The annual Recruiting Trends Survey 1998-99 of Businesses, Industries, and Government Agencies highlights the labor market outlook and hiring intentions of approximately 330 companies nationwide. This report, conducted by Career Services of Michigan State University, provides information collected in the early fall, just as the recruiting season begins. In addition to their hiring goals, the human resource managers or company representatives also responded to questions on the pre-graduation academic and co-curricular activities that best shape college students so they can find success early in their career. 

Labor Market Outlook

Survey respondents offered their general impression on the overall outlook for the college labor market this year. They felt the current conditions were very favorable. Approximately  75% rated the market as "very good" to "excellent." Industrial sectors with high positive ratings about hiring opportunities included construction, retail, business services, transportation, communication, and utilities. 

When addressing their specific industrial sector, 69% believed their labor markets would be very active. Different industrial sectors shared differing opinions, however. Construction (commercial and residential) and services, which cater to individuals, business, and government, such as business consulting, education, engineering, and professional services, were the most optimistic. Retail, those companies selling merchandise for household consumption, also felt that labor market conditions were very good. Manufacturing companies were less optimistic, rating their sector as "good" to "very good." Finally, financial services reported a slower labor market in the investment area but strength in real estate. 

Uncertainty faced several sectors of the economy. Utilities are dealing with deregulation of their practices, making the industry much more competitive and reducing the demand for labor. Transportation companies have been impacted by the worldwide slowdown, especially in the airlines. For some in this sector, the lack of funding from the federal government has not been offset by state governments, even though funding at this level has increased. Thrown in this mix are communication companies who appear to be ready to hire more graduates while several major companies are merging or restructuring. 

Across the country, the outlook varies. Nearly 40% of the respondents recruited college graduates nationwide; others focused their activities in selected regions of the country. Asked to rate how they perceived the labor market in these regions where they recruited, a consistent picture emerged. The north-central states supported the strongest labor markets across all sectors of the economy: 72% believed the labor market was "very good" to "excellent." 

Other regions with strong labor markets included the northeast mid-Atlantic states (64% "very good" to "excellent") and the southeast (62% "very good" to "excellent"). The south-central states were slightly below these levels because of a weakening petroleum situation. Some caution was reserved for the labor markets in the western states that were viewed as less robust, particularly in manufacturing and retail. 

Dark Clouds Ahead

In addition to their general impressions, respondents were asked to elaborate on the factors that were framing their hiring decisions. By grouping factors in similar categories, a set of positive and negative influencers emerged that provides structure for the figures offered in the previous section. 

Positive factors influencing job opportunities. The growth and expansion (economic performance) of their individual companies provided solid support for their hiring outlook. Mergers and restructuring have allowed companies to become more competitive which has allowed markets for products and services to expand. Advanced technology and faster product development processes have resulted in new products reaching markets sooner, as well as the upgrading of current products. Continuous improvement of service to customers and clients has increased sales and service contracts. To handle the increase in business, more entry-level workers are being added. 

Behind individual company performance, a strong national economy, led by housing and construction starts, improved auto sales, telecommunication advancements, and retail transactions, has sustained the national labor market. Low interest rates, a volatile, yet optimistic, stock market, and available venture capital have served as stimulants to buoy consumer confidence and expanded business activities. 

The final positive factor has been the competitive labor market itself. A rising increase in retirements, combined with high turnover, has left many companies with available positions. Compounding the market's competitiveness is a shift in the skill requirements needed for many of these positions; many employers are having difficulty in finding candidates that possess "the total package" of skills required. 

Negative factors influencing job opportunities. What makes for positive factors also can cause job opportunities to disappear. Increased competition has or could negatively impact sales and services which reduces the need for labor. However, the biggest culprit is the continuing practice of downsizing or restructuring, plus the high level of mergers this year. 
This activity has resulted in layoffs and hiring freezes throughout the economy. 

Asian economic conditions are dampening the prospects of many companies, particularly in the western United States. A prolonged slump in this region's economies will cause U.S. manufacturers and suppliers to constrict their output, resulting in lower projected hiring needs. Combine Asian woes with troubles in Brazil and Russia, the global economic picture remains precarious. 

The competitive labor market has led to changes in recruiting strategies which now try to have seniors commit early to a contract. A more problematic strategy is simply to scale back hiring needs. Faced with a limited supply of qualified applicants, employers feel it may be more judicious to hire fewer, yet well qualified, college graduates than fill their positions with 
individuals who do not come with the "total package." 

An ominous cloud hanging over the current labor market is the perception among many of these respondents that the economy will slow down in the spring. While selected economic indicators may point in different directions, overall the economy continues to perform well, although it has slowed in recent months. These premonitions are based on the fact that the business cycle has not vanished. After 93 consecutive months of growth, many observers anticipate that the economy must slow and enter a recessionary phase. Fortunately, solid performance across most economic sectors during the third quarter of 1998 has held these clouds on the distant horizon. 

