Oil boom narrows high school to university wage gap

Have you heard about that guy from your high school who you thought would end up in fast food but instead moved to Fort McMurray, Alta. and now makes big bucks?

How about that girl who earned her bachelor’s degree in biology but ended up working at a coffee shop because she couldn’t find any work in her field?

If you’re a student (or a parent of one), you might reconsider the value of bachelor’s degrees whenever you hear anecdotes like those, but it turns out there’s more to the story and it’s illustrated in a revealing new analysis from Statistics Canada.

The study confirms that while the oil boom of the 2000s really did benefit high school graduates in terms of wages, young Canadians with bachelor’s degrees are still way out in front in terms of average hourly pay and are more likely to be working.

The paper from Marc Frenette and René Morissette notes that from the period 2000-2002 to the period 2010-2012, average real weekly wages were virtually unchanged for male bachelor’s degree holders aged 20 to 34 with full-time jobs and up five per cent for their female counterparts while those with only high school diplomas made big gains, up nine per cent for men and 11 per cent for women.

Here’s what the change in average hourly wages looked like nationally:

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Another way to look at it: for every $1 a male degree holder earned between 2010 and 2012, a high school grad earned 75 cents, up from 68 cents a decade earlier. For female high school graduates, the ratio went from 74 to 78 cents on the dollar.

This narrowing of the wage gap followed two decades where it was growing, which may help explain why it feels like university graduates are losing ground.

But keep in mind that high school graduates are still less likely to find themselves employed at all. Among Canadians aged 25 to 29 in 2012, the unemployment rates were 8.8 per cent for high school grads and 5.8 per cent for university grads.

The researchers’ goal was to see how much certain variables—including oil prices, the housing construction boom and the increasing supply of bachelor’s graduates—effected the wage gap. While they determined that the price of oil was a factor for both men and women (especially in oil-rich Newfoundland, Saskatchewan and Alberta) there were some gender-specific factors too. For example, the narrowing gap for men may have been partly due to increasing rates of unionization, which tend to help high school grads more than university grads. Meanwhile women, but not men, appear to have been impacted by the increased supply of bachelor’s degrees over that decade, which presumably hurt university grads’ wages, and increases in the minimum wage, which presumably gave a bigger boost to those with only high school.

The study’s authors point to previous research that shows “parents and their high-school-aged children generally undervalue the returns to post-secondary education.” Now it’s a bit clearer why that might be happening.