You had your best-laid plans and then COVID-19 came along and hammered the entire economy. But you’ve got this – if you have the right information. Join Rob Carrick and Roma Luciw on Stress Test, a podcast guiding you through one of the biggest challenges your finances will ever face.
ROB: A post-secondary degree is commonly seen as the best way to get ahead. You go to school, ideally study more than your party, and then land a good job. The clear-cut path to financial success.
ROMA: But the cost of an education is rising and it’s rising faster than the salary you can earn with a degree. As the math changes, it’s time to consider how best to use your time and money.
ROB: Welcome to Stress Test, a personal finance podcast for Millennials and Gen Z. By Rob Carrick, personal finance columnist at The Globe and Mail.
ROMA: And I’m Roma Luciw, personal finance editor at the Globe. To start, let’s be clear, university grads still earn more than people without a bachelor’s degree. They earn 53% more than high school grads, but that gap used to be even wider. About 20 years ago, it was about 10% more than that.
ROB: The premium still remains substantial. Think tens of thousands of dollars per year, but it’s shrinking. Roma, what should someone be thinking about as they plan their post-high school path?
ROMA: Well, I think the days of ‘I’ll pick a subject I like, but without a clear idea of where that will lead’ are over. The reality is that there are more people out there than ever with degrees. So that’s not enough to make you stand out. You know, I had a columnist recently write a piece for me saying that when she’s hiring, she looks just as much at experience as she does at the education. Rob, why don’t we backtrack a bit and why don’t you fill us in on the changing landscape for students, the rising costs and what you see in the future when it comes to that?
ROB: One thing we have to note is there’s the overall cost of tuition, but it averages in undergrad degrees and professional degrees. Professional agrees have gone up a lot more. They are very substantial. An undergrad engineering degree or a commerce degree is quite expensive compared to an undergrad humanities degree. And then there’s the cost of going away to school, which a lot of people put a lot of value in. Rising rents have inflated the cost of living in another city if you’re not in residence quite substantially. So the input costs of a post-secondary education have gone through the roof.
ROMA: I mean, I guess the one thing I would think about is that at least for me, school was about more than a degree. It’s a, you know, period of time to learn and grow and become independent as a human being. But it’s tougher than ever out there. And I think you have to really think hard about what you want to do with your education.
ROB: You know, I think there’s a lot of responsibility on young people today to not only pick what will interest them in a post-secondary education, but also what fits in the workforce. Where are the jobs? Where are the employers who want them to work for them? And I think there’s a lot of responsibility on schools and guidance departments to help students get that right. It’s an economic decision now.
ROMA: After the break, we’ll hear from a young woman who has a bachelor’s degree. When she graduated, she applied to 100 jobs and didn’t get a single interview.
JUDI: My name is Judi. I’m 22 years old and I live in Toronto.
ROB: Judi has a bachelor’s degree in psychology with a minor in criminology from Toronto Metropolitan University. She graduated from the four-year program last spring.
JUDI: I always had an interest in psych, I would say, from maybe ninth grade or so. I just found myself drawn to it. I found it very interesting to learn about how the human brain works, why we do things the way we do. I think I had psychiatry as my end goal maybe when I was still in high school. But I think after I started the program and continued through it, I kind of became unsure about what I wanted to do in psych and I still am unsure.
ROB: She paid for school and living expenses with help from her family. She also worked at a minimum wage job to cover costs. When she graduated, she started her job search right away.
JUDI: It was very difficult, and I already expected that because I was trying to find just like a regular minimum wage job while I was in uni. And that was very difficult for something that I did not ask for experience and did not need experience. I applied for many internships at like business corporations, I guess. I applied to some psych internships, but at the end of the day, I needed like a paying job. I couldn’t afford to just be an unpaid intern. I also just applied to regular retail stores, restaurants, but I wasn’t even hearing anything back from them, so I knew it was going to be very, very tough to learn something.
ROB: She wasn’t picky about where she worked, but she had no luck. JUDI: I want to say like a hundred jobs at least. I did not get a single interview. I got two callbacks, but I never got a proper interview. They were just asking a few questions.