Hiring Intentions

College seniors should anticipate another robust year of hiring activity. In the spring of 1997, entry-level hiring activity accelerated. The 1997-98 Recruiting Trends report captured a significant upward shift in hiring intentions. Companies responding to this year's survey expect to continue hiring at the same level as last year which will show about 27 percent more new college graduates being needed to fill available positions in the surveyed organizations: 50% will actually increase their hiring and 23% will remain at the same level. Only 27% of the responding companies expect to decrease hiring at the bachelor's level. 

Technically trained graduates, especially engineering and computer science, will lead the hiring parade. The best news, however, is that this labor market is for everyone. Employers are looking for all types of students; but these students must be able to demonstrate computer/technical literacy as required by the position. 

Based on characteristics that describe a company (size, economic sector, and academic majors sought), comparisons revealed that not all companies held the same hiring intentions. According to size, the largest firms (more than 20,000 employees) were cutting their hiring by 6% at the bachelor's level; however, these losses were offset by medium-sized companies (2,200 to 20,000 employees) who were hiring between 10% and 20% more bachelor's graduates. The smallest employers (under 400 employees) reported large variations in hiring; their general trend is down. 

The manufacturing sector plans to slow down its hiring, reflecting the general contraction of this sector during the year. However, hiring increases in services and retail offset manufacturing. Intentions in other sectors vary. Construction will increase their hires, while finance will decrease their number, especially among investment service companies. Companies in the transportation sector plan to cut hiring levels, but plans vary by type of company. Utilities and transportation are down, as a 
result of deregulation and reductions in business travel (though tourist travel remains positive). Communication firms, in spite of some large mergers, expect to hire more entry-level college majors. 

Because of the reduction in hiring by large manufacturing firms, the reported level of hiring for engineers and computer science graduates is down by 2% to 5%. Students in these majors do not need to worry as the demand for their skills far outweigh the supply. This slight adjustment in hiring level reflects more reasonable expectations by companies on what is available. When we examined the core group of respondents, the demand for engineers and computer science remains steady. 

All other majors will do well. Business majors are in slightly higher demand. However, MBAs may need to adjust their target companies. Financial companies are indicating they will reduce MBA hires this year; however, business services, primarily consulting, plan to hire more MBAs. Liberal arts and communication graduates should see hiring intentions remain at the same level. 

Starting Salary Expectations

For the second year, college graduates will see nice increases in starting salaries. Salary ranges are expected to shift up 3% to 5%. Employers did indicate that in certain markets, higher increases would have to be offered to attract qualified candidates. 
The estimated bachelor's starting salary range is between $33,900 to $37,200. However, these figures are strongly influenced by technical majors. The following chart shows the expected salary ranges for aggregated academic majors. 
 

What do employers want to see in a college candidate that is seeking employment with their companies? We have asked this question in many different ways over the past several years, and the answers seldom vary. Employers, today, are not simply content with listing requirements. They want to see a candidate that possesses all the necessary skills and competencies to be successful in their work environments. 

Frequently, you hear employers refer to "the total package." What comprises this package: 
 

• Academically well-prepared
• Solid verbal, written, listening, and presentation skills (communication)
• Computer/technical aptitude (joins writing, reading, and mathematics as essentials)
• Demonstrable leadership potential
• Interpersonal effectiveness

Ability to work in team environments 
Personal traits that encompass ability to take the initiative; sustained motivation; flexibility/adaptability in response to change; hard-working; and ability to plan and organize multiple assignments

All the skills and competencies that go into the package are not gained by attending classes. Employers expect students to engage in a variety of co-curricular activities to gain the experiences necessary to make the successful transition into the workplace. Employers have a preference on what they expect students to engage. 

Topping the list is practical work experience gained through co-op, internships, and summer employment that has career focus. Those experiences introduce students to the practicalities of the workplace and tests their learning against real problems. Some companies have limited their hiring to those students who have participated in co-op or internships. 

Employers are exploring with candidates their involvement in student organizations, community service, and other activities. They probe by asking: How have leadership skills been developed? Have individuals worked in diverse settings with diverse individuals? How have students contributed to their communities in meaningful ways? For many companies, especially small firms and very large organizations, community and civil involvement beyond the workplace is important to their companies' bottom line and public image. Students who have participated or volunteered in these types of activities are more likely to have the positive attributes that employers seek. 

Employers are sending mixed signals on the value of overseas study. Some employers, particularly those with international connections, favor students who have lived in other cultures. For many employers, overseas study contributes little to the entry-level position. In the longer term, employers, however, recognize that overseas experience strengthens an employee by allowing for promotion or acceptance of assignments that involve an international perspective. 

While the labor market looks rosy, seniors cannot become complacent. They need to develop their job search strategy now. Prepare a resume. Identify a network of contacts. Target key employers that they are interested in. On-campus interviewing started in September with a flourish, but may be tapering off slightly. Seniors need to begin interviewing in January to obtain the positive results they desire. 

Some students prefer to wait until spring. There is no guarantee this labor market will remain as robust as it currently is. The storm clouds on the horizon may move in. Students need to anticipate this movement and take action now.