The Return On Investment from a university education


In 2013 there are more students attending universities from coast to coast than ever before in our country’s history. Not only that, but Canada is recognized as having one of the highest rates of postsecondary educated people in the world as a leader in producing graduates at both the university and community college levels.

There’s good reason to support the notion that young Canadians should seek out additional education beyond high school, whenever possible. In the vast majority of cases university graduates enjoy better wages and quicker access to work than their less-educated peers, although the numbers increase or decrease depending on the course of study.  There are only so many philosophy majors who are going to land a position that relates to their selected course of study to which they earned a degree.  Another noticeable trend is many university students with generalist degrees following that up by attending a community college in order to gain practical, hands-on skills needed for consideration in many fields.

Over the past 15 to 20 years, emphasis on postsecondary education has intensified with each passing year. Enrollment expanded in most regions at a record pace, but in recent years there has been no shortage of criticism from the business sector that many of these graduates are ill-prepared to enter the workforce.  Not surprisingly it’s a subject many educators take issue with.

It’s been established and widely acknowledged that university postsecondary education provides a tool for building and sustaining regional development within the micro and macro economy of a region and province.

Since 2007 Dr. Max Blouw has been President and Vice-Chancellor at Wilfrid Laurier University and serves as Chair of the Council of Ontario Universities.  Prior to joining WLU, Dr. Blouw had a distinguished career at the University of Northern British Columbia and many years of teaching at St. Francis Xavier University.  Upon his arrival at Wilfrid Laurier University, Dr. Blouw spearheaded the collaboration of an institution-wide process that ultimately determined the direction the institution would take.  The process created the institutional proposition inspiring  lives of leadership and purpose.  He tackled the topic of return on investment to a post-secondary education in today’s economy during a keynote address at the Toronto Region Board of Trade. While some have suggested that universities should focus more on job training, Dr. Blouw often strongly argues and emphasizes that a university’s primary role is to educate.

A Knowledge Economy

Region building, prosperity and the knowledge economy are what Dr. Blouw focused on during his address and ultimately what higher education brings to the table.

There has been passionate discussion in the media recently about the role universities – and colleges – play in Canadian business and their contributions to the economy through the education of their students.  Some of it has been rather pointed criticism of universities and higher education from a general standpoint. The need to have businesses work more closer with postsecondary institutions was a theme covered by The Canadian Chamber of Commerce and highlighted in the June issue of The Canadian Business Journal, titled “Bridging the Gap Between Education and Enterprise”.

Dr. Blouw believes much of discussion has been around the notion of change; the changes in student needs and then their opportunities to access education and how it’s delivered.  While Dr. Blouw concedes some of the criticism levelled at universities may be valid, he doesn’t believe that is entirely accurate.

“On the bright side, when you’re criticized what it does mean is that you have recognition and validation of the central role you do play in people’s minds,” he says.

It is Dr. Blouw’s contention that universities do in fact fuel prosperity. He says it’s especially true in an era when critical thinking, flexibility and the ability to adapt to change is absolutely crucial. Secondly, he believes that a university degree offers a tremendous return on investment that both individuals and governments can make.  Finally, he notes that universities are innovative and responding to creative changes in technology, student needs and societal needs.

“Prosperity begins with innovation,” Dr. Blouw states. “Innovation begins with fundamental knowledge.  University-generated research helps to improve and save lives and produces new ideas and evidence that informs public policy.”

He went on to note that it also generates humanities research that contributes to the arts and culture that enriches our lives.

Innovators of Research

Dr. Blouw used shared some interesting statistics about university research that were assembled by the Association of Universities and Colleges of Canada. For starters, universities are the second-largest performers of research throughout the country, which is quite unique compared to other countries in that regard.

“The private sector does more than we do, but not by a great deal,” he says. “The universities are also by far the largest performers of fundamental research. In total, we do about $10 billion a year in research activity.”

Between 55 and 60 per cent of that activity is performed using externally awarded funds and the federal government is the single-largest contributor of those funds, providing at least $3 billion annually to university researchers.  The balance of the funds that support research come from provincial and other levels of government, from the private sector and from university resources.

“Universities are also significant generators of economic benefit to the local and regional and even provincial communities that they serve,” Blouw states. “Nationwide, Canadian universities are a $30 billion enterprise. So on top of the $10 billion in research activity there’s much more. We provide stable, well-paying jobs and attract thousands of students who each spend about $6,000 per year in the local economy.”

It’s not going out on a limb to say that municipalities that have universities in their city have a leg up on other communities. Often the success of local enterprise is directly intertwined with the university in that municipality, which educates students within defined specialized areas of expertise.

Drawing upon his own personal career experience, Dr. Blouw mentions how he started his career at St. Francis Xavier University in Antigonish, Nova Scotia – 5,000 people; 5,000 students.

“If the university weren’t there the community would not be 5,000 people,” he says. “In fact, the community might not be there. It’s a university town. That’s a unique, heavy impact. Many other communities have an equally strong dominance of universities within their borders. ”

Dr. Blouw also recalls the early days of the University of Northern British Columbia in a geographic region larger than France with a population of about 300,000. The effect of the school being there has been profound.

