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Facing Tough Job Market, New Grads Accepting More Offers, Lower Salaries

by Jun 2, 2010, 2:55 pm ET

As the last strains of Pomp and Circumstance played out over college quads and athletic fields these last few weeks, more than a few of the new graduates had to be wondering: What next?

A survey of graduating seniors found only a quarter of those in the Class of 2010 who applied for a job had one waiting. Conducted by the National Association of Colleges and Employers, this year’s results, certainly discouraging if you’re one of the grads or a parent, are an improvement over 2009, when only 19.7 percent had jobs waiting.

The ever-so-slowly improving economy is one reason for the better numbers. Another is savvier job hunting. “A greater number of Class of 2010 graduates accepted the jobs they were offered,” says Marilyn Mackes, NACE executive director. Last year, 45 percent of the students offered jobs accepted them; this year the acceptance rate rose to 59 percent.

Since the survey was conducted a couple months ago the numbers no doubt have improved. Still, the demand for recent college graduates mirrors the national economic picture. While the unemployment rate for those with bachelor degrees of all ages was 4.9 percent in April, the rate for those under 25 was 8 percent. Better than the national 9.9 percent, the unemployment rate for young degreed workers has been steadily rising. In April 2009 it was 6.8 percent and in April 2008 it was 3.1 percent.

Even the most prestigious schools report their graduates are having a difficult time finding work. Harvard, last year, said only 33 percent of its 2009 seniors had a job at graduation, down from 51 percent the year before. While this year’s numbers aren’t yet available, one sign of the times is the university’s launch in March of a jobs mailing list. In two days 1,000 students had signed up.

The NACE Job Outlook 2010 Spring Update projected college graduate hiring to be up 5.3 percent over 2009. Not a huge improvement, but better than last fall’s prediction by the Michigan State University 2009-2010 Recruiting Trends survey, which had recruiting flat for the college year.

Data like this, and the monthly U.S. Bureau of Labor Statistics reports showing that among all 20-24 year-olds the unemployment rate was 17.2 percent in April, has promoted concern from both industry and government.

The U.S. Congress Joint Economic Committee inventoried the plight of younger workers, saying that the 19.6 percent unemployment rate for  workers 16-24 is the highest ever in the 63 years the data has been tracked. For those without a high school diploma, the unemployment rate is 33 percent.

Those who are working tend to be in industries hardest hit by the recession. The committee report notes that young workers make up 34 percent of the leisure and hospitality workforce and 20 percent of the wholesale and retail trades workforce. Nationally, workers under 25 comprise 13 percent of the entire labor force.

The biggest share of those workers are teenagers. Nevertheless, those 20-24 — where the young, college educated fall — still account for almost 20 percent of the workers in each of those two groups and close to that percentage in education and health services.

Northeastern University economics Professor Andrew Sum found that 51 percent of young graduates were working in jobs requiring a college degree. That’s a 13.6 percent decrease since 2000.

When they do find jobs in their field, it’s often at a reduced salary. A NACE survey found the average salary offer for grads with a B.A. is $47,673, a 1.7 percent decline from last year. Liberal arts majors took the biggest hit, with salary offers averaging $33,540, an 8.9 percent decline over last year. Grads with computer science degrees saw a 5.8 percent increase to $58,746.

The tough job market and declining first-year salaries are no doubt behind the increasing number of recent graduates moving back home. A survey by CollegeGrad.com found that 80 percent of the 2009 grads moved back. In 2006, only 67 percent did.

Several months ago Intel announced an Invest in America Alliance to funnel $3.5 billion to U.S. tech companies in all fields, including information and biotech, over the next two years. That will help spur hiring, especially for new college graduates in emerging fields and sciences. But in addition, the 17 partner firms in the alliance pledged to increase their hiring of graduating seniors to an estimated 10,500 this year alone.

The implications of the recession for newly minted graduates will extend into the future. Yale economist Lisa Kahn who has been following the impact of recessions on the careers of young workers found that for every one point increase in the national unemployment rate, starting salaries for new, white male graduates declined 7-8 percent. The effect persisted for years, she found. After 18 years of employment, those who graduated at the height of the recession in the 1980s earned, on average, 2 percent less than those who graduated into a more robust economy.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • http://www.aftercollege.com Roberto Angulo

    As predicted, the economy is slowly starting to recover but it will be a long haul. New grads this year are competing with new grads from last year, so even though we’re coming out of the trough, grads this year may be having more competition than last year.

    During the job forum we hosted in February, http://bit.ly/a54tHJ, our guest experts had policy and industry recommendations to help college students, some of these include:

    -Internships: these are a great way to get industry experience. Many grads who normally get FT jobs after graduation may end up taking internships to get industry experience.

    -Local programs: local city governments are well positioned to start projects where college grads can contribute to the solutions. Local governments may have less bipartisanship and politics to get some of these initiatives implemented faster.

    -Training and volunteer programs: grads should consider volunteering at non-profits to keep their skills fresh and develop industry contacts.

    Times are tough, but they’re getting better.

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  • http://www.CollegeRecruiter.com/weblog Steven Rothberg

    Thank you, John, for not just writing another “the job market is terrible” article but for putting the job market for this year’s graduating class into context. The job market is worse this year than it was a few years ago and few would dispute that, but what likely will surprise many is that this year’s grads are competing for jobs not just with their classmates but also those who graduates a year ago.

    Something that makes the job market tougher for Gen Y grads than Gen X’ers and certainly Baby Boomers is the much higher percentage of Gen Y who attend and graduate from college than those in previous generations. This year’s high school graduates will form the largest college entering class in history and that isn’t just because this is the largest high school graduating class in history but also because a higher percentage are going to college — a little over 70 percent. Baby Boomers, if they remember accurately, will realize that’s about double the percentage of their generation who went to college. So this year’s graduating class isn’t competing against a third of the people their age for jobs which require college degrees but are instead competing against a large majority of the people their age for those jobs.

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