Job Market for the Class of 2004 Gradually Improving

Black Collegian, Feb 2004 by Gardner, Philip D

After three years that witnessed a dramatic contraction of job opportunities for new college graduates, this year's graduating class can expect to see a slight expansion of opportunities over last year. Employers are seeking qualified candidates to fill very specific positions or acquire specific skill-sets (often referred to as "spot-hiring") or they are looking for candidates for training programs that position the company with regards to their long term hiring needs. While this activity is welcomed, not all sectors of the economy will be hiring, and some academic majors, particularly in computer science and some disciplines in engineering, will face weak markets again this year.

Hiring Up

Slightly more than 450 employers responded to Michigan State University's 33rd annual college labor survey. Forty percent have set hiring targets that include new college graduates - a 5% improvement over last year. Still 49% have made only preliminary plans or were still uncertain of their hiring needs at the time they completed the survey (September 2003). For employers with definite plans to hire, 60% indicated that they would increase the number of positions they will recruit for over the academic year. Overall, estimates place hiring up 6% to 9% over last year.

The recession and subsequent economic recovery, albeit without jobs, has aflected the entire country - no region has been exempt from the loss of jobs and lack of new positions. In response to how employers viewed the labor market conditions in the areas that they recruit college graduates, the majority, nearly 86%, felt the market would remain "poor" throughout much of the year. More confidence was expressed for improving labor conditions in the southern states from coast to coast than in the North. The slow recovery and displacement of workers in manufacturing apparently continues to hold back the growth of labor in the North.

Encouraging News

Encouraging hiring news has been reported for specific sectors of the economy, particularly, retail, financial services, health, accommodations/hospitality, and administrative services (support for non-core functions of a company such as travel services, temporary worker acquisition, janitorial services). Retail companies expected to make strategic hires for the holiday season, as well as long term needs required by expanding operations. The troubled sectors included manufacturing, information services, professional services, and transportation. The first three of these sectors are particularly important to the college labor market, as they absorb a significant number of college graduates each year.

Manufacturing

Manufacturing on the surface looks more troubled than it really is. Some segments of the manufacturing sector are doing very well, especially food and beverage production, apparel, and chemicals. Firms in the transportation segment that have defense contracts will be seeking more graduates; but the automotive-related companies that are also in this segment are not looking to hire many young people this year. Segments that are particularly troubled with regards to hiring include metal fabrication, machinery, and electronics.

The Public Sector

The public sector that has been aggressively hiring for much of the past three years (holding the college labor market together in many respects) has seriously slowed hiring. The Federal agencies, particularly those related to homeland security, will be hiring. However, this will not be enough to offset the loss of jobs at the state level. Many states are facing serious budget problems, resulting in lay-offs and hiring freezes.

Trends

With the trends looking upward can we say with some certainty that the college labor market has turned around? The following chart tracks the average hires for each company over the last six years. The drop was steep, very steep; but it appears that last year witnessed the bottom of the labor-market decline. This year's growth is definitely upward. Yet, note that the upward slope is flatter than the downward slope and expected to continue to grow at this rate for a couple of years. It will take longer to recover the jobs lost between 2001 and 2003 than it did to shed them. You will also see that some labor markets have not yet responded to the improved economy. The MBA market, which we will discuss later, still lags behind the growth of the bachelor market for this year.

During the 1990s small employers (under 500 employees) powered the hiring of college graduates. This year, for the first time, small employers will not be as active in the new college labor market. At first this caused some concern; but actually smaller employers will be helping this year's graduates in a big way. Small employers who need to hire now, months before graduation, can tap into a well-educated labor pool that is currently underutilized. This pool is composed of graduates from the classes of 2001, 2002, and 2003 who have not found the type of position they desired when they graduated or have not yet landed a job. By small employers tapping into this available labor, pressures will be taken off the entry-level labor market. Hopefully, small employers can siphon enough of the recent graduates away from on-campus activities.