Back Down To Earth - Interview

Kiplinger's Personal Finance Magazine, April, 2001

GONE ARE THE days of free BMWs and other lavish incentives that tech start-ups once spread around so freely. Nevertheless, this year's crop of college seniors will be much in demand by employers.

Despite the slowing economy and the recent spare of layoffs, companies are engaging in "skill replacement," says Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University. "Firms need a different mix of employees than they currently have, so they're laying off at one end and hiring at the other. The beneficiaries are college grads who are more computer literate."

New hires will benefit to the tune of nearly $40,000 a year. For the first time, the average starting salary for new graduates across all fields is bumping up against that level, and compensation has been rising a bit faster than the rate of inflation.

"Employers would love to keep salary increases closer to inflation," says Gardner, and the economic slowdown will give them some help. Nonetheless, engineers and computer-science grads are in short supply, so job seekers in those fields are still able to command salaries approaching $50,000.

At the bottom of the salary range, starting pay for liberal-arts and social-sciences majors has been increasing at a faster pace than salaries at the top--"from the low-to-mid $20,000s to the upper $20,000s and lower $30,000s," says Gardner.

A couple of years ago, graduates in the information-technology field could name their price. Not any more, says Neil Fox of Management Recruiters International. "Employers in the IT field are becoming more discriminating," says Fox, taking more time to find the right candidate.

At the same time, students are putting a premium on stability and security. Only 13% would choose to work for a dot-com, while 42% would prefer to work for a Fortune 500 company, according to an online poll by the National Association of Colleges and Employers.

It's not surprising, then, that the class of '01 is looking more critically at compensation packages, especially when it comes to stock options. "If they go with an IT firm or a dot-com, they want money up front in salary rather than later as stock options," says Gardner.

And prospective hires are sizing up a potential employer as they would an investment, looking at a company's history, its board of directors and its management team, and making sure that a start-up has a solid business plan, says Ken Ramberg, president of Jobtrak, which partners with more than 1,000 college-placement offices, alumni associations and MBA programs to post jobs and resumes online.

Among the strongest job candidates are liberal-arts grads who can speak the language of computers, because they can act as liaisons between technical staff and senior managers. In the next few years, as DNA research becomes an even hotter field, the demand for biologists, chemists, food scientists and medical researchers will also explode, predicts Gardner.