You and your college degree!

We have all heard that old anecdote of the janitor vs. the doctor where one can argue that someone might be better off skipping college/university all together and just settle for a career that does not include a degree as a prerequisite. In that example the data is simple and out of line with the real world amongst many other assumptions.. of course it also helps that the janitor has a significantly lower cost of living than the doctor.

But lets take a look at some real world examples, there are numerous careers and jobs that can be obtained with nothing more than a high school diploma and a little bit of ambition. In Canada most construction jobs, sales jobs, insurance agents, real estate brokers and mortgage brokers don’t require anything else besides passing Grade 12 and a few months at a local community college. Check out this quick list of such jobs here.

A quick look at the non-degree jobs in the Adzuna Survey show an average annual salary of $52000, not bad compared to the average 2013 Canadian Salary of $47200/year. Many of those jobs however still require other forms of informal education in that they are not just “walk in entry level” type jobs.

Now lets consider entry level jobs, minimal training required such the service industry and manufacturing industry. In BC an average annual salary in the service industry yields $21300, in industry/manufacturing I’ve calculated a conservative average including administrative positions $49500/year.

So.. we have a bit of data (I admit not entirely complete) that we can use to calculate some ball park averages on what kind of income if available to people without any form of post secondary degree. The sum of $52000+$21300+$49500 / 3 gives us an overall average of $41000. This is below the national average but well above the BC low income poverty line for an individual of $23300.

We will now compare our calculated non-degree salary of $41000 against a college degree. Again, for the sake of simplifying this post I am trying to consolidate as much data as possible while also being quite conservative with the figures..

The average 4 year college degree in Canada inclusive solely of tuition and books costs $6800. This does not include food and housing as you would be paying for this regardless if you were in school or not.. I have also not factored in a beer budget. Those 4 years of school will cost $27200. I will now offset this by 3 months of summer work that most students would expect to use to help finance tuition, books & beer. $10.25/hour * 40/week * 12 weeks gives us $4920. Multiply by 3 summers gives us $14760. So now tuition & books *should* net a $12440 bill at the end of those 4 years again only considering tuition & books..

Alright.. next step, lets factor in food and housing to both sides – simple Canadian average rent & food ( $500 / month rent & $300 / month food ) this is $9600 / year or $38400 for the 4 years in school.

Ok, so our newly graduated student 4 years later has now invested $38400 plus $12440 for a grand total of $50840 for their degree.

During those 4 years the non-degree individual grossed $125600. The new graduate at this point is now $176440 behind their buddy that skipped college.

Ok.. so this story of the janitor vs. the doctor at this point now seems to have a little bit of merit doesn’t it? Let’s see how things unfold…

The normal retirement age these days in Canada is 65. That gives a college graduate approximately 40 years worth of employment. The range of college/university degrees vary widely and we won’t really get into that here.. but as an average a degree holder can expect to earn $61000 / year (unadjusted for future inflation) from beginning to retirement. That means that the degree holder would make $2440000 over the course of their working life. The non degree earner according the calculations presented here would make $1640000.

The students career income adjusted for the initial $176440 behind the non-degree earner would equal $2263560. This works out to over half a million dollars ahead of the non-degree earner!!

We have not even considered the extra benefits, pensions etc.. that degree holders have access to. In fact, from a purely Return On Investment (ROI) point of view almost all Canadian college and university degrees have a 4%-15% ROI. The example I have presented here worked out to 10.1%

To be fair, there is another side to this story with the hundreds of thousands of college and university degree graduates who cannot find work in their field of study and are either unemployed or underemployed… I’ll look at that in the near future.

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One thought on “You and your college degree!

  1. Pingback: Changes vs. Status quo | My Mind

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