ROB: Judy doesn’t feel like her degree gave her the tools she needed to enter the job market. Especially since most of the jobs she thought she qualified for required 3 to 5 years of experience.
JUDI: I feel like I was just learning theory, learning how to do like research stats, which I feel like is useful. But I didn’t really see that helping with me, just finding my first entry-level job. It’s very frustrating because like, no one can just get 3 to 5 years of experience straight out of university, obviously. Like, I think a few months is the most you can have and that is the most I had, like I just had six months of experience, maybe at like a psych internship place.
ROB: She finally found a job the way many people do, through someone they know.
JUDI: My mom actually knew this guy and she just asked him like, ‘Hey, are you looking for someone?’ And he was like, ‘I am’. So I went in for an interview and yeah, thankfully, that worked out and I’m now working there.
ROB: Judy considered going back to school when she couldn’t find a job. She wasn’t ready to commit to a master’s program, so she looked into a college certificate that would have cost about $10,000 between tuition and living expenses.
JUDI: I looked at George Brown College because I heard from a friend that she found that useful. And I was going to do a behavioural science program because it had a co-op. But honestly, I think the co-op was the only thing drawing me towards that program just so I could get some experience and then find a job. And when it came down to it, I didn’t end up pursuing it, obviously.
ROB: Most of Judy’s friends with an undergraduate degree are in the same situation. She doesn’t regret her education and is optimistic she’ll figure it all out eventually.
JUDI: I do think my education was worth it. I don’t think education is never not worth it. I just think I got this far so surely everything has to work out in a few years.
ROB: Next, we’ll hear from an engineer who had to wait years to see the benefits of his master’s degree.SAMI: Hi, everyone. My name is Sami. I’m 29 years old and I live in Toronto.
ROB: Sami works as an implementation specialist for financial institutions. He has a four-year mechanical engineering degree from the University of Toronto. When Sami graduated in 2016, he started to hunt for a job.
SAMI: So back then, I had just completed my courses. I had my Bachelor of Applied Sciences and Mechanical Engineering in my hand, and I started applying everywhere I could. Everyone does that, right? Throughout that time, I applied to numerous engineering jobs. Feedback from prospective employers was mild.
ROB: Despite having a sought-after degree from a top school, Sami says the job opportunities initially weren’t there. He acknowledges that part of this may have been that he was overly focused on the academic side of the degree and didn’t take advantage of some of the resources the school offered to prepare new grads for the job market.
SAMI: I think it would be unfair not to mention that the university offers what they call PEY. I believe it’s a Paid Experience Year and typically is a placement between your third and fourth year as an engineer, where you get to go out into the real world to apply what you’ve learned, to learn a lot more than we’ve learned in class. So we did have the opportunity to go for something like that, but it just didn’t work out for me. I was heavily into the academic world. I was really enjoying the amount of learning that I was doing. And looking back, I recognize I was definitely in a comfort zone. The practical placements are a really good bridge to the real world or to what life looks like after graduation. I know for a fact that many of the students who ended up doing that practical year with an external employer ended up going back to that employer as soon as they graduated. They had already proven themselves. They had already built the healthy professional relationships they needed, and it was kind of like a shoe in for them.
ROB: Rather than taking any job he wasn’t interested in just to get his foot in the door, Sami opted to head back to school for an additional two years.
SAMI: I personally felt like there was a bit more that I wanted to do that I wasn’t fully done with the university yet. I looked at my options for further education and I was really drawn to the Master of Engineering program at my faculty at the University of Toronto.
ROB: While doing his graduate work, he relied on merit, scholarships and family support. He figured his master’s degree would make him a stronger candidate.SAMI: I think it’s fair to say that having a graduate degree definitely makes your resume look better or makes your profile look better, makes you perhaps a more suitable candidate for many jobs. But in my experience, going for graduate studies right after my undergraduate studies did not enhance my job prospects at that time. Employers generally still look at you as a fresh graduate, and from their perspective, you have no life experience. They don’t care how many years you went to school. I mean, a lot of the people I was messaging with were not as educated as I was. They did not know what I was talking about. So at that time, I did not feel like that graduate degree helped me. I was asking myself, why did I do this? I feel like I’m in the same spot I was in two years ago. Yeah, the prospects are basically almost the same. Maybe just a small improvement, but not something that was life-changing, unfortunately, at that point.
