Culture, Tourism and the Centre for Education Statistics
The High Education / Low Income Paradox: College and University Graduates with Low Earnings, Ontario, 2006
Section 7: Conclusion
This study has examined the highly-educated, low-earnings populations in Ontario and at the Canada level in 2006 – who they are and what they are doing. The initial starting point was the observation that both Canada and Ontario ranked highest compared to a number of Organization for Economic Cooperation and Development (OECD) countries in terms of the percentage of both college and university graduates aged 25 to 64 with non-zero earnings who earned less than half the national median employment earnings in 2006. This finding raised questions about who these low-earning postsecondary-educated individuals are and what factors might explain their low-earnings status.
We note first that, despite this international ranking, overall, college and university graduates in Ontario who are employed are under-represented in the lowest earnings category and over-represented in the two highest earnings categories – an observation that is consistent with the widely held perception that acquiring a postsecondary education still pays a dividend in Canada.
For the total working population, the gender effect emerges as a statistically significant factor. It was weakest when work schedule was accounted for, indicating that more women working part-time helps to explain a part of the gender effect, and strongest when controlling for self-employment status, the effect being smaller in Ontario compared to the Canada level. However, when considering only postsecondary-educated individuals in the working population in Ontario, the gender effect retains its significance when demographic, education and field of study are taken into account, but is no longer significant both in the model that controls for the effect of work schedule and in the final model that takes all factors into account. This is not the case at the Canada level, where females have significantly higher odds of being in the lowest earnings category compared to males in all models.
Similarly, age was not a significant factor in Ontario, whereas at the Canada level, those aged 55 to 59 and aged 60 to 64 in the working population had higher odds ratios than those in the reference group (45 to 49 year-olds) to be in the lowest earnings category. This was also the case for 60 to 64 year-olds in the sub-group of postsecondary graduates in the working population at the Canada level.
Finally, while the effect of being a recent immigrant was significant at both the Ontario and Canada levels among the total working population, the immigrant effect was no longer significant for Ontario or Canada only the postsecondary-educated working population was considered.
Another finding of note is that for the total working population at the Canada level, education level had strong effects — those with high school or less were more likely to fall into low earnings than high school or trade graduates, whereas college graduates were less likely to do so and university graduates even less so. This was not the case in Ontario, however, where the only statistically significant finding was that university graduates had much lower odds of being in the lowest earnings category compared to other workers. The relative advantage of university graduates over college graduates held within the postsecondary working population as well, with the odds ratios for university graduates being much lower compared to college graduates at both the Ontario and Canada levels.
Overall, the key factor explaining why some individuals fell into the lowest earnings category consists of nature of the labour market attachment of these individuals. For all earners, the two most important predictors of earning less than half the national median employment earnings were: working was not their main activity for the year and self-employment status.
For the university-educated population, 42%1 of low earners in Ontario reported an activity other than working as their main activity for the year, though they did report having had some employment earnings. Another 24% were self-employed and 7% were both self-employed and reported an activity other than working as their main activity. Once all self-employed and non-working earners were removed from the university-educated low-earnings population, the remainder was 28%. This represents about 5% of the total university-educated population in Ontario in 2006.
For the college-educated population, 34% of low earners in Ontario reported an activity other than working as their main activity for the year; 30% were self-employed; and 3% were both self-employed and reported an activity other than working as their main activity. This leaves 33% of the low-earnings group, which represents 8% of all college graduates in Ontario being in the lowest earnings category in 2006.
The fact that Ontario (and Canada) rank high compared to other OECD countries in terms of the proportion of postsecondary-educated workers earning less than half the national median employment earnings therefore raises a number of questions. Are postsecondary graduates in Canada who report employment income more likely than workers in other countries to report an activity other than working as their main activity for the year? A useful avenue for future research would be to undertake an international comparison of the characteristics of highly-educated low earners in order to determine the extent to which differences in labour market attachment behaviours contribute to this finding.
The findings reported here also raise questions about the consistency of statistical reporting practices in an international context. Do all countries report in the same way? Do all other countries include self-employed workers in their statistics, for example? Do they all include individuals who report that working was not their main activity for the year? Answers to questions such as these may help place the international standing of Ontario and Canada in a broader light. Certainly, when the focus is only on university and college graduates who reported that working was their main activity for the year, the percentages falling into low income are very much smaller, placing a very different perspective on the situation in Ontario and Canada compared to other countries.
- This percentage (43%) is different from that reported earlier (49%) of low earners who reported that working was not their main activity. This is because the previously reported 49% included those who reported both being self-employed and that working was not their main activity. Thus, 43.3% (not working) + 5.3% (not working and self-employed) gives us the same figure as the previously reported not working percentage (49%).
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