The Link Between Post-Secondary Education and Employment Earnings

  • December 09, 2014

By Denise Mullen

Does post-secondary education make a difference? It most definitely does. A recent longitudinal study from Statistics Canada makes this abundantly clear: see- The Cumulative Earnings of Postsecondary Graduates Over 20 Years: Results by Field
of Study
.

The study followed 15,166 college and bachelor’s degree graduates aged 25 to 35 in 1991 for 20 years – spanning the period 1991 to 2010. Data sources include information collected from the former long-form census questionnaire and from T1 Income Tax Returns.

Regardless of type of degree or college diploma obtained, there are significant earnings benefits compared to having only a high school education. For men, the difference over a 20 year time frame was a cumulative boost in employment earnings of 30% to 70% versus a high school education, while for women the figures ranged from 40% at the low end to more than 100% at the high end.

Even clearer is that those who choose STEM fields of study (science, technology, engineering and mathematics) as well as business administration do even better: their potential employment earnings are at least 80% higher for men and up to 155% more for women as compared to high school only. Taken one step further, the difference between a college diploma and a bachelor’s degree gives men a ~30% and women a 50% leg up in employment earnings.

Table 1: MEN
Median cumulative earnings by level of education and field of study
Bachelor's
degree
College
certificate
High
School
HS compared to BAHS compared to CollegeCollege compared to BA
2010 constant dollars
Education $ 1,290,400 $ 996,600 46%13%29%
Fine and Applied Arts $ 843,900 $ 807,200 -4%-9%5%
Humanities $ 1,144,600 $ 827,500 30%-6%38%
Social Sciences $ 1,358,900 $ 1,241,500 54%41%9%
Business Administration $ 1,619,400 $ 1,099,500 84%25%47%
Life Sciences $ 1,334,700 $ 753,500 51%-15%77%
Engineering $ 1,845,000 $ 1,244,200 109%41%48%
Health $ 1,627,600 $ 1,089,700 84%24%49%
Mathematics and Physical Sciences $ 1,607,500 $ 1,128,000 82%28%43%
All fields of study $ 1,517,200 $ 1,137,000 $ 882,30072%29%33%
Sources: Statistics Canada, 1991 Census–Longitudinal Worker File and CANSIM table 326-0021.

Table 2: WOMEN
Median cumulative earnings by level of education and field of study
Bachelor's
degree
College
certificate
High
School
HS compared to BAHS compared to CollegeCollege compared to BA
2010 constant dollars
Education $ 1,044,600 $ 513,500 128%12%103%
Fine and Applied Arts $ 652,100 $ 437,300 42%-5%49%
Humanities $ 808,200 $ 555,900 76%21%45%
Social Sciences $ 824,300 $ 563,800 80%23%46%
Business Administration $ 1,169,100 $ 625,100 155%36%87%
Life Sciences $ 844,900 $ 502,300 84%9%68%
Engineering $ 972,600 $ 718,800 112%57%35%
Health $ 1,094,000 $ 812,800 138%77%35%
Mathematics and Physical Sciences $ 1,148,700 $ 793,800 150%73%45%
All fields of study $ 972,500 $ 643,200 $ 458,900112%40%51%
Sources: Statistics Canada, 1991 Census–Longitudinal Worker File and CANSIM table 326-0021.

While both genders benefitted from completing a post-secondary program of study between 1991 and 2010, women did better. However, a sizable gap remains between men and women in overall pay although it appears to be narrowing over time. In 1991 the compensation gap between men and women with bachelor’s degrees, regardless of profession or occupation, was 49%, based on median annual earnings. Engineering is the main exception. By 2010 that difference had narrowed to 37%. For those with college credentials, the gaps were bigger, with men making 80% more than women in 1991 and 61% more in 2010, again based on median annual earnings.

The link between education and income is well established in the academic and policy literature, and it receives further support from the new Statistics Canada analysis. This same picture emerges in a recent report from The Research Universities’ Council of British Columbia, which tracked the job market performance of university graduates who completed their programs in 2008. Men and women are both earning more as a result of investing in post-secondary education. But it is noteworthy that women continue to lag men in overall earnings despite having similar post-secondary qualifications. This likely reflects a number of factors, including male-female differences in hours of work, consistency of employment, specific occupation, industry, and access to employment networks.

Table 3: EARNINGS GAP BETWEEN MEN AND WOMEN
Median annual earnings by sex, field of study, 1991 and 2010
Gap between Men and Women: BAGap between Men and Women: College
1991201019912010
Education30%12%76%74%
Fine and Applied Arts8%23%160%60%
Humanities30%38%54%28%
Social Sciences60%44%173%104%
Business Administration27%30%75%56%
Life Sciences54%32%41%52%
Engineering23%87%71%60%
Health44%31%54%22%
Mathematics and Physical Sciences32%34%41%39%
All fields of study49%37%80%61%
Sources: Statistics Canada, 1991 Census–Longitudinal Worker File and CANSIM table 326-0021.

There is an important caveat to the Statistics Canada study: it does not consider the impact and contributions of vocational, technical and trades training programs offered by some post-secondary institutions (colleges and technical institutions). Currently, there are shortages of qualified candidates in some trades and technical occupations across the country, and many forecasters believe the problem is about to get worse. British Columbia is putting greater emphasis on expanding trades and technical training programs, which are a viable and attractive option for some young adults considering their educational and career options following high school. But the opportunities that exist in trades and technical occupations do not negate the fact that university and college credentials are valued highly in the contemporary labour market.