At the start of the year, the class of 2020 was expecting to graduate from college or university into a healthy labour market. Instead, the pandemic has reshaped the economy — and the career trajectories of new grads — virtually overnight. What does this mean for grads entering the labour market, and how can governments ensure they are supported?
Graduates who begin their careers during times of economic downturn experience long-term economic repercussions. A large study of Canadian college graduates revealed that graduating during a recession leads workers to take different employment paths than they would have otherwise, accepting lower paying roles, or doing work not directly related to their training and aptitude because those are the available jobs. Skills, professional networks and enthusiasm can wane or atrophy if not used during a worker’s early years in the labour market. Research has shown that graduating into an economic recession leads to large initial losses in earnings and lower wages, and less optimal career paths can impact these workers for a lifetime. These losses can be overcome — eventually — but the long-term economic effects are exacerbated by socioeconomic factors or the inability to be mobile in order to take advantage of labour market opportunities.
U.S. workers entering the workforce during the 2008 recession were among the hardest hit economically. For Canadian workers, wages grew more slowly than usual during these workers’ first decade of employment and they were less likely to be in management positions by the time they reached their early thirties than peers who entered the labour market before the recession.
Earning potential isn’t the only negative consequence of graduating during a recession, which can also have long-term consequences on a worker’s emotional and physical well-being. A U.S. study revealed that recession graduates are more likely to divorce, less likely to live with their children and have higher death rates even decades down the road.
This sounds pretty bleak, but the data shows that these workers were right to attend postsecondary education in the first place. Postsecondary grads fare much better in a depressed labour market than those without a college or university credential. For PSE grads, the economic impacts of the Great Recession were shorter and the long-term outcomes more positive than for those without the credential.
Graduating from college or university in 2020 may be bad luck, but it should not be a long-term punishment.
The research may suggest that 2020 grads will find it difficult to get started in their careers, but the fact is that they are not entering the labour market in a policy vacuum. There are things we can and should do to help insulate new grads from the negative impacts of a pandemic-fueled recession. Governments can embrace policy solutions ranging from student loan forgiveness to making money available to allow employers to hire new grads and maintain internships. Don Drummond, the Stauffer-Dunning Fellow in Global Public Policy at Queen’s University, has proposed making grads whose job offer has disappeared eligible for the Canada Emergency Response Benefit.
We can shore up the economy in ways that are creative and targeted to the sectors and workers that are hardest hit. We can commit to looking at this cohort differently in the coming years, providing ongoing assistance and funding for skill development and training, and support to help workers relocate to access opportunities. We could implement pandemic-related, job-loss career coaching.
One goal of the postsecondary education sector is to provide students with the high-quality education and training our economy and society need to stay strong. One of the ways we measure the system’s ability to achieve this goal is by evaluating the postgraduate career outcomes of its graduates, including labour market performance. This approach makes sense; students pursue higher education in large part to access employment and it is important that the system be accountable. Nevertheless, the COVID-19 pandemic is unprecedented and this may well be a different kind of recession. For this reason, it is more important than ever that we assess graduates’ career outcomes in the context of the overall labour market, and look to lessons from the past to guide the development of policy that can help this cohort be successful. Graduating from college or university in 2020 may be bad luck, but it should not be a long-term punishment. There are lots of ways that governments can and should support new grads during this unprecedented time and into the future. We should do this because it is the right thing, and because it will benefit all of us in the long run.
Amy Kaufman is Director of Policy, Research and System Improvement at the Higher Education Quality Council of Ontario.