TORONTO -- Students may not get the value they should out of increasingly more expensive university degrees if they don't specialize on fields in high demand, according to a new report.
The report by CIBC World Markets says while completing a post-secondary education is still the best route to a well-paying, quality job, the premium is dropping as too few students are graduating from programs that lead to good jobs.
"Narrowing employment and earning premiums for higher education mean that, on average, Canada is experiencing an excess supply of post-secondary graduates," said CIBC economist Benjamin Tal.
"And despite the overwhelming evidence that one's field of study is the most important factor determining labour-market outcomes, today's students have not gravitated to more financially advantageous fields in a way that reflects the changing reality of the labour market."
Tal says students will get the biggest bang for their educational buck from specialized and professional fields such as medicine and law.
The fields of humanities and social sciences, on the other hand, carry much greater risk, while students in health or business face a more limited risk of ending up with lower incomes.
Yet the study found just under half of recent graduates fall under the sectors deemed "underperforming" -- even though they know they'd earn more with a medical or law degree.
"Canadian students are continuing to pursue fields where upon graduation, they aren't getting a relative edge in terms of income prospects," said Tal, who co-authored the report.
The unemployment rate among university graduates, he added, is just 1.7 percentage points lower than among those with only high school education, a gap that was much larger in the 1990s.
Jessica McCormick, chairwoman for the Canadian Federation of Students, said some students are discouraged by how difficult it can be to find a job in their chosen field upon graduation, especially with the added stress of having to make student loan payments.
But she also argues it's important to have people with a variety of training, because areas that are in high demand right now may not be 10 years down the road. "If students were all studying in a particular field, that would obviously saturate those fields of study and return on investment would decline because there would be more competition for jobs," McCormick said.
Overall, higher education still translates into better wages -- those with a bachelor's degree, on average, earn more than 30 per cent more than high school graduates, while master's or PhD graduates have a 45 per cent earnings premium over those with secondary degrees.
-- The Canadian Press