Black Collegian Career Center

After nearly five years of robust labor markets, college seniors must deal with a situation that none of them expected when they enrolled as freshmen four or five years ago.  This year’s survey of U.S. employers confirms what the economic news has been reporting for more than a year: the economy has encountered some bumpy weather that has put the breaks on labor demand.  As the employer’s information revealed the breaks were not gently applied; rather the market contracted quickly and with some negative consequences.

What does this news portend for this year’s graduates?  Are there some bright spots in the report?  When can seniors expect the market to again turn in their favor?  Enough information is available to probe these questions. Yet, uncertainty looms over any predictions this year as economic indicators continue to present a murky picture heading into spring.

Market Implosion

Problems overtook the labor market quickly during the 2000-2001 academic year.  In spite of optimism in the early fall of 2000 (see last year’s article), the slowdown of the manufacturing sector, the collapse of the dot.com startups, and the drastic reduction in stock market value colluded to halt hiring by the spring of 2001.  An examination of three years worth of hiring data by a sample of those responding to this year’s survey found that hiring intentions were sliced by 35% at the bachelor’s level and 45% at the master’s level by May 2001.  Cutbacks were the largest in manufacturing, professional services (primarily consulting firms) and IT companies.

Employers who anticipated retirements to occur during the year instead learned that senior employees had shelved retirement as the value of their retirement portfolios declined.   This delaying action further stymied hiring.  As a result, many employers simply quit looking for new employees by early spring.

Some companies had to take even more drastic action, withdrawing offers (about 10% to 13%) or delay starting dates six months or longer.  Companies did not leave seniors high and dry; some provided separation pay and payment for expenses incurred in moving.  Others tried to find comparable employment with similar companies.

As the 2001-2002 academic year began, layoffs were being reported at levels not experienced since the early 1990s and May graduates were still having difficulty finding full-time employment.  The labor market has suddenly become jammed with a backlog of highly educated labor.  How much of these difficulties are expected to carry over or will the labor situation improve by spring 2002?

Labor Market Expectations

Anticipating a great deal of uncertainty among employers, the first question asked this year was: how definite are their hiring goals?  Only 6% of the responding employers (slightly fewer than 300 this year) stated that they planned not to hire anyone this year.  While 94% will hire, 40% had only set preliminary hiring figures and another 41% were uncertain.  The uncertain group was waiting until the economic situation turns around.  For them the question is: when will that upturn begin?

All regions of the country are faced with depressing labor market news. Particularly hard hit are the Western states and the Midwest.  Both regions have a manufacturing sector that has slow downed production, idling thousands of workers and a professional service sector that has had to follow suit.  In other areas of the country, the impact of the tragic events of September 11 have damaged the tourism, transportation, food and lodging, and related industries.  As a result, the economy has been jolted by a business recession on one hand and a loss of consumer confidence on the other.

When asked to indicate when they anticipated hiring would occur, most said early to late spring.  However, the terrorist attacks significantly shifted this time frame into the summer and possibly early fall.  Even when the economy begins to pick up steam in the second quarter (April to June), there will be a lag as to when hiring will start.  Graduating seniors need to realize that a lot of idle labor will have to be absorbed during this period.  They can anticipate facing stiff competition for jobs.

Actual Hiring Intentions

Keeping in mind that much of the damage to the college labor market occurred last year, this year’s graduates can expect the market to contract even further.  The market looks to be a little stronger for bachelor’s graduates than for master’s, especially MBAs.  Employers expect to cut hiring for bachelors between 6% and 13%.  Engineers, computer science, and some business majors will feel the biggest pinch.  Engineers can expect to see fewer job offers compared to recent graduates.  Even with the apparent cut of 10% for engineers and 17% for computer science grads, there appear to be jobs available – maybe not the graduates’ ideal jobs – but good starting positions.   In business, the strong demand for logistics and supply chain majors has weakened while consulting firms are not hiring as many accountants.  Nevertheless, financial services and insurance appear to be one bright spot as mortgage banking, personal financial services and insurance anticipate hiring increases.

For MBAs, the picture is grimmer. Without a strong consulting services presence and manufacturing sitting on the sidelines, the labor market has softened and is expected to contract by 20%.  Some bright spots may be found in financial services, construction and federal employment.

There are sectors in the economy that are looking for new employees. The strongest demand is among federal agencies who face exceptionally high numbers of potential retirements (not affected by the stock market) and who also face manpower shortages in dealing with the national economic crisis. These gains are partially offset by the hiring freezes at the state level.Construction companies have been able to shift from commercial to residential and public construction (such as schools), and have been able to work through a mild early winter. Public education, while not a focus of this particular survey, also faces shortages particularly in the South and West.

Who Will Be Hiring?

