By Request: The Graduates
I got an email yesterday from a reader concerned about the impact of the recession on people who graduated from college in 2008, and possibly in 2009 as well. He was mostly interested in the short-term effects, but it’s in some ways the long run effects that are more interesting. The short-term effects are bad—few places are hiring anyone and you’re competing in the job market with older, better-qualified, recently-laid-off people. But the long-run effects are surprisingly bad.
Indeed, the news is almost shockingly dismal. Research from Paul Oyer and Philip Oreopoulos, Till Von Wachter & Andrew Heisz suggests that the negative impact on earnings of first entering the labor force amidst a recession lasts anywhere from ten years to forever. And that’s research based on relatively mild recessions. Austan Goolsbee wrote this research up back in May 2006, and hopefully has some clever plans to whisper in Barack Obama’s ear.
So for my part, I think members of the class of 2009 ought to be looking seriously at applying to graduate programs. But even here there’s trouble. When I was a colllege freshman in 1999-2000, there were nutty dot-com firms handing out huge salaries to people for no reason. Consequently, it relatively easy to get into a prestigious law school’s class of 2003 and guarantee yourself a nice salary when you finished. But by my junior year, those kind of offers had vanished so more people wanted to apply to law school. And those applicants were competing with various 23, 24, and 25 year-olds who’d had a year or three of experience working in the bubble sector, so a lot of members of the class of 2002 wound up getting into less prestigious schools than comparable candidates scored in 2000. And, again, that kind of thing can have a life-long impact on your earnings.
Long story short, life is cruel and unfair, which is one of many reasons why we need economic and social justice and why talk about the infinite justice of market outcomes shouldn’t be taken too seriously.
85 Responses to “By Request: The Graduates”
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January 9th, 2009 at 9:50 am
Social Justice for college graduates and law school applicants? Are you kidding me?
There are jobs available these days - just the people don’t want to do them. There is money to be made, but people have to apply themselves. The days of Wall St. firms handing out 6 figure salaries to anyone well connected enough to have gone to the “right” schools is over, but that doesn’t mean there aren’t jobs.
January 9th, 2009 at 9:51 am
“Not taken too seriously” is the understatement of the millennium. It should always, always be greeted with a mixture of anger and derision. It is not and never has been anything other than a way for the more fortunate to rationalize both their positions and their exploitation of the less fortunate. The single worst thing about this country just might be be the reverence with which that line of arrant, self-serving line of bullshit is commonly greeted.
January 9th, 2009 at 9:54 am
There’s always Uncle Sam. I came out of engineering school in the recession year of 83 and the jobs just weren’t there. Instead of crying about it, I got my commission in the Air Force and ended up in a series of great jobs doing things and going places that made me very happy. I’m glad Wall Street won’t be wasting the talent of more of our graduates. Let them get a real job.
January 9th, 2009 at 9:54 am
I agree with GtheK to the extent that incremental differences in the lifetimes earnings of relatively fortunate people are less of a public policy concern (or at least, should be less of a concern) than the fate of relatively unfortunate people…or than the gap between the more- and less-fortunate overall rather than within a slice of the population that certainly wouldn’t trade places with the lower slices, recession or not.
The advice to attend graduate school is only sensible if you’re genuinely interested in a career that grad school prepared you for; certainly nobody should go get an MA in History to avoid pounding the pavement for a job.
January 9th, 2009 at 9:56 am
So, GtheK, according to you it’s perfectly OK that people are permanently advantaged or disadvantaged because of the complete accident of the year they happened to graduate? What a prime example of smug, fucked-up assholery.
If you think everybody should have the full “life’s unfair” treatment without benefit of a civilized society doing its best to mitigate the unfairness, go live in a fucking cave.
January 9th, 2009 at 9:56 am
There are jobs available these days - just the people don’t want to do them. There is money to be made, but people have to apply themselves.
Kids these days! With their crazy haircuts and their inflated sense of entitlement! Why, back in my day we knew how to work! Not like now!
January 9th, 2009 at 9:57 am
But certainly Rich is quite right that there are degrees of unfairness and dealing with the most drastic ones must be the priority. Of course, the market-worshipers want to do nothing at all.
January 9th, 2009 at 10:01 am
I was planning on going to grad school in the US this coming fall. Part of what dissuaded me is the sucky economy and that I’d be competing with all sorts of people who probably would get better references from their profs than me, who’s been out of school for 6 years.
At least I’m an expat in another country with a decent job.
January 9th, 2009 at 10:02 am
yeah, i just graduated and was able to get a great job (though it’s very much at risk now), but that’s not the story for most people my age. people are having an incredibly hard time finding a job. kind of sucks.
January 9th, 2009 at 10:10 am
Perfect solution: we can just take some of Lord Yglesias trust fund and distribute it to these less-rich graduates.
January 9th, 2009 at 10:17 am
Rich in PA is right on. Go to grad school now only if it was part of your longterm plan anyway. Grad school is a grind even when one is highly motivated. I watched too many students founder and flail in grad school, only to drop out before they finished yet with a heavy debt load. It does stink to not be able to get the job one wants right off, but most young people, if they have not overburdened themselves with stupid debt (e.g. cars, credit cards), can ride out a hiring lag and manage to cobble together a successful career in its aftermath. Without debt, they simply have more flexibility to make choices that prioritize longterm career goals over short term financial demands.
January 9th, 2009 at 10:18 am
Matt, I’m nearly twenty years older than you are, and I didn’t need a study to tell me these things. I remember the people who graduated into the job market during the Reagan/Thatcher recession in the early eighties. They were the cool older kids of my high school freshman year - the student body presidents, year book editors, and team captains, movers and shakers of our little world, who went onto “good” colleges; the recession that greeted them when they graduated from college - mild compared to what we might be facing - smacked them face first onto the ice and then kicked them in the gut for insurance. Many have never fully “recovered”, in so far as they are generally making less and are far less advanced that where they ought to by rights be in whatever careers they may have made for themselves since. Most are living reasonable, decent lives, but many have never gone as far as they could have. Malcolm Gladwell may be shallow, but that doesn’t make him at the end of the day wrong: people’s lives, their ability to live to their full potential, ought to be dependent on something a little more just - or at least stable - than dumb generational luck.