ROB: Sami struggled to find a job in downtown Toronto. He had to expand his search.
SAMI: But I decided to move to a small city in southwestern Ontario for a couple of years so I could get a head start on my career. I ended up getting a good job. The employer was not interested in my graduate studies. They made it clear that to them I could have PhD, but if I don’t have what they call real-life work experience, they’re just not going to look at it. A few jobs later, I felt like my master’s degree was being seen as what it actually is, something that is truly valuable. But I think I had to accumulate a lot of on-the-job experience for my master’s degree to glow like that on my resume.
ROB: In other words, his education was worth it, but not right away. He had to wait years to see the rewards.
SAMI: Had I not gone to grad school right after my undergraduate degree, I would have probably started with, you know, like 10% less in terms of compensation at the beginning. I do think that my graduate degree helped me be considered to higher-paying jobs. In fact, the last time I switched jobs, I wasn’t actually looking for a job. A recruiter looked me up or something like that. They found me on LinkedIn. They really liked what I had on my profile, so they reached out to me and the rest is history. I don’t think that part of my journey would have been this smooth had it not been for my master’s degree. It was a differentiating factor, but it took five full years to get to it being at my differentiating factor.
ROB: A graduate degree may not be a showstopper on a resume, but Sami would advise people to go for the extra studies instead of working at a dead-end job.SAMI: Just from my experience, if you were offered a job with a bad compensation package and you don’t see that you’re progressing or learning anything through that experience, I think there’s nothing wrong with thinking of your graduate studies as a stopgap. It’s a lot better than sitting on your butt and not doing anything for sure. But when faced with the prospects of going into a job you are not excited about ‚a job that’s not even enough to pay the bills, a job that’s probably going to cause you a lot of stress while not being able to pay for things like therapy or going to the gym or eating healthy, if you have the capability, to get into your graduate program and learn something you’re passionate about, I think that’s much more productive in all aspects. That’s much more productive than going into a job that you couldn’t care less about.
ROB: After the break, we’ll speak with a recruiter about how much employers value higher education and how tough it is for new grads these days.
ROMA: Jermaine L. Murray is the founder of JupiterHR, a career agency based in Toronto. Jermaine, so happy to have you on the pod. Can’t wait to dig into this topic.
JERMAINE: Thanks for having me. I’m super excited.
ROMA: Awesome. So I’m going to start off by asking you the big question. Do employers still care about university or college degrees?
JERMAINE: Yes and no, in a sense. And I know that kind of sounds like a copout, but I think it comes down to the specific role and the culture of the organization. One thing that has always been consistent is that people value actual, tangible experience. In some cases, two years ago, you might not have needed a degree to get a job as a software developer, right? If you had a tangible experience, if you had the projects, if you were just really good at coding, even if you were self-taught, you had a really good shot at getting a job. Now, because so many other people have flooded the market, whether it’s because of layoffs or just that time of the year, you have more employers that are upping what they’re looking for and asking for for their roles or for their hiring. And sometimes, that means pursuing people with more degrees, especially because they feel like they may be able to get more bang for their buck. But the reality from the candidate experience is like more hoops to have to jump through in order to get an opportunity that is most likely going to give you a below-market value because they can.
ROMA: I’ve been hearing that the job market right now is pretty brutal for Gen Z. One career coach was telling me that it’s not uncommon for recent grads to job hunt for many months, up to a year. Is that what you’re seeing?JERMAINE: Yeah. Yeah. I always tell people that the hardest point in your career to get a job is always going to be at the start when you’re fresh out of school. How difficult that turns out to be usually comes down to like what the economy looks like, so to speak. But right now, it is absolutely brutal. And I think part of it is because the talent pool is flooded but employers are incentivized to pay as little as possible to get as much as they want. And then you have senior people that are willing to take lower positions that they may be overqualified for at lower pay just to have something. And that has like a ripple effect. So now you have the intermediate people going for entry-level roles and the entry-level role people getting pushed out entirely. I make the the unfortunate joke that it’s literally like The Hunger Games right now in trying to get something and the earlier you are in your career, the more precarious the situation.
