Gloomy job market awaits graduates
By Mike Dorning
Bloomberg News Service
Ten months after graduating from Ohio State University with a civil-engineering degree and three internships, Matt Grant finally has a job — as a banquet waiter at a Clarion Inn near Akron, Ohio.
"It's discouraging right now," said the 24-year-old, who sent out more than 100 applications for engineering positions. "It's getting closer to the Class of 2010, their graduation date. I'm starting to worry more."
Schools from Grant's alma mater to Harvard University have begun sending a wave of more than 1.6 million men and women with bachelor's degrees into a labor market with a 9.9 percent jobless rate, according to the Education and Labor departments. While the economy is improving, unemployment is near a 26-year high, rising last month from 9.7 percent in January-March as more Americans entered the workforce.
The graduates' plight has been the topic of high-level discussions within President Obama's administration, which so far has concluded the best response is to focus on reviving overall employment and bolstering assistance for higher education, said Peter Orszag, White House budget director.
"What's clear is that there is harm to those who graduate at the wrong time through no fault of their own, which is one reason why it is so important to improve the jobs market," Orszag said. "That is the bottom line here."
The scramble for jobs may depress earnings of new and recent college graduates for years to come and handicap their future career opportunities, according to Lisa Kahn, an assistant professor of economics at Yale University's School of Management in New Haven, Conn. It also might hurt Democrats in the November congressional elections, as the young voters who helped propel the party to power in 2008 grow disenchanted with their economic prospects.
Students who graduated in the early 1980s — when two recessions drove unemployment to a peak of 10.8 percent — suffered wage losses of more than $100,000 in the next 15 years compared with those who came into the job market during the decade's boom years, according to Kahn's research.
"They get shifted down into a lower level and lower pay scale," she said. "They are working for worse firms, they're not learning as many skills and they're not moving up the career pyramid as quickly."
The average salary offered to bachelor's degree candidates this year is $47,673, 1.7 percent less than 2009, when the economy already was in recession, according to data compiled from campus job-placement offices by the National Association of Colleges and Employers in Bethlehem, Penn.
"More so in the last year to 18 months than at any time, we have seen applicants from prior graduating classes looking for the kind of entry-level jobs we're recruiting for," said Dan Black, director of campus recruiting for Ernst & Young LLP, a professional-services firm with headquarters in New York. "There are a lot more cohorts competing with each other: '09 with '10, probably '10 with '11."
Unemployment among people younger than 25 was 19.6 percent in April, the highest level since the Labor Department began tracking the data in 1948. Their economic travails may haunt Democrats in the November midterm elections.
The youthful voters who helped propel the party to victory in the 2006 Congressional elections and gave the 2008 Obama campaign much of its vibrancy are showing signs of waning enthusiasm.
Democrats held a 62 percent to 30 percent advantage over Republicans in 2008 among "millennials," born after 1980, according to the Pew Research Center for the People & the Press in Washington, D.C.
Their 32-point margin shrank to 18 points this year, with 55 percent leaning Democratic and 37 percent Republican, based on polls taken from January through April.
"It's definitely tamped down the energy and the excitement and activism that the Obama campaign had sparked among that entry-level age group," said Democratic strategist Joe Trippi, who advised Howard Dean's 2004 campaign and is working with candidates in several midterm races.
Even graduates of elite and graduate universities feel the impact. A new list of "Hot Opportunities" Harvard's career-services office began compiling in March garnered 1,000 student subscribers in its first two days.
"This is the first year we have seen such a demand for our services this close to graduation," said Robin Mount, director of the office in Cambridge, Mass.
Thirty-three percent of Harvard's graduating seniors had accepted a job as of commencement last year, down from 51 percent the year before. The survey results for this year's class haven't been released.
On-campus recruiting at schools of business declined 65 percent during the fall job-interview season, according to the MBA Career Services Council in Tampa, Fla.
Peter Giulioni, assistant dean and executive director of MBA Career Services at the University of Southern California's Marshall School of Business in Los Angeles, said he is encouraging this year's graduates to be more flexible in the jobs they seek.
"Whereas in the past maybe 10 percent of my students had to go with their Plan B, about 30 percent are now," he said.