The Forgotten Graduates of the Recession

NEW YORK (MainStreet) — Mollie Thompson was a top student in her class at the University of Minnesota, but you might not know it from the limited success she’s had finding work after college.

Since she graduated in 2009 with a bachelor’s degree in environmental science policy, Thompson has yet to find a full-time job, let alone a position that provides basic health and retirement benefits. Instead, the best position she has landed so far was a part-time paid internship that lasted the better part of her first year out of school, followed a few months later by another part-time gig, this time working as a barista at a local coffee shop in Minneapolis.

“It’s really been a deflating experience,” Thompson told MainStreet. “I worked as a barista when I was in high school, and it just felt like a step backwards to work as a barista again after college.”

Several dozen job applications later, Thompson is still stuck working at the coffee shop, a fact that is all the more surprising to her because she never had much difficulty finding work in college.  In fact, she has worked an incredible range of jobs on and off, starting from the age of 14 when she scooped ice cream at a 50s-style restaurant near her home in southeastern Wisconsin, and continuing through high school as she spent summers babysitting, working as a secretary at a car dealership or serving as a kennel attendant at a veterinary clinic, all while keeping up her grades. She thought her degree would only make her more competitive in the labor market, but she has yet to experience the professional benefits of having pursued higher education.

Like many students who graduated during the recession years, Thompson has struggled to find her footing in a particularly treacherous job market. In April 2007, shortly before the recession began, the unemployment rate for college graduates under the age of 25 was just 3.7%, according to the Bureau of Labor Statistics. Two years later, as Thompson was gearing up to enter the labor market, that number had shot up to 8%, and the employment situation only worsened from there.

Nearly a tenth of college graduates under the age of 25 were unemployed throughout 2010, a separate report found, as were nearly a quarter of high school graduates, despite the fact that the recession had officially ended more than a year before, and the overall job market was gradually improving. In fact, if these reports factored in students who settled for working menial positions unrelated to their desired profession, that number might be much higher, as one recent survey from Adecco found that 43% of students who graduated between 2008-2010 are currently working jobs that do not require a four-year degree.

Ultimately, college students faced a unique set of obstacles for employment: Companies remained hesitant about expanding their payrolls, and those jobs that were created were primarily in lower paying professions like the retail and food services industries. To make matters worse, when students do find that dream job posting, they must compete not just against fellow unemployed graduates, but also older workers who are desperate even for entry-level work.

This year, at long last, a series of surveys and reports have predicted a significantly improved hiring outlook for recent college graduates.

One survey from the National Association of Colleges and Employers found that companies across the country plan to hire 19% more new college graduates this year than in 2010, marking the strongest year-over-year hiring growth for graduates since the beginning of the recession. Likewise, a Careerbuilder survey found that employers aren’t just planning to hire more grads but also to pay them higher salaries than the year before.

But as promising as these improvements may be, will this hiring shift actually help students like Thompson who have already been out of school and underemployed for multiple years, or is it too late for this group of recession graduates?

Will There Be Long-Term Career Damage?

Just because more good jobs become available to college graduates doesn’t necessarily mean those who have been out of school longer will be first in line for the new positions. If anything, the reverse could prove to be the case for some students.

“If graduates from ’08 and ‘09 haven’t been building up their skills, even in an indirect way, since finishing school, then they will be less competitive [than newer graduates],” said Susan Cantrell, a research fellow at the Accenture Institute for High Performance who has surveyed hiring managers from many of the country’s leading companies.

According to Cantrell and other hiring experts we spoke with, students who graduated in 2008 or 2009 and spent most of their time traveling or who simply failed to hold down any position, even on a volunteer level, may be at a disadvantage now when competing for job openings against the class of 2011. But on the other hand, if one has worked or volunteered during that time, they might not be as bad off as they think, as long as some of these positions display a similar passion or skillset related to the profession they want to pursue.

“Companies really do value experience,” Cantrell said. “If students have been productively using their time volunteering or doing freelance work, even if they were generally underemployed, that’s impressive and will still give them an edge over newer grads.”

Even retail jobs, though not ideal, do have the potential to help older graduates distinguish themselves, according to Cantrell, by helping to develop soft skills like teamwork that may be valuable to potential employers.

That said, though older graduates may be able to compete with upcoming classes of students, many may still experience an unfortunate lingering side effect from having graduated at the wrong time.

Any student who graduated in the recession interested in finding out the worst case scenario for his or her career need only take a glimpse at a research paper from the National Bureau of Economic Research entitled The Short- and Long-Term Career Effects of Graduating in a Recession. The paper, which was published back in 2006, was cited often a couple years later when the global economy took a nosedive thanks to its striking conclusion that the economy one graduates into makes all the difference to their career.

The researchers did a thorough analysis of payroll and tax data for Canadian students who graduated between 1976-1995, and found that those who graduated during a recession switched jobs more often and earned 70% of the wage growth they would have during normal times.

“Those who graduated into a recession took a hit that seems to be coming in significant part from not being able to land that coveted job that leads to better wages,” said Philip Oreopolis, co-author of the study and a visiting professor of economics at Harvard University. Instead, graduates end up working lower paying jobs at smaller firms (if they find work at all) and are forced to jump from one position to the next to make up for lost wages. On average, it took the students in this study about 10 years to get back on the salary track they would have been on ordinarily, and even longer for those students who had less flexibility to move from job to job, perhaps because they were tied down to a particular location.