“All businesses in the region, and banks in particular, are now staffed by the graduates from the business program of the university who want to live in the northern communities,” he notes.  It’s a similar situation with social workers, environmental tourism and those in the medical profession.

“We can detect the difference before and after the university – it’s really easy to compare,” Dr. Blouw states.

The impact of growth and direct economic impact to municipalities where universities are housed can easily be ascertained through statistical data that shows how they financially benefit the cities and surrounding region.

“A study we conducted found the operating expenditures of Laurier, the other postsecondary institutions, will be about $141 million by 2016,” Dr. Blouw reveals. “That’s very significant direct investment in a community that demanded it. That $141 million is expected to generate at least $236 million of additional indirect spending in those three years.”

There is undoubtedly both a direct and indirect economic impact of having universities within a municipality and the spin-off effect it can have across a larger swath of the greater regional municipality.

“My personal journey confirms that universities have a profound benefit to the communities that surround them as well as the broader regions.”

In an increasingly knowledge-based economy it is the essence of human capital that ultimately distinguishes the successful platforms from those that fail.  Further to that is the requirement for governments and educational providers to collaborate with private enterprise in developing the proper programs to ensure individuals are equipped with the necessary skills and knowledge to carry out the requirements that are demanded from today’s skilled labour market.

“Universities are in the business of providing high-quality human capital,” Dr. Blouw relates. “We have a long and incredibly successful record of doing exactly that.”

Criticisms of Being Over-sold

Nonetheless there’s been a lot of discussion recently about the value of a university degree and the role of universities in preparing graduating students in joining the workforce.

Is a university education being oversold? Perhaps. It really depends on who’s answering the question. There is no disputing the rising costs for tuition and if the student requires accommodation upon moving away from home, that too adds to the enormous tab.  In such cases it’s not uncommon for families to have to fork out between $20,000 and $50,000 to have their child earn a Bachelor of Arts degree. That has led to a number of discussions about the so-called education bubble – much like the infamous housing bubble. Costs to attend universities continue to soar and it’s leaving students asking why they are paying such exorbitant rates when there is no guarantee of a job upon graduation.  Death and taxes still remain the only guarantee in life. But for thousands of young Canadians, finding a way to pay for a postsecondary education is still the better option.  One of the obstacles is that many teenagers are not at the point in their lives when they can envision the specific career they want to pursue.

“I believe that the criticisms we’re hearing have their origins in the expectation by some that there first be a straight line and highly efficient relationship between the education of 17 and 18-year-olds for what their career will be when they are 40 or 50,” Dr. Blouw asserts. “I haven’t experienced that myself and I ask if you have.”

“Secondly, I think the criticisms have their origin in the expectation that a university degree will lead directly and quickly to a great job. I didn’t experience that, and I wonder if you did. Thirdly, the perception is that university doesn’t prepare people well for specific job outcomes. And finally; that universities are not operated professionally or efficiently.”

However, Dr. Blouw also states that his education has served him incredibly well throughout his professional career.

“I believe that except in really highly-specialized professional disciplines universities really shouldn’t think of themselves as being in the business of producing workers who can immediately fit into specific jobs, he declares”

Instead, Dr. Blouw is of the opinion universities need to provide students with a more broad, personal, intellectual development that enables graduates to thrive in a world that is constantly changing where adaptability is a far greater trait than explicit knowledge in one targeted area.  Most people change jobs several times from the time they begin their career until the time they retire.  In other words, it’s far more about human development.

“We focus on the ability of our graduates to communicate clearly and effectively to analyze and confront ambiguity with clear methods and with confidence, Dr. Blouw continues. “These qualities have value in the workplace in my view.”

When a university graduate is recruited the employer has, in their new hire, a good communicator, and adept researcher, problem solver, a questioner, a critical thinker who can advance their employer’s interests. In the past most employers expected to train employees for job-specific tasks.

“I think that has shifted and part of the criticism that we’re hearing is that employers really would like us to make them more efficient by training our students specifically for their workplace,” Dr. Blouw counters. “I can’t blame them – but I don’t think it’s our job.”

To bolster the assertion that university degrees promote a strong return on investment, Statistics Canada recently released a national household survey that shows 67.1 per cent of the highest earners in Canada – those earning at least $191,000 per year – have a university degree. In other words, the association between university education and very high incomes is very strong.  Of those in the top 10 per cent of earners – those making more than $80,000 per year – 50 per cent of them have a university degree.

Between July 2008 and July 2013, 810,000 jobs for university graduates were created. That represents a number three times higher than community college graduates.

“The workplace is demanding, increasingly, a university education,” Dr. Blouw asserts. “A survey of people who graduated university in 2009, and conducted on behalf of our Ministry of Training Colleges & Universities found that six months after graduation the average employment rate for undergraduate degree holders was 88 per cent.  The rate for college graduates is also high but the transition is not as easy for them – it takes longer (to get work).”

It’s hard to argue with the numbers. While a postsecondary education does not guarantee a leg up in ones career, it certainly is the case in many instances.

By Angus Gillespie