Anxiety runs high in this year’s graduating class. New grads feel especially vulnerable, since they’re trying to break in while current employees are holding tight to the jobs the up-and-comers might fill.
Worse, there’s growing evidence that the financial consequences of entering the job market during recession could last from a decade to a lifetime, according several depressing academic studies. So it’s not just this year’s graduates who need to be worried: this year’s new and returning students may face much of the same.
For example, those who took first jobs at such times had to settle for lower salaries and climb more rungs, according to Columbia University economics professor Till von Wachter, University of Toronto economics professor Phil Oreopoulos and Andrew Heisz of Statistics Canada, who studied the fate of Canadian graduating classes of 1982-1999. They found it took some 10 years for the recession-era grads to reach salary parity with grads who entered the workforce in flusher times.
“But if the recession is bad, it can take longer,” von Wachter said.
Stanford Business School economics professor Paul Oyer’s research found that MBAs who start investment-banking careers during bull markets will earn $1.5 million to $5 million more on average over a career than those who graduate during recessions. Even those who expediently work in other fields temporarily are less likely to ever become investment bankers (we’re still unsure if that’s such a bad thing).
Oyer finds the consequences can last 20 years. That’s why, he said, bankers are not born to work on Wall Street; rather, they’re made by circumstances.
Missing the Train
Job offers have been rescinded. Compromise is in the air. “People are willing to look for alternatives to what they had planned originally,” said Diego Nachmann, a recent MBA grad. A 30-year-old native of Montevideo, Uruguay, he felt lucky to land an internship in corporate finance in Costa Rica. “There are trains that, if you don’t catch them after the MBA, you’ll never catch them, and you may not be able to work in what you like for the rest of your life.”
Some fields are more resilient than others: grads have been offered fewer financial services jobs, but more in management consulting, said Everette Fortner, career development director at the University of Virginia’s Darden School of Business. And at least companies still seem interested in hiring.
Less well-trained grads from less prestigious schools, and those with less marketable degrees—woe to the English majors—will have the hardest time getting a foothold in recessionary markets, von Wachter said.
But employment experts consider certain fields, like health care, food services and mining, virtually recession-proof. People need those items regardless of the economic climate, according to a Department of Labor analysis. Construction, manufacturing and employment services are hardest-hit.
Coping With Reality
Sunny prospects for health-care jobs—as prices soar and Americans age—are one reason freelance photographer Jason Sangster decided to switch to nursing. Heavy competition, an unpredictable schedule and, above all, instability, encouraged him to enroll in a University of Portland nursing program. “I though about the stability, being able to find a job anywhere, anytime, a job I would probably be very well compensated for,” he explained.
“Overall, I would consider nursing to be a rather recession-proof profession,” agreed Brenda Morris, baccalaureate program director at Arizona State University’s College of Nursing and Healthcare Innovation.
Education also seems sound, at least for now. “We haven’t seen a real dramatic impact for our graduates,” said Michele Crew, career services coordinator at Oklahoma State University’s College of Education.
Since most jobs are found by word of mouth, building networks, cultivating relationships and pursing internships are excellent strategies, careers writer Jason R. Rich advised.
Or grads could go abroad. Lorraine Corlet, a 32-year-old NYU business student from Mozambique, said that oil and growth economies are enjoying booms but lack experienced people to fully exploit them. She suggested grads look at Dubai, China or Hong Kong.
“They don’t have experienced people, and they’re looking for them,” she said. But Corlet stayed in the United States—for a summer internship in private equity.
The silver lining: earnings of those who begin their first professional jobs in bad times do eventually recover. According to von Wachter, eventually the financial disadvantages of graduating during a recession fade away.
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