“Stay in school!” is the rallying cry of many Canadian parents who see education as the key to improving their children’s standard of living. In fact, more education is generally associated with higher salaries and better working conditions. It is also linked to a wide range of other benefits, including increasing a country’s economic prosperity.
While occupations that typically require a university education may offer higher earnings, attaining a post-secondary education isn’t always easy. It requires a significant investment of both time and money. Students often also have to give up jobs to complete their studies. But most judge these sacrifices to be worthwhile—a sentiment that is supported by recent data showing that workers with university degrees experienced fewer job losses during the COVID-19 pandemic compared to those without degrees.
More than what meets the eye when it comes to education levels
The implication seems clear enough: if education is good, more education must be better. But what if there aren’t enough jobs requiring a university degree?
In the late 1990s, only about one-fifth of jobs were for university-educated workers and the supply and demand for university-educated workers was in balance. But things started to change in the new millennium. Although both the supply and demand for workers with university degrees has increased over the past two decades, the supply has increased at a much faster rate. Today, 34% of workers hold university degrees versus just 18% in 1997. Meanwhile, the share of jobs that typically require a university degrees increased to just 24% in this same period (see Figure 1). Put another way, the gap between supply and demand effectively went from zero to an 10-percentage point difference in just over two decades.
Figure 1: Share of employment among persons with a university degree and in occupations requiring university education, Canada
Note: Throughout the analysis occupations identify as "Management" positions have been excluded. This because these occupations (coded as 0) are not associated with any particular educational requirement. Included management occupations does not change the trends discussed here.
This shift has resulted in an oversupply of university-educated workers. Today, many graduates face a difficult choice: wait for a position that requires a university degree to become available, accept a position that requires less education, or stop searching for a job altogether. Accepting a position that requires less education than you have obtained results in being overqualified. Overqualification is associated with low levels of job satisfaction, which can lead to a higher turnover within workplaces.
An interesting question is: how has the pandemic affected higher-educated workers who are in jobs they are overqualified for?
University-degree holders and the pandemic
The Labour Market Information Council’s (LMIC) previous work has shown that employment losses during the pandemic have been greater in occupations with lower educational requirements. In fact, employment in occupations that require a university degree increased throughout most of 2020. So it stands to reason that university graduates may have fared better during the current pandemic.
But have they done better than their lower-educated counterparts?
We must bear in mind that among occupations that don’t require a university degree—and for which job growth continues to slump—many workers actually hold university degrees.1 Although these overqualified workers fared better than their peers in those same occupations throughout the pandemic, both groups experienced a significant decline in employment from February to April 2020 (see Figure 2). In fact, during this period employment in occupations that do not require a university education fell by 4%. However, the employment losses were greater for those without a university degree (21%) than for overqualified workers in these occupations (16%).
In addition, employment levels for the overqualified individuals had fully recovered to pre-pandemic levels by the end of August 2020, while levels for those without a university degree have yet to recover. This suggests that there are benefits to holding a university degree even if you are overqualified relative to your occupation. That said, the 2020 employment pattern also shows that a worker’s occupation mattered more than their education level in terms of maintaining employment.
Figure 2: Employment levels in 2020 for university degree holders in occupation that do not require them and individuals without university degrees in occupations that do not require them.
Note: Management occupations , denoted as "0", were not included in this analysis
Looking ahead to the future
Life is full of uncertainties—and staying in school is often a good choice if you want to weather them. But pursuing a university degree without considering the opportunities available may not be the best path or solution to job security.
The current lack of jobs that require university degrees has led to a relative oversupply of graduates, many of whom have ended up accepting positions in occupations outside their field or unrelated to their education. Although a university degree might insulate workers somewhat from job loss during times of economic slowdowns, it is no panacea. On the other hand, it is important to remember that a university degree shouldn’t be seen merely as a way to secure the right job. It is also a means to better understand the world around us, with significant value beyond labour market outcomes.
At this uncertain time, the LMIC remains dedicated to providing Canadians with access to quality labour market information. We will continue to analyze data related to the pandemic that you can use to make informed decisions.
1 As of February 2020, for all jobs that required less than a university degree, 19% of employees had a degree and 81% did not.