January 9th, 2009 at 10:19 am
“I think members of the class of 2009 ought to be looking seriously at applying to graduate programs.”
Why not try starting your own business instead, especially since, as you note, lots of other recent alumni will be applying to grad school to wait out the weak job market? During a recession you should be able to get deals on professional services, leases, advertising, etc. Think of a business that doesn’t rely on consumer discretionary spending, e.g., B-to-B or, B-to-G.
If starting a business isn’t your speed, consider applying to Officer Candidate School in one of the services.
“Long story short, life is cruel and unfair, which is one of many reasons why we need economic and social justice…”
Modifying “justice” with adjectives such as “social” and “economic” is tendentious. If you’re in favor of more income redistribution, argue for it, instead of pretending that such a policy is implicitly just.
January 9th, 2009 at 10:21 am
Matt: “So for my part, I think members of the class of 2009 ought to be looking seriously at applying to graduate programs.”
Maybe. I suppose the “good” schools don’t have night programs so you could, you know actually work once you got out of school. But it is possible to work and go to graduate school at the same time.
Rich in Pa: “certainly nobody should go get an MA in History to avoid pounding the pavement for a job.”
Well said. I would add law school to that as well.
January 9th, 2009 at 10:22 am
Look at that picture. Imagine those poor girls struggling to find work. And then tell me you’re against subsidized prostitution.
January 9th, 2009 at 10:24 am
This is ridiculous. Life is unfair. I definitely think that society should struggle to compensate for the different opportunities we are each granted or manage to find. However, I think that this all smacks of a bunch of people pissed off that their road to riches will not come as easily as MTV told them it would. Until one can overcome biology, generational differences will continue to shape people’s lives, possibilities, etc. For christ’s sake, my grandpa came out of high school during the Great Depression and you didn’t see him whining that he didn’t have the same chances that the Baby Boomers did.
January 9th, 2009 at 10:30 am
Why not try starting your own business instead, especially since, as you note, lots of other recent alumni will be applying to grad school to wait out the weak job market? During a recession you should be able to get deals on professional services, leases, advertising, etc. Think of a business that doesn’t rely on consumer discretionary spending, e.g., B-to-B or, B-to-G.
Dave, I don’t want to be confrontational, but give me a fucking break. Starting a business—any business—requires access to credit that the vast majority of recent college grads simply don’t have—credit which has also become infinitely harder to get in the current economic situation. Unless you’re talking about starting a one-person consulting business out of one’s parents’ garage—which I would classify more under “freelancing”—you’re just being incredibly unrealistic.
January 9th, 2009 at 10:31 am
n the late 80’s early 90’s it was fashionable for many Gen-X’ers to say that the Boomers had mucked everything up and there was no good prospects or even hope for our generation, especially during the recession of that time. The most famous (Douglas Copeland) was not even, by some definitions even a part of Gen X proper.
And there were other Gen X’ers that pretty much ignored all this nonsense.
My advice to the graduates is to also ignore such nonsense today.
And add me to the list that says that not getting into the frickin law school of your choice is not a social justice concern. Unless we’re going to devaluate ’social justice’ in the same way we devaluated ‘racism’ in the fight over seating Roland Burris.
January 9th, 2009 at 10:33 am
We are talking about people who are going to be in the top two fifths of society no matter what. Instead of grand schemes to improve their outcomes, why don’t you have a grand scheme to lower their expectations?
January 9th, 2009 at 10:34 am
There is also something of a echo-boomer demographic bubble that’s going on. Kids who graduate now have a lot more peers to compete with than did graduates in the troth graduation years of the mid-late 90s.
What was supposed to happen was that a bunch of baby-boomers would be retiring and opening up slots in the work force. Since everyone’s 401(k) just tanked, less people will be retiring and those slots won’t be opening up.
January 9th, 2009 at 10:34 am
In the late 80’s early 90’s it was fashionable for many Gen-X’ers to say that the Boomers had mucked everything up and there was no good prospects…And there were other Gen X’ers that pretty much ignored all this nonsense.
And by 1996-97 no one was saying such things. I wonder why that might be, Kolohe? Maybe you should click the link in your second paragraph and find out why.
January 9th, 2009 at 10:42 am
Steve LaBonne: who is being [i]permanently[/i] disadvantaged here? College graduates? People thinking of applying to law school? Yeah, sounds like life has been real unfair to them so far. I’m sure the kid born to the crack addicted mother in West Baltimore is shedding a tear or two.
Look, its not as if there is a lack of jobs or opportunities in grad school for these people. Its a lack of opportunities that will make them a ton of money now, or immediately on finishing grad school. Someone isn’t going to apply to law school because their chances of going to Michigan are worse and they’ll have to settle for Rutgers? For shame! That’s another lawyer we don’t need.
As mentioned above, there are plenty of opportunities. The military is hiring. They like college grads - you can go to officer school, and depending on the branch of the service, you’ll get an enlistment bonus. Start out making mid-30s a year with full benefits, including housing. Don’t want to actually shoot guns? Heck, the Air Force is filled with people who have desk jobs.
And I’m sure when push comes to shove, the local fast food chain is hiring too. I’d be willing to bet they’d take someone with a college degree in a heartbeat. Show up for work for a month straight and don’t burn yourself, and you’ll probably be manager. Play your cards right and within a two years you can be managing a dozen franchises.
There are dozens of opportunities out there, but you have to WANT to work, not just want to do a job where you get paid a lot and have weekends off.
But all of these things require work and sacrifice. It requires that you bite the bullet and get out of the college lifestyle. You probably won’t live in a loft, and probably won’t go to happy hours with your 20-something friends.
This has nothing to do with social justice and permanent disadvantages. Permanent disadvantages have to do with people who are crippled by a stray bullet, or have a rare disease. If you’re young and healthy, and have an education to boot, you’re not permanently disadvantaged. There is some work somewhere for you to do.
