COVID-19: study estimates up to $44,000 income loss for students graduating in 2020

A study estimates that students graduating in 2020 may lose up to $44,000 over the next five years because of COVID-19.

The Statistics Canada study examined five economic situations arising from the pandemic.

It then looked at how these will affect earnings for high school and postsecondary graduates this year.

The study used the historical average of 14.3 percent for annual youth unemployment as baseline.

The five scenarios are 16 percent, 19 percent, 22 percent, 25 percent, and 28 percent.

“Students belonging to this year's class of high school, college, and bachelor's degree graduates could lose from $23,000 to $44,000 over the next five years if this year's annual youth unemployment rate reaches 28.0%,” Statistics Canada stated in its The Daily publication Tuesday (July 28).

These numbers translate to $4,600 to $8,800 per year.

“If, instead, this year's youth unemployment rate reaches 19.0%, which is close to the historical high of 19.2% (set in 1983), earnings losses are likely to be far more moderate (from about $8,000 to $15,000 over the next five years, or about $1,600 to $3,000 per year),” according to Statistics Canada.

A different outcome results if the youth labour market recovers quickly.

If the youth unemployment rate reaches 16 percent this year, Statistics Canada estimated that five-year losses could amount to less than $6,000 for all groups.

This translates to less than $1,200 per year.

These projections should not discourage high school graduates from pursuing postsecondary degrees.

“Although such losses are at least as large as the average debt load of postsecondary graduates, they are quite small compared with the estimated long-term benefits of graduating with a postsecondary qualification rather than a high school diploma based on an earlier Statistics Canada study,” the federal agency noted.