, which uses outdated information, provides a low, median, and high wage point for employment classifications used in the LFS. The â€˜lowâ€™ refers to the 10th percentile, median is the 50th, and â€˜highâ€™ is the 90th.
While not perfect, letâ€™s consider the 10th percentile (a.k.a. low wage, a.k.a. median of the bottom 20%) as an â€œentry levelâ€ wage. Unsurprisingly, these â€œentry-level wages,â€ both at national and provincial levels, are much lower than the wages that get talked about as part of the â€œgolden ticketâ€ narrative.
In 2013, â€œentry levelâ€ wages for these fields ranged from a low of $36,380 in Life Sciences to a high of $58,874 in Math. If someone graduates with above-average student debt, wages in this range can get a person close to qualifying for the Repayment Assistance Programâ€”the program designed by the Canada Student Loans Program to help graduates who have difficulty repaying their loans.
Median wages at the national level ranged from a low of $67,787 in Physical Science, to a high of $115,850 as a Doctor/Dentist. While aligning a little more closely with the public narrative, even the median wages in these fields can come up well short of the â€œadvertisedâ€ promise.
The most notable finding was just how far the top 10% of earners in the fields were from even the median earners. The top 10% of wages in the fields ranged from $113,790 in Life Sciences, to $340,917 in Medicine/Dentistry. While these wage figures are much more in line with the promises being made to young Canadians, they are obviously far from the norm.
When the high wages were compared to the median wages, the level of wage inequality is quite apparent. In Law and Technology, high earners earned approximately 58% more than median earners, and had the lowest level of inequality. At the other end, high earning dentists and doctors earned 194% more than the median.
Not only is the narrative misleading young Canadians into thinking theyâ€™ll walk into top earning wages in their field, it fails to mention that those top wages are far from the reality for the majority of workers in those fields.
STEM as the Canary in the Mine
After reviewing the data, I was left with a question: if these fields are truly the best fields for young Canadians to enter, what does that say about the state of our economy?
In almost all of the fields examined, wage decreases since the recession are visible in at least one provinceâ€”and in one case, the national median has decreased. In almost all cases, this misleading narrative advertises a wage that is only earned by people in the top of the field. In almost all cases, income inequality within the field is significant.
With the increasing costs needed to get the credentials to enter these fieldsâ€”not to mention that some of these fields require graduate degrees to obtain some of the best-paying jobsâ€”and with the growing prevalence of precarious employment, a troubling trend becomes evident.
Based on the data, itâ€™s becoming clear that we may have more than a â€œskills gapâ€ myth to dispel; we may have an â€œeconomic recoveryâ€ myth as well.
- Summer reading! Review of Stanford’s second edition of Economics for Everyone (June 20th, 2016)
- First Nations Education is critical social infrastructure (September 30th, 2015)
- Rethinking Economics Waterloo Conference, Feb 7 (January 22nd, 2015)
- Alex Usher Needs to Consider Taxation (May 20th, 2014)
- Alex Usher is Wrong on Tuition Fees (May 12th, 2014)