I have a hard time believing that someone born in the late 20th century U.S.A. who has just spent 4 years getting an education, drinking at bars, and watching college football or sex in the city during their free time is some how permanently disadvantaged.
But that’s just me.
January 9th, 2009 at 10:56 am
So for my part, I think members of the class of 2009 ought to be looking seriously at applying to graduate programs.
Please, please no…. there are many mechanisms designed to keep people who are only interested in grad school as a life-delaying mechanism out, and yet there are already a ton of people like that in there. I don’t say this out of malice towards them but out of concern for them. Grad school is a long period of poverty for the acquisition of degrees that might or might not make the difference in the long run. What’s more, adopting the “you have to get your Masters” line– that is, getting your MA or MS becoming like getting your BA or BS now– is just a disaster for higher education and removes the distinguishing characteristics of the Masters in the first place.
If people want to go to grad school out of a specific career path or a genuine interest in becoming a semi-professional academic more power to them. But doing it solely because the economy is bad is a terrible idea. And if people want to go the doctoral route, they should understand that the system is just fundamentally broken, with departments having lots of incentives to take on more grad students, but less incentive to take on tenured professors– meaning that there’s a huge glut of PhDs and no jobs.
January 9th, 2009 at 10:57 am
And by 1996-97 no one was saying such things. I wonder why that might be, Kolohe? Maybe you should click the link in your second paragraph and find out why.
That was precisely my point. In 2013-2014 (assuming this actually ain’t Great Depression Part Deux) nobody’s going to care that it was hard to get a job in 2009. And Matt’s links are about the variance in earnings for investment bankers with MBA’s for christsakes. Granted, I’m not a progressive, but I was unfamiliar that the equality of earnings for frickin investment bankers is a major social justice issue.
January 9th, 2009 at 10:57 am
GtheK,
You do realize that shit rolls down right? When the college grads can’t get the jobs they studied for and pick off the cream of the jobs at the next level down that it pushes down the people who would have had those jobs, and so on…
January 9th, 2009 at 11:05 am
Kolohe,
the people who entered the job market in ‘83 and never made up the money they lost cared.
January 9th, 2009 at 11:05 am
And MattY’s second link is wrong (goes to the same Goolsbee article). The paper (linked in the times article) is here: http://www.columbia.edu/~vw2112/papers/nber_draft_1.pdf
And this article covers Canadian college graduates and workers. Now, it’s may be indicative of a larger trend, but the labor market in Canada is quite different than labor market in the US.
January 9th, 2009 at 11:08 am
Actually the MA in History is very useful. If you have a BA in history your career prospects are limited to working at the Dunkin Donuts drivethrough. But, if you have that Masters you can work as a Starbucks barista!
January 9th, 2009 at 11:10 am
Although it is not the end of the world. I can attest from personal experience that the economic costs of not getting and staying on track can be enourmous. A layoff no job in the first six month of graduation can throw a spanner in the gears of the dream machine. Especially for graduates of professional programs.
For those 2008 graduates that had offers rescinded or were or going to be laid off in the first year of employment, their career earning prospects are not as bright as they expected less than a year ago. By and large, top companies hire classes of new graduates for training or management rotation programs in the spring to start in the summer. You miss that bus you will miss out many career opportunities. Of course there are exceptions and the truly gifted individual that through perserverance or great talent ( 3 sigma crowd) can overcome these odds. Most in the middlw will just have to make themselves useful and reconcile to the fact they are not going to be as comfortable as the dreamed.
As I said not the end of the world, but not heaven either.
January 9th, 2009 at 11:19 am
Now they tell me! And I thought just because I got a job the day after graduation my history degree was worth something! Now I’ve been unemployed since the end of the Obama campaign, and I’m starting to wonder.
Obama better get hiring low level people soon!
January 9th, 2009 at 11:30 am
Why not try starting your own business instead, especially since, as you note, lots of other recent alumni will be applying to grad school to wait out the weak job market? During a recession you should be able to get deals on professional services, leases, advertising, etc.
You just can’t get clients, or credit from financing sources to pay for those leases, etc. But as long as you don’t need any credit or income, this is a great time to start a business!
Think of a business that doesn’t rely on consumer discretionary spending, e.g., B-to-B or, B-to-G.
Um, most businesses rely at the end of the day on consumer discretionary spending. Where, after all, are the businesses that are supposedly going give you business get their money? The fact is, the economic outlook for all firms of whatever type is pretty dire these days.
January 9th, 2009 at 11:31 am
That was precisely my point. In 2013-2014 (assuming this actually ain’t Great Depression Part Deux) nobody’s going to care that it was hard to get a job in 2009.
Yeah, I realized after I posted my comment that I was a bit unclear. Sorry. What I should’ve said, in the plainest possible language, is that even as early as 1990-1991—at the worst part of that recession—it was apparent to many people that the coming tech revolution was going to provide a lot of opportunities.
Perhaps I lack the vision that I had then, but I just don’t see any comparable glimmerings on the horizon right now. I certainly hope Obama’s proposed green-initiative alternative-energy thing bears fruit, but it really seems to me, at best, to be something like the Depression-era WPA.
January 9th, 2009 at 11:33 am
WTF - your grandpa may have graduated into the great depression, but he also graduated into the New Deal, and then because he made through the WW II in one piece into a sustained 30-year long economic boom that had little or no precedent in human history. I not recommending that we start ourselves a world war, but at this point a new new deal is looking pretty good to me.
January 9th, 2009 at 11:33 am
Mom and Dad,
I know just spent the last four years of school earning my bachelors in poly sci and I know I had to put myself thousands of dollars into debt just to earn it….and I know there are no real professional jobs available right now…so here’s my plan
And I’m sure when push comes to shove, the local fast food chain is hiring too. I’d be willing to bet they’d take someone with a college degree in a heartbeat. Show up for work for a month straight and don’t burn yourself, and you’ll probably be manager. Play your cards right and within a two years you can be managing a dozen franchises.
