Aboriginal people have most to gain from education

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Aboriginal people in Saskatchewan have the most to gain monetarily from getting an education, and the most to lose by not getting one, according to a recent study done by University of Saskatchewan economics professor Eric Howe.

The study, Education and Lifetime Income for Aboriginal People in Saskatchewan, uses statistical information and trends in employment and wage rates for Aboriginal people to forecast the average lifetime income for Aboriginal men and women who achieve differing levels of education.

The results of the study show Aboriginal people in Saskatchewan have a higher rate of return for their investment in education than non-Aboriginal people. This is especially true for Aboriginal women, who have the highest rate of return overall.

The estimates of life-time income are calculated for the targets of the study-young Aboriginal people, who haven't yet made the big decisions regarding their educational path. The figures presented show the potential earnings of Aboriginal people who are now 13-year-olds, and who will enter the workforce in 2004 at the age of 16, and retire in 2054 at the age of 65.

The forecasts show that an Aboriginal male who drops out of high school can expect lifetime earnings of $344,781, while an Aboriginal female who drops out can expect lifetime earnings of $89,502.

An Aboriginal male earning a high school diploma can expect life time earnings of $861,636, while an Aboriginal female can increase her lifetime earnings to $294,350 by getting her high school diploma.

The potential for earnings increases even more as post-secondary education comes into the mix. An Aboriginal male who attends college or a technical school could expect his lifetime earnings to increase to $1,191,146, whether or not he completes the program. By attending university, that figure grows to $1,386,434, again, regardless of whether the program is completed.

For Aboriginal females, attending college or technical school would translate into lifetime earnings of $646,904, while attending university would increase potential lifetime earnings to $1,249,246.

While the study dealt specifically with potential income levels for Aboriginal people in Saskatchewan, the results are in line with those from similar studies done in the United States, Howe explained.

"This is a North America wide phenomenon. You measure the rate of return to education in the United States by sex and ethnicity, and the highest rate of return is for Aboriginal females . . .. For Aboriginal males, Aboriginal males are in a tie for second place among males. And so why is this the case? Why is this also then the case in Canada? And it's for a really straightforward reason," he said.

"The rate of return to education for women over all is higher than the average rate of return to education for men . . .. Women earn about two-thirds of what men earn in Canada. Their income is about a third less than men. But at higher levels of education, I assure you their income is about the same. And so why is the return to education for women higher? Well, they're getting the average increase, because the higher educated you are, on average, the more money you earn.

But they're also catching up with men at the same time. The same thing applies to Aboriginal people. When an Aboriginal person gets more education, they're not only having an increase in their average earnings, because the higher your level of education, on average, the more money you make. They're also catching up with non-Aboriginal people. The results are really impressive, really, really impressive for Aboriginal females. Because they're getting a triple whammy. Because, with higher levels of education, they're experiencing this increase in the average earnings. They're also catching up with men. They're also catching up with non-Aboriginal people. So Aboriginal females have a really high rate of return to education."

Howe said he conducted the study for two main reasons. One, to detemine if the results in Saskatchewan would mirror the results from American studies, which it did. And two, to use the study and its results to get the message of the importance of education out to young Aboriginal people before they've made decisions about their education. Howe presented the study results in a way that would appeal to that target group.

"You need to set the results in a way that they will communicate early on in a person's education. Maybe Grade 8. Because if you break down results in such a way that they don't really communicate, and they aren't compelling, to people until they're say, in Grade 12, well, frankly by Grade 12, a whole lot of educational decisions have already been made. So I did the computation in terms of dollars of lifetime earnings because I thought that would make the most sense to young people making educational decisions . . . I wanted it to be more intuitively compelling to a young person. After all, the young person has to decide whether or not to stay in school," he said.

In addition to breaking the results down into dollar figures, Howe also uses a more concrete example of what not getting an education can cost in the report.

"If an Aboriginal male drops out before getting his high school diploma, that reduces his lifetime earning by half a million dollars," Howe explained, "I called out to a Ford dealership in town, and was told the price of a fully-loaded, F-150 Supercab, 4 X 4 with a bunch bigger engine than I'll ever have in any vehicle I drive in my entire life, is $38,600. So for an Aboriginal male to drop out of school, it's like him owning 13 of these brand new trucks, and just pushing them off a cliff."

For an Aboriginal woman to drop out of high school, the reduction in lifetime earnings is equal to the value of 30 of these trucks.

"There's a lot of money on the line here . . . especially a lot of money for Aboriginal women. If an Aboriginal woman drops out of school before getting her high school diploma, heraverage life time earnings will only be about a little less than $90,000. And thinking about what that means, I mean, $90,000 with which to live your whole life is frankly just plain not very much money. So the incentive for an Aboriginal women to continue with education is extraordinary. The incentive for an Aboriginal male is large, but for an Aboriginal female, it's extraordinary."