The world changes.
Humans adapt (eventually).
CHANGING DEMOGRAPHICS
The pace of change began accelerating in the 20th century. Into the third decade of the 21st century, our world would be unrecognizable to our grandparents and great-grandparents at the beginning of the 20th century.
My generation flooded the job market a generation after our fathers returned from Europe ‘defending democracy from fascism’. When they returned in 1945 there were about 2.35 billion people in the world. In Canada in 1950 the fertility rate was 3.45 children per woman.
There were more of us than ever before. And our beautiful sisters joined us in a significant way, changing forever the social fabric of the western world.
We competed for jobs and provided employers with an endless supply of labour. To compensate we demanded more ‘stuff’ – that we probably didn’t need – and became wealthier consumers, often with two-income households, and fewer kids. By 1975 the number of live births per woman had declined to 1.85.
By 1985 the world population had more than doubled since 1945. There were 4.87 billion humans in the world. By 2021 it had more than tripled, and the number of live births per woman in Canada had declined to 1.46.
In 2021 the ratio of college-aged adults to seniors in Canada has declined by a factor of almost three since the mid 1980s.
Our universities responded by developing export markets for seats in Canadian universities. They charged 3 to 4 times as much in tuition to international students. And they sweetened the pot by bribing foreign immigration consultants to promise permanent residence to Indian and Chinese nationals.
My accounting profession also jumped on the bandwagon. They outsourced studies of median incomes of their members to academics and experts working for large consulting firms. This allowed them to plead plausible deniability when it turned out that they published median incomes which were overstated by sixty to ninety percent.
PRODUCTIVITY AND HIGHER EDUCATION: THE CONVENTIONAL WISDOM
In the 1970s and 1980s North American employers reacted to changing demographics by increasing educational requirements. For them, it was an embarrassment of riches. They worked to ‘filter out’ those of us with less-developed ‘cultural literacy.’ This was only possible because employers had an endless supply of candidates.
In my own field of accounting, two of the three legacy professional bodies added an undergraduate degree as a requirement in 1984 or 1985. That was about 25 years after the other legacy body – chartered accountants – had started the trend.
In our view, this did not increase the quality of the workforce. However, it did reduce the ‘net present value’ of an investment in an accounting designation and resulted in significant levels of debt for graduates beginning their careers. Inevitably a university degree increased the feeling of ‘self-worth’ on the part of new CPA members. Today the newly amalgamated profession exhorts would-be CPAs to “become a CPA and be a recognized leader, exerting global influence.”
According to a study originally released in 2014 by the Harvard Business School[1], a university degree also results in higher salary expectations, higher absenteeism, higher turnover, and a greater likelihood of feeling unengaged or under-utilized. It is exceptionally rare for anyone to actually ‘exert global influence’.
Universities were quick to make the claim that higher education resulted in higher productivity. In what we were calling the “knowledge economy” this just sounded right.
Except it wasn’t. History tells a different story.
[1] Dismissed by Degrees: How degree inflation is undermining U.S. competitiveness and hurting America’s middle class
In comparison with the US, our productivity has been declining since the late 1990s. In the period since 2012 (after Statistics Canada produced that study), we continued to push post-secondary education – primarily at universities – in the hope that our productivity will increase. For some years Canada has been at or near the top of the world in terms of post-secondary graduates per capita.
Perhaps we should stop listening to experts from our universities and start listening to employers. In 2014 Harvard Business School did just that. We invite you to look at “Dismissed by Degrees: How degree inflation is undermining U.S. competitiveness and hurting America’s middle class” – see the link in the footnote above.
“Insanity Is Doing the Same Thing Over and Over Again and Expecting Different Results”
Attributed to both Albert Einstein and a pamphlet published by Alcoholics Anonymous
CANADA’S PRIVATE SECTOR IS DOMINATED BY SMALL BUSINESS
Most businesses in Canada are exceedingly small. There are about 2.8 million self-employed Canadians and 1.2 employer businesses averaging about seven employees. Between them they employ about 76% of private-sector workers.
By contrast, Canadian universities are exceedingly large. The University of Toronto boasts of some twenty thousand faculty and staff – and is about fifty times the size of the average large[1] business in Canada. The top 10 accounting firms in Canada average almost 5,000 staff members.
The point is these organizations can’t help but have cognitive biases that favour large organizations. For that reason, business and professional school curricula are mostly irrelevant for these businesses.
Even Statistics Canada (6,346 staff in 2022) talks disparagingly of what they call “micro-businesses”. But companies with 4 or fewer employees are particularly important to our economy.
Clearly, the services required by small organizations are significantly different than those required by our large universities, the largest professional firms, and their correspondingly large clients.
At SBA Canada, we believe that vocational training should be focused on the needs of smaller businesses.
About a year ago we looked at the curriculum for a Bachelor of Business Administration, with a major in accounting at Thompson Rivers University in British Columbia. From our perspective at least 24 of the 39 courses had no relevance to the work that most accounting practitioners do.
Most of those 24 courses were not only irrelevant, but they were also beyond the capabilities of instructors teaching the courses. What’s more the courses involving technology were inevitably at least ten years or more passed their ‘best before date’.
[1] Statistics Canada defines a large business as having 500 or employees. This is a rarefied group. In 2018 the largest three thousand businesses had an average of just 414 employees.