I’m sure that kinda future sits well with parents who are trying to get their kids out of the house!
January 9th, 2009 at 11:34 am
And I’m sure when push comes to shove, the local fast food chain is hiring too. I’d be willing to bet they’d take someone with a college degree in a heartbeat. Show up for work for a month straight and don’t burn yourself, and you’ll probably be manager. Play your cards right and within a two years you can be managing a dozen franchises.
OK, and then when the fast food chain hires all those college graduates, where are the non-college graduates who otherwise would have been hired going to get their jobs?
January 9th, 2009 at 11:40 am
Hey, I started out mopping the floor just like you guys. But now… now I’m washing lettuce. Soon I’ll be on fries; then the grill. And pretty soon, I’ll make assistant manager, and that’s when the big bucks start rolling in
January 9th, 2009 at 11:41 am
James Gary,
“Dave, I don’t want to be confrontational, but give me a fucking break. Starting a business—any business—requires access to credit that the vast majority of recent college grads simply don’t have—credit which has also become infinitely harder to get in the current economic situation.”
Going to grad school isn’t free either, James, and chances are you could start a business for less than the cost of grad school tuition. As far as access to credit, banks weren’t lining up to loan money to start-up businesses before the credit crunch. That’s entrepreneurs often fund their start-ups from a combination of personal savings, credit card advances, loans from friends & family, angel investors, etc.
January 9th, 2009 at 11:44 am
“as early as 1990-1991—at the worst part of that recession—it was apparent to many people that the coming tech revolution was going to provide a lot of opportunities.
Perhaps I lack the vision that I had then, but I just don’t see any comparable glimmerings on the horizon right now.”
Some of the companies that led that tech boom were founded back during the economic malaise of the 1970s.
January 9th, 2009 at 11:47 am
And I’m sure when push comes to shove, the local fast food chain is hiring too.
More to the point: fast-food chains, for the most part, don’t offer full-time positions for positions below the level of manager because doing so would require them to provide benefits. So, as Scott notes, working fast-food will require moving back home and working for wages far below subsistence level ($7.00/hr, even full-time=$1120/month, before taxes) until fortune smiles on you.
January 9th, 2009 at 11:48 am
I graduated in May of 1991 and the job market wasn’t so hot then either - though I don’t know if it as bad now. I do have sympathy.
Saying that - I can’t say for certain with expectations are for the new grads, but there may be some management of expectations that need to be made. I knew when I graduated that someone with little office experience and a poli sci/history background wasn’t going to making the big bucks so it wasn’t a problem for me. But some of these grads have likely been hearing stories for the last few years about these fabulous starting salaries and they may need to have a strong cup of coffee. Sort of like all those home sellers that were asking outrageous prices for the houses at the beginning of the slide down who didn’t get the new market fundamentals.
January 9th, 2009 at 11:52 am
If you’re a college grad and can’t walk into a fast food restaurant as an assistant manager, you’re a tool.
January 9th, 2009 at 11:54 am
But some of these grads have likely been hearing stories for the last few years about these fabulous starting salaries and they may need to have a strong cup of coffee.
WTF…how you do you know what anyone’s expectation was? I think if you’re about to graduate and you still don’t have a job…if something decent comes along…low salary/benefits…most people take it…
January 9th, 2009 at 11:58 am
That’s [why] entrepreneurs often fund their start-ups from a combination of personal savings, credit card advances, loans from friends & family, angel investors, etc.
All of which sources of funding also dry up in a recession. Banks aren’t exactly handing out credit card advances these days; in fact, they’re cutting limits. And loans are much harder to get from friends and family who are themselves worried about holding onto their jobs and who’ve seen the value of their investments cut by a third in the last quarter.
January 9th, 2009 at 12:07 pm
I got a (part-time) MBA from a Top 10 school in 2001. Barclays Global Investors recruits using an aptitude test. I tested in the top 50 worldwide out of 8,000 applicants, but didn’t get an interview, as I didn’t have any I-banking experience. If I’d graduated a year earlier in 2000, I’d have been fat and happy (well, until last year at least).
More directly, the suckiness of the job market affected me getting interviews with other industrial firms: I was interested in going into the biotech or energy sector, and had a suitable technical first degree for those fields, but it was difficult to even get an interview as there was a lot more competition. A factor might have been graduating with my bachelor’s degree in 1991, which (as there also was a recession then) probably made my career path pretty flat. I found a perfect fit for me later, but it took three years of persistent knocking while staying in a job I was not happy in
I’d also say the beating your confidence takes trying to find a job in a recession probably makes you less confident and more risk adverse to someone who graduated when times were good. And as your career path will inevitably be flatter (as there’ll be less job-hopping in the cohort with 3-5 years more experience than you, so there’ll be less opportunity for promotion internally or externally), you’ll just look less impressive on paper. Someone who made partner/VP/senior manager/whatever in five years is going to feel a safer hire than someone who took eight years to reach the same rank
January 9th, 2009 at 12:15 pm
“Going to grad school isn’t free either, James, and chances are you could start a business for less than the cost of grad school tuition. ”
This, frankly, is f**king stupid advice. Most small business fail, especially tech start-ups. Which is fine if you have capital and a resume with name-brand firms on it: you can take the risk then. But not for a young person with no capital and a sparse resume. They don’t have a fallback position.
A young person needs to get skills *which are apparent and communicable to other people*: most small businesses require a boatload of skills, but they’re not necessarily demonstrable at interview and on a resume. At the end of grad school, you’ll have a boatload of debt, yes, but also have increased your human capital. So grad school is a lot less risky than starting a business in a down economy.
January 9th, 2009 at 12:25 pm
“I have a hard time believing that someone born in the late 20th century U.S.A. who has just spent 4 years getting an education, drinking at bars, and watching college football or sex in the city during their free time is some how permanently disadvantaged.”
Ahh, fuck you, GtheK. Get your degree already and stop whining.