ROMA: Okay, if we can have a look at what’s happening in the lives of students. Tuition costs are rising and the big cost of a college or university degree for those who are leaving home is, of course, high rent and soaring living costs. But basically, a degree has never been more expensive. What are some of the factors to consider when deciding whether to pay for a college or university degree, whether it’s worth it?
JERMAINE: I think one of the main things that you have to look at is how long it would take for you to get the return on your investment. I think everyone has different backgrounds and different like safety nets, for example. But one thing that I kind of wish, even when I was going back to school, and I don’t want to age myself, you know, back in the early 2000s when I was making this decision, I remember that I actually wanted to go to university for theatre. And my parents took me aside. And, you know, they’re immigrants. They’re Jamaican immigrants. So, like already not being one of the big three doctor, lawyer or scientists, they’re like, ‘we’re not paying for you to go to theatre school. You know, I don’t care if you see yourself as Denzel.’ And so, like, they kind of push me to go towards broadcast and journalism. And part of that was because they believed that there was a higher chance for me to get a salary either two, three, five years into that career that would make it beneficial to pay off for, you know, how much they invested for my tuition. And I think that has to, as cold as it sounds, I think you have to take that kind of approach when it comes to your degree and getting the ROI on it, right? Like is it A, is the job market going to be viable? B, if you do get a job, how long is it going to take for you to hit certain goals? And, you know, if you’re living in a high cost of living area like, say, Toronto or Vancouver or one that’s rising like, say, Edmonton or Montreal, there are certain like life milestones that you also want to make sure that you can hit, like living on your own, for example. If ideally, you got a job straight out of school, how long would it take you to hit that milestone? And those are kind of things that you have to consider when choosing your line of work. ROMA: Okay, So what are some of the degrees or programs that you see leading to the best paying jobs these days?
JERMAINE: So I think the traditional ones like finance. I would say computer science is still a really good one, especially if you are somebody that’s really good with math, looking at analytics or looking at statistics or looking at mathematical-based degrees are really good option. Cybersecurity having its own distinction at this point. And I wouldn’t be surprised if AI or something along the lines of business transformations becomes more prevalent as we start going on towards this path.
ROMA: Jermaine, what are the job prospects for someone getting a general bachelor degree? Is that still worth it?
JERMAINE: If someone were to say to me, ‘Hey, I’m just going to go, just to get the degree for the sake of getting a degree.’ I would tell them not to do that. I would tell them to sit back and think about what it is that they really want to do because the job prospects of somebody just going for a degree for the sake of a degree is pretty low. If somebody is intentional about like what industry they want to go into, they can very well position themselves, develop the right appropriate skills, the right contacts, the right network, so that they can maximize their chances to go into that liberal arts degree. If somebody just got a math degree because they know that math degrees pay well, but like they weren’t really intentional about it, unless that they were like a superstar prodigy student that had like 90s across the board easily, chances are they’re going to be middle of the pack and they’re going to be a bit aimless and they’re not going to be focusing on one of those things that are going to lead you to a job which is either developing your skill set, developing your network or developing unique work experiences. So that’s where like the intentionality comes into play because the more intentional you are, the more strategic you are and the more likely you’re able to maximize that ROI.
ROMA: Now, I do want to ask you one question about something other than undergrad degrees. You know, we’ve mentioned that the job market is tough. Maybe for some people that are struggling in the workplace for a number of years there maybe, you know, looking at getting further education or certificates or other things. Is that investment worth it?