Probably the most important information revealed in the survey concerns who will be hiring.  The fantastic economic performance of the 1990s can be directly attributed to the activity of small and medium-sized employers.  When hiring picks up again, graduates can expect smaller companies, generally those with fewer than 3,000 employees, to lead the way.  Smaller companies will need to acquire new labor faster because they will be able to quickly utilize excess capacity, which in turn stimulates need for additional labor.

Advice From Employers

Company representatives offered advice to seniors as they prepared for their job search.  Employers discouraged simply sitting at home and grousing about the job market.  They would rather potential candidates remain active in their learning and communities.  Some specific recommendations included:

Research companies. Take time to research the companies with whom the graduate would like to work for, especially small to medium-sized companies that may not be familiar to them.  Many companies are focusing on “organizational fit” in an attempt to retain new employees longer (reduce turnover).  Identify companies that offer entry-level experiences and offer the type of work environment you desire.

Remain active. Continue to gain life experiences whether it be through volunteering, internships or similar activities.  A simple act such as volunteering at a local homeless shelter brings the volunteer in contact with other volunteers who may have connections to a job.  More important, the self-motivation these engagements illustrate provides a better picture of a potential candidate’s value to an organization.  This option does have a down side, particularly if a graduate is faced with pending student loan repayment.  There are some opportunities to defer payments; check with the financial aid office or lenders to see how loans can be deferred.

Personal reflection. Take time to focus on what the graduate really wants to do.  Often seniors are so busy finishing courses and job searching that they fail to take personal time to explore their interests that have emerged over the past four years and connect them to their passions.  The hectic transition period in a new organization is not the optimum time to do this reflection.  Establish goals that center on one’s passions.

Attitude. The labor market changes quickly and will be very competitive.  Seniors should proceed with an open mind on the opportunities that may present themselves.  The ideal may not materialize; so plan how to use the first steps available to start the journey to where one wants to go.

Realistic expectations. Salaries, bonuses, and other perks will be influenced by the economic slowdown.  Bonuses will not be used much this year.  Having a clear understanding of the workplace and what can be expected will be an asset in the job search.

Salary Expectations

This year salaries are expected to grow modestly about 1% to 3%.  This comes after a year that saw the tops of the salary ranges constricted for many jobs.  The longer the economy remains in the doldrums, the more likely employers will realign their salary structure.  The intense competition, which saw salary levels increase more than 7% per year, resulted in skewed salaries between new hires and longtime employees.  Employers would like to make adjustments to improve company morale.

Even with some constriction in salaries, the salary projections look favorable.  In most cases the bottom end of the salaries continue to increase which helps all graduates over the long run.  The following table highlights some of the estimated salary ranges for selected academic majors this year.

Preparing for Success

Employers still want highly skilled workers.  In fact, skill replacement is behind some of the layoffs in this recession.  Employers will retain workers or hire new ones who can demonstrate competencies in these areas:

Communication:  written (memos, business letters, grants, research and strategic plans), presentations and listening.

Computer literacy, which runs a wide gamut depending on the needs of the company; including the working knowledge of an office suite (word processing, spread sheets, data management and presentation), as well as Web page maintenance.  For many companies, the bottom line is an employee’s ability to utilize the Web for research, data acquisition and knowledge transfer.

Interpersonal skills should include the understanding of diversity, being empathetic and handling conflict among co-workers.  An increased awareness of human behavior, especially as it pertains to customers, is expected.

Teamwork and leadership involve working, communicating and leading co-workers.

Critical thinking will show ability to handle complex systems and open avenues for creative innovations in products and services.

Perspective requires the understanding of the workplace and the industry (economic sector) the graduate wishes to enter.  This requires candidates to be flexible and open to change as the company adjusts to world events.

Going to Graduate School

In tough job markets, the first thing many seniors do is apply to graduate school.  For some, the commitment has been arrived at over a long period of time and is well thought out.  For others, however, graduate school simply serves to delay entry into the labor market.  A word of caution should be heeded for those considering graduate school.  Obtaining another degree does not guarantee that there will be a job, nor does it necessarily enhance one’s position in the job search.  Seniors need to carefully think through their motivations in this regard.  Piling on more debt and undertaking a demanding intellectual activity is not necessarily the best route for some seniors immediately after completing their bachelor’s degree.

What You Can Expect From Recruiters

Recruiters will not be idling away the time while waiting for the economy to improve.  In times of uncertainty, hiring managers will continue their strategic operations.  For those who have an active presence on college campuses, their visibility will remain high.  They will attend job fairs and information nights.  During their talks with students, they will identify viable candidates to contact when hiring begins.   Ethically, it is not appropriate to interview if a company does not have a position but many companies will maintain their relationships with key contacts at their target colleges.  If a company does not have a strong campus presence, they will strengthen their hiring networks to identify potential employees.  In response, seniors need to be ready and available when hiring begins.

Employers also expect to sustain their company’s visibility by marketing on college job boards and with other online partners.   Finally, while they may have to reduce their numbers of interns or co-ops hired this year, companies will strengthen experiential learning opportunities in order to develop the talent they need.