January 9th, 2009 at 12:28 pm
Stefan,
If you have a good business idea, and are looking for funding, e-mail me the details via the e-mail address on my website. There are folks out there with money to invest in new businesses (if they are sold on the idea), and I know a few of them. I’m sure others reading this blog do too. It’s easier now than ever before to network and find people who do have money to invest (convincing them about the merits of your idea remains a challenge though).
“This, frankly, is f**king stupid advice. Most small business fail, especially tech start-ups.”
Most small businesses fail, because most are started by people with little human capital entering already-crowded niches. The subset of people Matt is referring to — those for whom grad school is an option — would presumably have a higher level of human capital than average.
“A young person needs to get skills *which are apparent and communicable to other people*: most small businesses require a boatload of skills, but they’re not necessarily demonstrable at interview and on a resume.”
If you can describe the skills used in a job on a resume, and explain them in an interview, you ought to be able to do the same for the skills you used in a business you started. If you can’t, then you probably won’t be successful as an entrepreneur or as an employee.
January 9th, 2009 at 12:33 pm
“Most startups, by necessity, focus on incremental developments.”
About the quickest way to lose the interest of a VC is to show them an idea that is too early in the technology cycle. Exception may be biotech startups, where the IP can retain significant value for a decade or more.
That’s not to say that they haven’t ended up funding R&D that’s far from a product: fuel cell startups being a case in point. But that wasn’t their intention.
January 9th, 2009 at 12:35 pm
Why don’t this new jobless folks take some “Farm Beginnings” classes to become the first wave of a new arigibusiness we’ll need to overcome the food shortages caused by peak oil?
January 9th, 2009 at 12:47 pm
“Most small businesses fail, because most are started by people with little human capital entering already-crowded niches.”
Nope. Most businesses fail because they’re undercapitalized and run out of cash: paradoxically some can see great revenue growth and still run out of cash (because sales growth that outstrips profit growth will suck up cash).
Even most VC-funded tech and biotech start-ups also fail (about 50-70%). Are you going to tell me that a firm that can outcompete 50+ other ideas to catch the eye of a VC is deficient in human capital?
“If you can describe the skills used in a job on a resume, and explain them in an interview, you ought to be able to do the same for the skills you used in a business you started.”
You *ought* to be. But the fact is that hiring managers and HR departments are going to evaluate you based on your achievements *and the reputation of the institutions and companies you’ve been associated with*: the so-called “halo effect”. A failed business you started up has no such halo effect.
Look, what you advocate may work for maybe 5% of graduates who have the combination of luck, persistence, leadership, people and political skills, and optimism-verging-on-delusion that entrepreneurs require. But for the 95% of bog-standard graduates, it’s not a solution.
January 9th, 2009 at 12:48 pm
And what is wrong with moving back with your parents exactly? Or working for miniumum wage? Besides their “disappointment” that their little Johnny, who they spent many years telling their friends was such as smart boy, now actually has to work for a living?
This comment, and the one above it, are exactly the problem. Who cares if your job is flipping burgers or making fries? Are you working hard? Earning honest money? So you have to bite the bullet and live with your parents for a year, is that the end of the world? Or is it having to work a minimum wage job with poor people? Or be around people who don’t have an education.
No, it’s not. But to read some of the commentary on here as if this was some sort of disaster requiring social justice is nonsense. One of the above commenters was right - it all trickles down. The jobs get harder for the un-educated and poor to get. And once again screws people who have a history of getting the short end of the stick.
But once again, if working a entry-level job for a couple years while living with your parents is some sort of a permanent disability, then the world has been good to you. Very good to you. You’re already in the luckiest 1% of people ever to grace the earth, and you’re still able to eat 3 meals a day and have a roof over your head. Maybe you can’t buy as many songs from iTunes as you once did, but I guess there are some hardships in life.
January 9th, 2009 at 12:53 pm
The trend is clear on the salary side as well. Per Salary List The salary has been stable and will surely drop for most jobs. I think the market is difficult now, but still there is opportunities for new graduates. I know people are hiring
January 9th, 2009 at 12:55 pm
But once again, if working a entry-level job for a couple years while living with your parents is some sort of a permanent disability, then the world has been good to you. Very good to you. You’re already in the luckiest 1% of people ever to grace the earth, and you’re still able to eat 3 meals a day and have a roof over your head.
That’s good advice! I think you should become a career counselor, if you’re not one already.
January 9th, 2009 at 12:58 pm
Maybe you can’t buy as many songs from iTunes as you once did, but I guess there are some hardships in life.
Right, can we please stop with this you got screwed because you’re too materialistic bs…flipping burgers isn’t an entry level job…also i think you underestimate just how difficult finding that first entry level job can be….lets say your internship didn’t work out, or the career fair was a joke…what if you just flat out don’t have any connections and have to rely on job sites and newspapers, sending out resume after resume, never hearing from anyone…the point i’m trying to make is that something structurally is changing in regards to education levels and standard of living and i don’t think it has anything to do with buying too many songs on itunes…sure, theres nothing wrong with living at home with your parents for a year after graduation, working a part time job…but whats happening is that more and more people are doing this, and they’re waiting way longer than a year to find decent work, if they find it at all.
January 9th, 2009 at 1:04 pm
In 1983, in Philadelphia, you could not find work flipping burgers unless you had a personal connection. You needed to be part of the “young boy” network.
I don’t think most of the country has experienced what we’re about to go through. Some people know. If you lived in Detroit, you’ve probably seen worse than what is about to happen. People in Detroit, Pittsburg, Philadelphia and other big cities moved away in response to what happened from 73-83. That isn’t really a convenient option for the whole country.
January 9th, 2009 at 1:06 pm
“Even most VC-funded tech and biotech start-ups also fail (about 50-70%). Are you going to tell me that a firm that can outcompete 50+ other ideas to catch the eye of a VC is deficient in human capital?”