JERMAINE: I think it comes down to the specific advanced degree. I know a lot of people, and this might be a little bit controversial, so, you know, please don’t shoot up my inbox with what you hate mail, but for example, the conversation on MBAs. I know a lot of people that decided they want to get an MBA because they think that MBAs are an automatic ticket to a six-figure job. And in my opinion, the real benefit of an MBA is the ability to be in a room or be in a class of people that are already in positions of influence or are already at companies that you want to work with and be able to network with them. Right. But if you don’t use the MBA as that kind of opportunity, very rarely is it going to automatically translate into you getting that six-figure job. And that is time and money that’s sunk in there. On the flip side, if somebody wants to be like, say, a data scientist, for example, where you have to work with advanced algorithms, getting a master’s in advanced analytics or advanced statistics, I feel like would be beneficial because it’s hard to find that kind of project or structure on your own and in a challenging enough environment where you have peers to kind of bounce off of.
ROMA: How important, or is it even important, where you went to school or what your GPA is?
JERMAINE: I would say that it depends on the market to be real with you. Now, obviously, the closer you are to graduating, the more weight that kind of information is going to have, especially if you’re light on internships or practical work experience. But I was actually just talking to a friend the other day who has worked as a software engineer at Google, Meta, Amazon and Click Therapeutics. Eight years in his career, and an interviewer asked for his transcript for his GPA. It was crazy because I was like, I don’t even know where to find that. And that’s why I said it’s kind of based on the market because again, in a normal market where, you know, there’s positive job growth, the economy’s booming, it matters less and less unless you’re like 1 or 2 years out of school. Or if, for example, you’re going to like a very traditional organization that, you know, has it built into their cores that they want a particular kind of person. A lot of startups that I’ve been working with, they won’t take candidates that even they have good GPAs unless they come from a top software school. So that is still a thing in this economy. In this market, though, it is not uncommon for like an eight, ten year vet to get asked that GPA question because I guess from like the point of view of the interviewer, they may have two really close candidates and they’re just trying to find like something that will give someone the edge over the other. So it’s an easy decision for them to make.
ROMA: I hate the thought of my boys having to eventually pick between studying something that really interests them and picking a degree because they think it’s something that’s going to pay them enough to give them the life that they’ll need. And yet, on the flip side, I would hate to see them study something and then graduate with a degree that leaves them frustrated and not being able to have the life that they want. What kind of advice do you have for anyone who’s listening to this podcast who is struggling with that decision?
JERMAINE: I would say that because of the costs and because of the time sink, I would say that you should be looking at your degree as a business decision and run the numbers, so to speak, because we live in a world where you can still pursue what you love and do what you love without it being confined or gate kept by an educational institution. I’m a huge history fan. I always say to myself, you know, one of my goals is to get wealthy enough so I could go back to school and take a history class because I just want to talk like Roman history with people, Egyptian mythology, like all of that.
ROMA: That’s my undergrad.
JERMAINE: I have to get on a separate podcast with you. But, you know, I’m saying that I would love to do that. But like I was also aware of like the limited opportunities that that would allow me to live like a fulfilling life. And a lot of times making the business decision with the degrees allows you to fund those dreams and those ventures. So I would say the cost has to come from somewhere, either in terms of bandwidth and energy or time and money, right? So at the very least, make it a bit easier on yourself to be a bit more pragmatic in that sense. But just because you’re not going after it in one route doesn’t mean all the other routes are totally locked off from you.
ROB: Higher education will still help you earn more money over your lifetime. But since that premium is shrinking, we’d encourage you to at least consider money when you’re thinking about what to study. Roma, what are your takeaways?
ROMA:
1. When it comes to finding a job, a degree might not be the slam dunk it once was, but it’s still extremely valuable, especially for those just starting out.
2. What you study matters and at a time when the cost of school is rising, you need to do your research and be realistic about what your degree will get you.
3. College and trade diplomas are also in demand and can lead to good wages. It’s something to consider.
ROB: Thank you for listening to Stress Test. This show was produced by Kyle Fulton, Emily Jackson and Zahra Khozema. Our executive producer is Kiran Rana. Thank you to Sami, Judi and Jermaine for joining us.
ROMA: You can find Stress Test wherever you listen to podcasts. If you like this episode, please share it with any friends you have considering their post-secondary options.
ROB: Next week on Stress Test: solo buyers are the fastest-growing home-owning cohort in Canada. We’ll look at how singles make it work in such an expensive and competitive housing market.
ROMA: Until then, find us at The Globe and Mail dot com. Thanks for listening.