The Lure of Short-Term Thinking

March 23, 2007

Alex Usher, Vice-President, Educational Policy Institute

Education is a tough file for any government to love. Being a labour-intensive industry, costs are always rising faster than inflation (and if they aren’t there will be hell to pay with the unions). Improvements are slow and inconsistent. And it takes forever for people to benefit, meaning parents and students are never happy.

So when, every once in awhile, a big idea in education comes along that seems to promise some low-cost quick benefits, and politicians swarm all over them like . In Canada, politicians are stuck on one such idea right now: and as such, they risk overdoing a good thing.

The first is labour market-focused education. Right now, most of the Canadian economy is in reasonable shape at the moment, but two sectors in particular are red-hot. The first is the entire Alberta economy, spurred by high oil and gas prices and unprecedented development in the oil sands. The second is the construction industry in the BC lower mainland as the region gears up for the 2010 winter Olympics. Together, these areas have created such an intense demand for labourers and skilled tradespeople have not only soaked up most of their own surplus labour but that of other provinces as well, resulting in a large exodus of skilled tradespeple into the areas and contributing to shortages of tradespeople right across the country.

Economics 101 tells us wherever there is a labour shortage of any kind, the price of labour goes up. Not surprisingly, this has happened and equally unsurprisingly, business has responded by screaming blue murder about how governments aren’t doing enough to supply them with this labour and hence are harming firms “competitiveness”. This doesn’t actually indicate a real shortage of skilled labour, by the way: it just means a shortage of skilled labour at a price management is prepared to pay (this illustrates a little-known fact: when governments talk about education as a means to make the economy “more competitive”, what they really mean is that they are over-educating the population so as to create enough surplus skilled labour to keep wages depressed and competitiveness high). I digress. The point here is that for the first time since the late 1970s, vocational education is “in”, and in particular apprenticeships have received a real boost, with enrolments soaring 50% or more since the start of the decade in some places.

Apprenticeships seem like a winning proposition to Canadian governments. They are students who cost virtually nothing to educate (they are in public education facilities for only five to ten weeks a year on block-release) and do not require student assistance because they “earn while they learn”. Employers get skilled labour, young people get steady pay-checks: what could be better?

There is much strength to this logic, and it is pushing governments across the country to encourage apprenticeships. The only problem is that while apprentices are in the workforce form the start of their apprenticeship, they do not become journeypersons for a minimum of four years in most trades. And when you look four years out, the economic picture isn’t so rosy. For one thing, the winter Olympics will be over. For another, the generous tax credits which have been spurring much of the oil sands development will have been phased out. As labour markets in the west cool, many workers will trickle back east where they came from. And it will be into this situation that all of today’s new apprentices will graduate. It could get very, very ugly.

It wouldn’t be the first time governments over-responded to short-term labour market issues. In the early 1990s, Massachusetts invested heavily in training workers for a biotech boom that never came. In 1998,the Harris government in Ontario spent tens of millions to “double the pipeline” for computer engineers to appease the tech companies who were screaming about having to pay too much for programmers. The result? The first class of the “doubled pipeline graduated in 2003, right into the worst tech slump in two decades.

None of this is to say that apprenticeships or technical education are bad things, or that the state of the labour market should be ignored in education. It is, however, to say that education that is actually worth anything takes time – and that the market is usually faster at solving labour market shortages than the education system is. By the time governments get around to pumping money into a particular form of education and institutions ramp up to create new spaces and students actually go through the program, the economy has moved on and the “shortage” no longer exists.

Enjoy the weekend,

Alex