No, but you know as well as I do that VC-funded start-ups don’t represent “most start-ups”. Most start-ups fail because of the reasons I mentioned. VC-funded start-ups are a different animal, and aren’t relevant to my initial comment. A recent college — if he has the initiative — can probably start a business for less than the cost of going to grad school, and may be able to fund it from the sources I mentioned. As you know, it’s highly unlikely that he’ll get venture capital funding for any business he starts (or that he’ll have the technical background to start that sort of business).
Most VC-funded start-ups fail because the types of businesses most VCs fund are inherently high risk (and have correspondingly high potential upsides).
“Look, what you advocate may work for maybe 5% of graduates who have the combination of luck, persistence, leadership, people and political skills, and optimism-verging-on-delusion that entrepreneurs require. But for the 95% of bog-standard graduates, it’s not a solution.”
I’d think the percentage would be higher than 5%, but I’d agree that only a small percentage of college grads will have what it takes (though a somewhat larger percentage may have what it takes to be employee number 1-10 in a start-up). In any case, since this group will be self-selecting, it was probably pointless of me to suggest entrepreneurship as an option for recent grads: those who are entrepreneurial are already going in that direction, and those who aren’t will remain convinced it’s too risky.
January 9th, 2009 at 1:20 pm
A recent college — if he has the initiative — can probably start a business for less than the cost of going to grad school, and may be able to fund it from the sources I mentioned.
Also, Dave—reading my previous comments I wouldn’t want to seem too dismal about the general prospects for eventual success for anyone with sufficient drive, intelligence and ambition. I certainly admire your overall optimism.
But as someone who’s been a small businessman for the last fifteen years, I can say that the general climate for starting one’s own operation—in terms of available “niches,” access to credit, and the nebulous and intangible “general openness of potential clients to new things” has never seemed anywhere near as bad as it does right now.
January 9th, 2009 at 3:18 pm
One thing no one has mentioned here is the nightmare of dealing with student loans when you graduate in the middle of a severe recession. Get behind on your loans and they can use fees and penalties to double or triple your principle in a year.
I’m sick of boomer assholes who went to school back when the government covered half the cost ragging on people who listened to their parents, teachers, and counselors and now have to try to make ends meet while earning $9/hour and paying $400 a month in loan payments.
Miss a payment and your credit rating is shot to hell, along with your once excellent job prospects. However, no matter how far under you get, no matter how bad the economy gets, there is no way to ever get out from under student loans.
Some baby boomer asshole who gets $1 million in debt flipping houses can just declare bankruptcy and walk away, but a college grad who can’t make their payments on their salary from Borders just gets grinded down forever. How fair is that?
January 9th, 2009 at 3:21 pm
That study involved Business majors. I wonder if it is true of other professions. For instance Engineers can often make good pay without rising up the organizational chart. Its their capacity to solve technical problems that earns their salary and that technical skill is probably less dependent on their position on the organizational chart. Business majors on the other hand are destined for mid-level management where the key to higher pay is promotions. This requires either starting out higher or being very aggressive about changing jobs.
January 9th, 2009 at 4:06 pm
You could always apply for an economic hardship deferment. Or call your lender and get them to work out a payment plan. Most lenders are incredibly receptive, without gouging you with ridiculous fees or interest rates. But, you have to let them know ahead of time. Don’t go missing payments, then expect to do things after the fact.
I had a tough time finding work after graduating, and when I did, I wasn’t making a lot of money ($7.50/hr in 2000). I called my lender (Sallie Mae) and they reduced my payments, and my interest rate barely budged. Now, I have more money, and I obviously I have some loans to pay back - and since interest was accumulating while I was struggling it’s more than I would have, but my credit rating is fine.
January 9th, 2009 at 4:42 pm
Oy. That single final sentence turned this into social justice question. I was hoping for a less normative discussion: what are the prospects for current graduates? And is that a good thing for our economy (not “do they deserve what they’re getting” but “how does that affect the economic outlook for the next big demographic? (who will, of course, become the drivers of the economy at the exact time the boomers’ retirement reaches its peak)”
As a 2008 grad myself, I’m ambivalent. I’m in grad school now, and not for economic reasons, so I’m not so directly affected. But most of my friends haven’t had such luck. Most of them are, indeed, competing with recently laid-off, older candidates for a few job openings. A lot of them are going back to school because it’s preferable to living at home unemployed. Obviously, that’s not good for anyone.
But there are a couple of other salient points that I haven’t seen discussed here: One, the folks I know who are having the hardest time finding employment are those who were preparing themselves for a career in some form of finance. That’s no surprise, but I can attest that these really aren’t people who would’ve contributed to a productive economy; the friends I had who were absolutely brilliant had no problems finding employment. They’re mathematically-oriented and analytical minds who’re a natural fit to the industry. But the rest were just piling on to a bloated financial industry because that’s where the jobs were. It’s not the “handing a job to any old graduate regardless of their degree” meme that’s been the CW since Michael Lewis wrote his piece in Portfolio. These people actually worked hard in the classes that would set them up for jobs in the financial services sector. But it wasn’t because they had any real proclivity for those jobs. It was just because that’s where the money was. Now they’re pretty much screwed. Again, bad news for a lot of the more-talented part of the up-and-coming workforce. On the other hand, I think my class is supposed to be towards the “leading edge” of the millenial generation, so hopefully the young’ns below us will be pushed by the downturn to some jobs with more intrinsic value to the economy.
The other point I wanted to make (if anyone’s reading this far into a comment this low on the list) is that the paths that people are finding are probably both more productive for society and more heavily-dependent on government funding. I have five close friends working in AmeriCorps programs right now: two because it’s supposed to be good for the CV when applying to med school, but the other three because they just couldn’t find anything else. Now, instead of being business analysts, they’re working in inner-city schools, etc. Others are going back to school - not elite private institutions but big public universities that are about to be hammered by shrinking state budgets. Their work, in public policy planning, fundamental (my own path) or applied sciences, etc., is probably of far more public value than the higher-salaried private sector jobs that talented graduates from a few years ago might have taken. In the long term, this could be a good thing for the economy, as long as enough federal funding is set out to compensate for the downturn. The public investments we’re making with the new stimulus shouldn’t be all about construction jobs. Nor should it be too focused on private-public parnerships, which Obama seemed to be touting yesterday. There are plenty of public programs out there that deserve funding.
