Fair job prospects await 2003 grads

Black Collegian, Feb 2003 by Gardner, Philip

JOB SEARCH STRATEGIES

Since January 2001, the college labor market has experienced a contraction in entry-level job opportunities at a dramatic rate. In the 18 months prior to this past September, the number of positions for which employers were recruiting bachelor's degree graduates declined more than 50%; conditions in the MBA market were even worse. From the figures reported this fall by a group of national employers, the decline in opportunities has appeared to slow and may have bottomed out. This simplistic statement masks an economy that Rob Norton of Fortune magazine describes as "uneven, anemic and jobless." Some sectors of the economy will actually experience growth while positions will continue to be eliminated in others. Michigan State University's annual employer survey explores the conditions in the labor market and the implications for this year's graduating seniors.

Tale of two recessions

In order to have an appreciation for the dynamics affecting this year's labor market, it might be helpful to compare the recession of the early 1990s with today's sluggish economy. The economy has always gone in cycles. The heady days from 1997 through 2000, the best labor market ever witnessed for college graduates, has caused some to forget that markets can be equally as bad. Changing demographics from the anticipated retirement of the baby boomer generation, promised a continuation of the robust market even if the economy should cool. Unfortunately, economic conditions have become much worse due to unforeseen events and some unsavory business practices. But, this gets us ahead of the story.

Prior to the economic slowdown that began in 1989, companies were restructuring to maintain their positions in a rapidly changing global economy. In fact, a useful way to look at the 1990's recession was from the perspective of structural change. As the economy improved in the early 1990s, structural changes still occurred that led to a long period with little job formation. However, behind the scenes, with plentiful capital, companies were able to fund new buildings and to purchase technology. Consumers had money as well as good credit ratings; plus they were building an appetite for commodities such as automobiles, homes and durable goods. This pent-up demand from companies and consumers sparked a surge in the economy that coincided with the dot-com boom. The result was a heavy demand for all types of labor. The opportunities were numerous, exciting, and extremely lucrative.

Today's recession is very different, at least in the forces that are shaping it. It is one of uncertainty. While the manufacturing sector began to slow down in late 2000 and the dot-com bubble burst in the winter of 2001, there was enough strength in the other economic sectors to keep the country moving ahead, and labor markets healthy, especially if the pace of retirements continued. However, events of September 11, 2001 took the starch right out of the economy, only shortly afterward to have the moral fiber of the economy dissolved by the Enron debacle of unprincipled accounting practices that spread to so many other companies. Since consumers attempted to buy the nation out of the impact of 9/11, many consumers' credit had been maxed out by the summer of 2002 and their appetites for homes and cars have been fairly well satisfied; thus, little pent-up demand exists to push the economy forward this year. Likewise, companies who went on a spending spree in the late 1990s have very little credit or available capital to enter into new ventures or improve existing practices. So, the economy creeps along without enough momentum to create many jobs.

Factors influencing the market

Respondents indicated that the uncertainty of the business sector was caused by global instability that has raised caution in trying to expand or sustain economic activities in regions with terrorism and armed conflict. Compounding the level of uncertainty has been the business scandals that took on new proportions with regards to the amount of money involved, and the widespread impact on so many investors. Where will investments earn fair value? Can the stock market be trusted to reflect honest valuations of companies? Until these questions are answered, money will be conservatively held with little going toward economic expansion.

Remaining unresolved is the issue of medical costs that have skyrocketed during the past year. These expenses have been passed on to employees in the form of higher costs or reduced benefits. For many potential retirees, medical costs have caused them to shelve plans to leave the workforce. For actual retirees, medical coverage is unaffordable. This delay has further bottled up the labor market leaving new graduates on the outside looking in.

According to employers, several factors are working on behalf of new graduates, however. First, many employers are looking to replace or upgrade the skills and competencies of their workforce. They are relying on young workers to have developed those skills and a willingness to apply them quickly once they are hired. Second, employers expect to hire a few new faces to insure a transfer of institutional knowledge between workers. During the 1990 recession, employers simply did not hire. When the economy heated up, many companies struggled because they had no one to put in key positions with an understanding of a company's culture. They do not want to make the same mistake again.