Education for productivity

Stuart Middleton
New Zealand Education Review
Vol. 14 No.29, 31 July 2009, p.16
APN Educational Media (NZ) Ltd.
Wellington

“Thanks a million!” we say when someone deserves our greatest gratitude. Hundred of thousands watch “Who wants to be a millionaire” and when Lotto gets up into the millions, millions flock to the shop to get their ticket.

“Million” has something of a ring to it. So it is little wonder that the firm belief exists that a successful university college education is worth $1 million over a lifetime to those with such qualifications. You perhaps should smell a rat in all this when the figure is constantly $1 million regardless of whether this is referring to the USA or Australia or even New Zealand.

Debate has burst out in the USA this week as this old hardy annual is challenged.

The belief goes like this. Taking a US high school diploma as the base point, a Bachelors degree is worth $0.9m more over a lifetime, a Masters is worth an additional $1.3m while a Doctorate is way out in front with an extra $2.2m. Of course it matters a little in which discipline the qualification is gained – Engineers earn the most while Education majors earn the least (of the group with degree qualifications).

So decisions about which discipline will affect this ability to earn over a lifetime.

Burleson Consulting claims that “everyone who has been to college knows that if you cannot succeed at pre-med or engineering, students fall back into Business Administration or Nursing. If they fail in Business or nursing they pursue liberal arts or social science (i.e. Psychology, Economics), and if they fail all else, students graduate with degrees in Education and Art History.”

Imagine me at this point, sitting at my desk, assessing whether the nib of my fountain pen will pierce the arteries in my wrist – my degrees are in liberal arts and social sciences and predominantly in Education. How did I miss out on Art History?

The debate that has burst out is to challenge the $1 million benefit – clearly a college or university degree makes a difference but different degrees make different differences! It is being argued that the high cost of gaining a degree now is wiping out the advantage of a higher education qualification. But, it is counter-claimed, that is only when the calculations are undertaken in today’s dollar terms. Over a real life time the dollar changes and the advantage is sustained. Back comes the riposte – getting the highest qualifications sometimes takes three or four further years (and they are at a cost not only in tuition fees etc but also in lost income).

But is this a useful argument to have when increasingly financial barriers perhaps lock out so many before they start? Perhaps, but the real benefits of a tertiary qualification cannot be ignored. All the evidence is that the American dream of a college education was founded on a dream of egalitarianism. OK, it didn’t turn out so well for many.

What is the situation in New Zealand? Education Counts, that wonderful Ministry of Education website that is such a store of information has completed a study of the impact of education on income in New Zealand. Some of the findings are interesting.

Education is certainly reflected in the average median weekly wage. No qualifications and school qualifications sit on and just above $300 per week respectively in 2007 income terms. So there is very little difference. A Bachelors degree will bring home $800 on the weekly wage packet, a long way ahead of no qualification and school qualifications. Already the first key point is clear – in terms of income, a post-secondary qualification is critical.

But here is the surprise. Any tertiary qualification other than a degree, that is a certificate or a diploma or some such, will lift weekly earnings to $600 a week!

This is another powerful argument for getting people through school and into a postsecondary qualification without any obsession on making that qualification a degree. There is clear economic gain to the individual in such a qualification. Economic transformation requires increased productivity and economic transformation for the country starts with the economic transformation of the individual through education. The cost to us all of not accepting the prime need to get young people into tertiary, to get those in our community who are unqualified into tertiary, can only be a symptom of a belief in economic degradation.

Some other findings: returns from higher qualifications are greater for Maori largely due to the higher levels of disadvantage within that group – so Maori students are a sounder investment. Maori women are traditionally remunerated at a lower level when compared with non-Maori but that gap closes with higher qualifications until it disappears completely at the postgraduate level.

This trend, the link between educational qualifications and income, is one which is strengthening – so let’s keep the momentum going. Getting out of the recession better than we went into it in terms of productivity would be to see that we increase the trend towards more highly qualified communities. Of course this assumes that those on higher wages are more productive – oops the hornets are stirring.

But certainly we need at this time to be even more determined than ever to increase pathways into or back into postsecondary education and be rightly tough on spending where this is not a clear outcome. So a blunt policy instrument approach to Adult Community Education funding, or a blanket approach to wiping out the Training Incentive Allowance for Level 4 and up, or taking an uncritical approach to tertiary funding caps might in the long run be simply bad economics.

New Zealand needs to be able to point to its education system as one that produces independent citizens rather than dependent people, productive citizens who contribute rather than those who simply take, people of all ages who add value to this blessed country rather than destroy its peace and contaminate its values.

That postsecondary qualification is the marker of such people.

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