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University degrees cushion recent grads against unemployment

Last month, Statistics Canada released the 2011 National Household Survey (NHS) data on Education and Labour, the most recent dataset of its kind since the 2006 Census. The data illustrate that, following the Great Recession of 2008-09, recent university graduates aged 25 to 34 had a more difficult time finding employment than was the case in 2006. Nevertheless, a university degree appears to have provided a cushion for young people during a time of rising unemployment. While the unemployment rate for recent university grads increased between 2006 (pre-Recession) and 2011 (a year of partial recovery from the Recession), it did so at a lower rate than did the unemployment rate for 25-34 year-olds without a university degree, the youth unemployment rate (15-24 year-olds), and the overall national unemployment rate.

Canada's proportion of adults that have a post-secondary education (i.e. college or university) performs very well among OECD countries. About a quarter of Canadian adults have a college education, and another 25% have a university degree. In 2011, 33% of people aged 25 to 34  held a university degree.

While the unemployment rate of recent university graduates increased between 2006 and 2011, having a university degree appears to have provided a buffer against the negative effects of the Recession. 

Youth unemployment

Still, there was variation in unemployment rate levels and changes among recent university grads during this time, depending on the highest level of university education obtained. Statistics Canada breaks down university education into five levels; in increasing order: (1) Bachelor's degree, (2) University certificate or diploma above bachelor level, (3) Degree in dentistry, veterinary medicine, medicine, or optometry, (4) Master’s degree and (5) PhD. Also, within each category, unemployment rates vary according to discipline, but this will not be addressed here.

Among people aged 25-34 with a bachelor’s degree, the rate of unemployment grew modestly between 2006 (4.9%) and 2011 (5.3%). Unemployment for this group was quite low compared to the national average, and it increased by less than the national average, which grew from 6.6% in 2006 to 7.8% in 2011. It was also low compared to the rate of unemployment of 25-34 year-olds without university degrees, which grew from 7.2% to 8.3%, as well as the youth unemployment rate, which rose from 12.8% to 16.6%. 

Rates of unemployment were slightly lower for recent graduates (25-34) with a bachelor’s degree as compared to those with a University certificate or diploma above the bachelor level.

For recent grads with a degree in dentistry, veterinary medicine, optometry, or medicine, the unemployment rate was low at 4.8% in 2006, and remained basically unchanged in 2011 (4.7%).

The unemployment rate of recent graduates with a Master’s degree increased by very little from 6.4% in 2006 to 6.8% in 2011. The rate of unemployment for this group in 2011 (6.8%) was one percentage point below the national average (7.8%) but, perhaps surprisingly, 1.5 percentage points higher than the unemployment rate of graduates with a bachelor’s degree. 

Finally, the rate of unemployment for 25-34 year-olds with PhD’s was 5.5% in 2011, up from 4.4% in 2006.

University degrees thus continue to provide a significant cushion against unemployment; the unemployment rate in 2011 for recent grads (25-34 year-olds) was notably lower than the overall national rate, the unemployment rate of 25-34 year-olds without university degrees, as well as the youth unemployment rate.

As well, the unemployment rate for young people under 25 with university degrees increased more than for graduates aged 25-34. This may be due in part to a lack of hiring during the Recession, which would be more likely to disadvantage the most recent (disproportionately, younger) university graduates. Also, when there is a Recession, younger workers as well as blue-collar workers are more likely than others to get laid off. Moreover, when jobs do become available, young people are less likely to be hired due to lack of experience.

The relatively modest increase in unemployment rates between 2006 and 2011 among recent university graduates does not necessarily mean that they found the same kind of jobs as this group did before the Recession. Many observers believe that, in a slack job market, employers may use a degree as a screening device even though the job they are filling does not necessarily require a university education. When Statistics Canada releases its 2011 NHS data on income this August, it will be interesting to see whether more recent graduates in 2011 took jobs that were lower-skilled, lower-paid, and/or that might have otherwise gone to non-grads than was the case in 2006.

Jenny Mason is a 3rd year law student at the University of Ottawa. She is an intern at the Broadbent Institute through the University of Ottawa Faculty of Law's Public Interest Fellowship program.

Photo: bobolink. Used under a Creative Commons BY 2.0 licence.