For Economic Success, Stay In School

There has been much discussion lately, on both sides of the border and indeed on both sides of the Atlantic, about the disappearance of the middle class. Society, so goes the thesis, is increasingly divided between ultra-wealthy elites and newly impoverished families, exiled from their formerly comfortable lives. George Packer’s book “The Unwinding” takes this subject as its theme and is a worthwhile read. President Obama has recently given a number of major speeches in which he has proclaimed as his goal the reduction of the large inequalities of wealth, income and opportunity in the United States.

Among the most significant factors in economic outcomes in Canada is education. As our children and grandchildren prepare to go back to school, it is worthwhile to look at the data to see the difference education makes. Increasingly, the key to a middle class life style is post-high school education. Those without it, even if skilled in a trade, will have trouble earning a middle class income.

Not surprisingly, higher income leads to higher household wealth, with university graduates having on average, twice the net assets of high school graduates.

As the nature of the economy has changed, so has the kind of work we do in Canada. Manufacturing, construction and basic industries such as forestry, fishing and mining are in decline, while services such as health care and education, technical work and professional trades have grown. Wages for less skilled work have fallen far behind. Not incidentally, being male is still a big factor in earnings. As this chart shows, across all occupations, men make more than women, and jobs requiring more education pay better than those requiring high school education or less.

Not only do the more highly educated make more money, they are less likely to be unemployed.

While education is not the sole determinant of economic success, it is certainly the most important factor. There is no better return on investment than that available from school. Shopping for a university degree is your best use of back to school dollars.