To make matters worse, Oreopolis speculates that the impact of the Great Recession on U.S. graduates could be even more long-lasting because of the limited growth of high-paying jobs to date.

“If it’s taking longer for the types of good jobs that offer promotion opportunities and better wages to become available, then the time it takes for graduates to catch up will be longer,” he said.

The Frustration of a Job Deferred

For some students, the promise of more job openings down the road just isn’t enough to ease the frustration of being turned down from jobs time and time again.

One third of students who graduated between 2006 and 2010 currently live with their parents, according to the Adecco study, many of whom are utterly dependent on their family due to their lack of solid employment. Even those students who did find work had to confront months-worth of rejections to do so, with students from the 2008 graduating class taking an average of 11 months to find a job. And some could argue those are the lucky ones.

Thompson, the University of Minnesota student, estimates she has applied to upwards of 40 jobs in the past eight months alone, and more still since she left college. Of those, she has landed three interviews.

Earlier this year, Thompson found an unexpected outlet for her frustration, when she met Max Berger at an energy event in Washington, D.C. Berger, a 25-year-old graduate of Reed College in Portland, Ore., had struggled for a time to find steady employment after graduating in 2009, and noticed many of his friends having the same problem, so this year he helped organize dozens of protests around the country, called Briefcase Brigades, intended to raise awareness of youth unemployment.

“Very few of the political and advocacy organizations, on the left or right, are speaking directly to the unemployment problem facing graduates,” Berger said recently in an interview with MainStreet. “The national conversation at this point revolves around how much and how deep to cut spending, and very little of the conversation is dedicated to the continued unemployment crisis.”

Some 50 schools around the country took part in the brigades, which occurred on April 28, as unemployed graduates dressed up in business attire and donned a briefcase to demonstrate to the legislators that they were ready to work and waiting for the chance to do so.

As Berger puts it, the pain of youth unemployment is only compounded by the fact that students are saddled with more loan debt now than ever before. Students who graduated with a bachelor’s degree in 2008 accumulated $23,000 of debt on average, compared to $17,000 back in 1996.

“Education is more important than ever before to get a job, but it’s also more expensive to get that education, and more difficult than ever to find a job,” Berger said. “So you end up with this generation graduating off a cliff.”

Thompson was inspired enough by the mission of this group and decided to organize one such rally in Minnesota. Though the turnout was small, she found herself moved by one attendee who carried a simple sign that explained the plight of today’s unemployed youth: “I graduated at the top of my class and I’m leaving the country to find a job.”

What Graduates & Schools Should Do Differently

Given the fact that Congress is currently dominated by talk of fiscal austerity measures – not to mention the backlash to the stimulus efforts of 2009 – it seems doubtful that legislators would do much, if anything, to pump more money in job creation programs or even unemployment assistance in a way that would help unemployed college graduates. At best, movements like Briefcase Brigade provide an outlet for the frustration of graduates.

Indeed, some of the blame could be directed at the schools themselves for failing to adequately inform outgoing students about the obstacles they may face in finding employment in their profession.

“Colleges are really failing to provide their students and graduates with a school-to-work plan,” said Jeffrey Arnett, a professor of psychology at Clark University and author of Emerging Adulthood. “They could easily compile information about what graduates in various majors end up doing five or 10 years down the road. Instead, they allow the students to stay in a bubble, and when the students are done paying tuition, the schools just say, ‘Good luck and see you later.’”

Arnett suggests that at the very least, faculty or administrators take students aside in their last semester at college to have a real conversation about what comes immediately after college, and offer them advice.

But for those who have long since graduated, their time would probably be better spent on rethinking their job hunt. In effect, these graduates have two options for improving their chances going forward of finally settling into a steady career: They can either double down on the profession they’ve been going after all along, or they can retrain for something more in demand.

Those looking to do the latter don’t necessarily need to go back to graduate school, though that is certainly an option. According to Cantrell, from Accenture, many of positions that hiring managers have expressed the strongest interest in are skilled trades like beer brewers, plumbers and factory floor workers, that require one to attend trade school instead.

If one is looking for a more glamorous position, Cantrell has also found there to be a strong demand for nursing and physician’s assistants, among other health care positions, as well as for computer programmers and analytics specialists. Having a master’s or doctorate degree can help make one competitive in these positions, though it is not generally necessary.

Still, if you have your heart set on a career other than these, you don’t necessarily need to abandon it altogether, but rather tweak the way you go about your job search.

“If you’ve been sending out your resume over and over and it’s not working, then think about ways to refresh your approach,” said Samantha Zupan, a spokesperson for Glassdoor.com, a job search engine. “Customize your resume for every position, talk to friends to find contacts in the industry and go to industry events where you can meet people and hand out your resume.”

Perhaps most importantly of all, students must be willing and prepared to be turned down, but persistent enough to keep applying. One of the more surprising statistics in the Adecco survey showed that 2010 graduates have applied to just 14 jobs since leaving school and 2008 graduates have applied to just 11. With so few applications, it’s no wonder graduates are receiving so few offers.

As the old adage goes, if at first you don’t succeed, keep on trying. You don’t need to go to college to learn that.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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