Education following job loss

Each year, about 5% to 10% of Canadian employees experience a permanent layoff. The implications of job loss are a big deal for affected individuals and their families; a permanent layoff is associated with sustained annual earnings losses equivalent to about 10% to 20%, five years out.

With no income and no idea when their fortunes will turn around, workers who receive a pink slip must decide on their next move as soon as possible. Looking for a job either locally or elsewhere, starting a business, or beginning an apprenticeship that combines work and study are all viable options. An even more substantial investment is to go back to school. But with the clock ticking, students will want to get the most from this investment by considering the program length, field of study and value in the labour market.

For the most part, shorter, career-oriented programs or courses tend to be selected following a layoff. They include certificate and diploma programs, microcredentials, and basic education and skills programs, rather than longer degree program or individual credits not associated with a credential. But do these shorter, career-oriented programs pay off in the end?

For certain types of programs, the answer appears to be yes. Workers who lost their job during the period from 2010 to 2014 and subsequently graduated from a certificate program (usually one year in duration) experienced 14.2% faster earnings growth in the five years following job loss, compared with other laid-off workers who did not enroll in any postsecondary program. Graduates of a diploma program (a two- to three-year commitment) saw even greater returns (+21.8%). But graduating is key—individuals who enrolled without graduating saw no benefits compared with those who did not enroll.

What about graduates of shorter programs like microcredentials, basic skills training or high school upgrading? They fared considerably worse than non-enrollees in terms of earnings growth (by 20% or more). This finding was not because individuals with lower earnings growth potential tend to select very short programs, but rather because earnings trends prior to the layoff were considered in these calculations.

Of all laid-off workers with a postsecondary education who went back to school after job loss, almost 60% changed fields of study compared with the one in which they had studied years earlier. Men and women who went back to school after job loss chose different fields of study, even when they had studied in similar fields prior to job loss. For example, laid-off men moved into health-related fields to a lesser extent than their female counterparts. This trend may limit the employment opportunities of men as population aging may foster employment growth in the health care sector.

Despite the potential benefits of returning to school following a layoff, a relatively small proportion (about 4% to 6%) of workers follow this path shortly after losing their job. By considering which postsecondary programs and strategies tend to be most effective, future cohorts of laid-off workers and policy makers may become better informed in their decision making in the critical months following a job loss.