January 9th, 2009 at 7:12 pm
I used to work in an employment agency that placed recent college graduates and went on to work for an outplacement company that helped people laid off due to company closures/relocations. Finally I went to work in the placement office of an MBA program. Now I’m self-employed and much happier. What did I learn?
1. People’s notions about employment, especially college students and their parents, are based on stereotypes, television, and whatever the parents happen to do for a living. Their notions are typically not explored or analyzed for accuracy or relevancy to the individual’s skills, strengths, circumstances, location, situation.
2. Students and parents have a completely misplaced faith that completion of any degree (undergrad or post-grad) virtually guarantees a good job/career. WRONG.
3. People routinely enter college with career plans that are nebulous at best, often either pursuing fields they aren’t necessarily interested in because they think “that’s where the good jobs are” at the time, or picking majors based on vague interests with no concrete plans about life post-graduation. Once again, they and their parents, operate on a misplaced faith that the school and job market will magically resolve lack of knowledge, lack of drive, lack of focus, lack of plan, etc. After all, they’ve just spent thousands of dollars on that education. It must be worth something, right? WRONG.
4. Most graduate degrees were originally intended for people who already had substantial experience in a field, that they intended to remain in. Thus the students brought expertise to the program and could apply what they learned in the program to their existing jobs or promotions. Nowadays graduate degrees are seen (often) as an avenue out of an uncongenial field into a new one, which means their work experience is often only somewhat relevant or entirely irrelevant. Thus people already working successfully in Finance who got an MBA in finance would be the ones likely to see a real increase in salary and job prospects. The folks with a BS in Marketing who’d had crummy jobs in Sales and went on to get an MBA in Finance, or even Marketing, usually found themselves not qualified for MBA level jobs in Finance or Marketing, but overqualified educationally for everything else. Meanwhile, the kids going right from undergrad to grad school then entered the job market with no work experience and too much education. Believe me, their job searches were not pleasant and typically ended with them obtaining jobs that did not require a graduate degree. The taking of that job would then nullify the value of the degree in the future as people with MBA-level opportunities would reject them for having accepted a lesser job in the first place.
5. Ivy League school graduates have a definite, if often undeserved, advantage over graduates from “lesser schools”.
6. Many many young adults would be much better off, especially young men, if they did live at home and worked full-time in service jobs for a few years, saving for college, honing some actual interpersonal and other work skills, actively exploring the world of work through research and “information interviewing”, etc. and then, as much more informed consumers, selecting schools and programs for good reasons, not the poor or non-reasons typically applied.
7. Finally, none of this applies to the small percentage of driven people who know just what they want to do and have a plan to do it. This is especially true of people who study very specific things link accounting or programming or engineering. I should note, though, that over the years I worked with a lot of unhappy engineers who went into the field because they thought it was secure and then found that they hated the work. But that’s a different problem.
January 9th, 2009 at 7:14 pm
I used to work in an employment agency that placed recent college graduates and went on to work for an outplacement company that helped people laid off due to company closures/relocations. Finally I went to work in the placement office of an MBA program. Now I’m self-employed and much happier. What did I learn?
1. People’s notions about employment, especially college students and their parents, are based on stereotypes, television, and whatever the parents happen to do for a living. Their notions are typically not explored or analyzed for accuracy or relevancy to the individual’s skills, strengths, circumstances, location, situation.
2. Students and parents have a completely misplaced faith that completion of any degree (undergrad or post-grad) virtually guarantees a good job/career. WRONG.
3. People routinely enter college with career plans that are nebulous at best, often either pursuing fields they aren’t necessarily interested in because they think “that’s where the good jobs are” at the time, or picking majors based on vague interests with no concrete plans about life post-graduation. Once again, they and their parents, operate on a misplaced faith that the school and job market will magically resolve lack of knowledge, lack of drive, lack of focus, lack of plan, etc. After all, they’ve just spent thousands of dollars on that education. It must be worth something, right? WRONG.
4. Most graduate degrees were originally intended for people who already had substantial experience in a field, that they intended to remain in. Thus the students brought expertise to the program and could apply what they learned in the program to their existing jobs or promotions. Nowadays graduate degrees are seen (often) as an avenue out of an uncongenial field into a new one, which means their work experience is often only somewhat relevant or entirely irrelevant. Thus people already working successfully in Finance who got an MBA in finance would be the ones likely to see a real increase in salary and job prospects. The folks with a BS in Marketing who’d had crummy jobs in Sales and went on to get an MBA in Finance, or even Marketing, usually found themselves not qualified for MBA level jobs in Finance or Marketing, but overqualified educationally for everything else. Meanwhile, the kids going right from undergrad to grad school then entered the job market with no work experience and too much education. Believe me, their job searches were not pleasant and typically ended with them obtaining jobs that did not require a graduate degree. The taking of that job would then nullify the value of the degree in the future as people with MBA-level opportunities would reject them for having accepted a lesser job in the first place.
5. Ivy League school graduates have a definite, if often undeserved, advantage over graduates from “lesser schools”.
6. Many many young adults would be much better off, especially young men, if they did live at home and worked full-time in service jobs for a few years, saving for college, honing some actual interpersonal and other work skills, actively exploring the world of work through research and “information interviewing”, etc. and then, as much more informed consumers, selecting schools and programs for good reasons, not the poor or non-reasons typically applied.
7. Finally, none of this applies to the small percentage of driven people who know just what they want to do and have a plan to do it. This is especially true of people who study very specific things link accounting or programming or engineering. I should note, though, that over the years I worked with a lot of unhappy engineers who went into the field because they thought it was secure and then found that they hated the work. But that’s a different problem.
January 9th, 2009 at 7:42 pm
I’m actually in this situation right now. I should have commented sooner as I’m sure this thread is already dead.
I graduated this past December (why I chose to graduate early is beyond me) and have been seeking a job. The opportunities are limited. I’ve applied to law schools as I’ve always wanted to be a lawyer, but in the meantime I am completely uncertain about the short term. I’m searching for a job. Anyone want to hire me?
But I’m not a victim of injustice. I’m freeloading at the moment because my parents are really generous. I’m spoiled. Social and economic justice would dictate otherwise, I imagine, but it certainly would not entitle me to a job and, as a result, a more dignified lifestyle.
January 10th, 2009 at 6:58 am
I’m a law student right now, thanking any lord up there I am a 2L instead of a 3L…it significantly hurts me because I can’t get a summer associate job, which tends to get you your real lawyer job, but at least I have another year and a half until I need to have a job, at which point all these companies and in my case firms that have laid people off, may need to hire people back…hopefully that happens, I don’t really have anything else.
January 10th, 2009 at 11:48 am
WTF - your grandpa may have graduated into the great depression, but he also graduated into the New Deal, and then because he made through the WW II in one piece into a sustained 30-year long economic boom that had little or no precedent in human history. I not recommending that we start ourselves a world war, but at this point a new new deal is looking pretty good to me.
January 10th, 2009 at 4:09 pm
I graduated from college in 2001 in New York (NYU). During our initial job hunting stages, the post-dot com recession was already in affect, and shortly after graduation, 9-11 really through a wrench into our plans.
By the time things were back on track and the paths to “good” jobs opened up, there was a new crop of graduates willing to do more for less, not to mention not having that embarrassing years of shiftlessness rearing its ugly head on their resume.
There was actually a fairly strong bout of nihilism and hedonism that surfaced in many of my friends resulting from the whole experience (especially after 9-11 and the anthrax attacks where we all thought there was a decent chance we might get killed any day). Everyone drifted for a couple years, some, including me, opted for graduate school, but others continue to drift. The same goes for friends that went to Brown, UPenn, and other Ivy League schools. Almost 8 years later, out of my 10 closest friends, 3 are unemployed, two of us are finishing up grad degrees, and a couple are working but still making less than 50-60k. In short, no one is really doing “well”. All our friends, just a couple years younger or older, are doing much better.
Oddly, the most successful ones are the ones that embraced the hedonism full tilt and managed to turn it into a career (mainly as rock stars). They go to the grammy’s have their faces on magazines, etc.
We would never have guessed that our musician and writer friends would be out earning us engineers, accountants, chemists, and economists 7 years later.
January 10th, 2009 at 4:24 pm
One of my friends who graduated in 2001 with an Ivy League econ degree struggled for a couple years through that recession to land a good job, finally gave up after too many crappy jobs, and opted to go back to undergrad for another 4 years, got himself a graphic design degree and landed a great job as a designer, worked there for a year (and earned some design awards) until 2 months ago when the firm laid off half their designers when half their clients canceled new design projects. Now, for the second time in his life, he finds himself unemployed and job hunting during a recession only now he’s pushing 30. He’s one of the brightest and most hardworking people I’ve ever met, but its like his life has been nothing but bad timing. Always a student during the “boom” years, and in the labor force during the bad times.
January 10th, 2009 at 11:21 pm
What about the effect of cost cutting plans now compared to earlier recessions?
Perhaps there is some hope for recent graduates who can replace higher salaried, more experienced employees. Certainly this is a trend in education. School districts will employ less qualified teachers to avoid paying more. The same could also prove true for large companies. Just a thought and recommendation for those graduating a year before me.
As for the study, I agree the result has been generalized inappropriately and while Investment banking is highly correlated to the economic condition, the same salary patterns may not apply to non-wallstreet firms.
January 14th, 2009 at 3:28 pm
As someone graduating this year, this an especially scary concern for me. I’m surprised no one has mentioned the option I’m seeking out - service corps. Loan forbearance, a salary (with benefits in some programs), and a chance to give back Obama-nation style. I’m also thinking about grad school, but know I’m not ready for it yet and this gives me some time to figure things out.
January 15th, 2009 at 11:39 pm
This is very disturbing news, and I can see exactly how it works. I am a graduating senior, class of 2009. In short, I’m screwed.
It’s not that I don’t work hard. I’m an aspiring graphic designer, and I’ve been trying to get an edge on the competition by learning every skill possible. I’m a pretty competent graphic designer too–I won a school-wide graphic design contest just last month. But in this recession there are so many older, more experienced people looking for the same job that the only way I’ll be able to get a graphic design job is by working for 2/3 to 3/4 the salary of a more experienced graphic designer.
The fact that I may be behind for the next ten years or more really haunts me, and I can’t see how anyone could spin it as being fair. I hope that the incoming administration will somehow address this problem.
January 17th, 2009 at 8:01 pm
I agree with some of the comments made earlier. Exploiters point to the condition of unemployment and hold it against a person, as if there is some form of social justice involved with markets. “If he’s unemployed, there must be something wrong with him.” They point to the condition and use it as a justification for allowing people to stay unemployed. What every successful person must realize is that, yes, he/she may have worked hard, but you get where you go not only because of your hard work, but also due to external factors.
And I swear, this whole “experience” thing really drives me insane, and I have good control over my anger. Employers will hire a blathering idiot as long as the guy has a resume of experience, and refuse to give a recent graduate a chance, no matter how determined or qualified the candidate is. Again, it is this idea that the market provides social justice, and if someone doesn’t have experience, there must be something wrong with them. And that is the first lie that enables the exploiter to justify his exploitation, hiring from one class of people, and creating barriers of entry for another.
March 11th, 2009 at 4:50 am
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March 13th, 2009 at 7:35 pm
I am a 2009 graduate AND THERE ARE NO JOBS! GtheK I highly doubt that you are out there looking because I will take anything… honestly post jobs that will sustain a 22 year old and I will apply… ANYWHERE… in the world! I loose my University jobs in June so anything you get before then - and look for jobs for my boyfriend and friends while you are at it- they are in the same position. Thanks!
March 17th, 2009 at 2:30 am
I bookmarked this site. Thank you for good job!
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