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 affected 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 layoffs 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.

The availability of well-educated labor already in the market points to an underlying problem within the labor market. Many recent graduates want a different job. To clear the labor market – that is to create enough appropriate jobs for new and recent graduates who are available – the market has to expand much faster than 9%. We are expecting heavy competition for jobs as they become available this year.

Employers Substituting

Employers are also making substitutions in whom they hire. Two years ago in this survey respondents said that during the recession they would carefully evaluate their positions to determine the best type of employee for each position. As hiring begins to expand, employers have indicated that they plan to hire fewer MBAs and insert bachelor- educated hires into many of the vacated positions. The MBA labor market is strained. In addition to this substitution, the number of MBAs being graduated is at an all time high. The supply of graduates exceeds the current level of demand. MBA graduates from the top programs should find opportunities (not multiple offers, however). Other graduates will have to work hard to find equivalent employment.

MBA Applicants

Employers expressed a concern about the MBA applicants they were seeing. Many of them were seeking entry-level positions suited for bachelor's candidates. While these graduates had received more book knowledge, they had not matured with regards to their career aspirations or how to approach the labor market.

Another group that will be experiencing difficulties in finding employment will be the computer science and IT graduates. Attention has recently been focused on the off shoring of jobs. The impact of these shifts probably has a bigger impact psychologically than on the labor market. The IT sectors suffer from massive over capacity and a labor force that has been skewed toward the dot-com companies. When the dot.com bubble burst, manufacturing and professional services were slowing down and cutting back on hiring. They could not reabsorb so much displaced labor. IT work force will be critical to the long- term economic health of the country. In the short term, however, the adjustments being made will be painful and probably discourage potential students from entering the field.

Salaries

How will starting salaries be affected by this expansion? Not very much. We do not expect to see increases in salary. The pressure is not there to push salaries higher. Employers are still trying to adjust internal salary structures that got out of line between 1998 and 2000. We have witnessed a contract in the salary ranges, especially at the top end over the last two years. The following are expected starting salaries for selected academic majors this year.

Accounting $35,200 - $38,200
Finance $38,600 - $42,400 
Marketing $34,200 - $38,900
Supply Chain $37,400 - $39,700
Civil Engineering $39,600 - $42,500
Electrical Eng. $46,900 - $51,000
Mechanical Eng. $46,200 - $49,600
Chemical Eng $39,600 - $42,500
Computer Science $50,800 - $57,200
Communications $30,000 - $36,400
Liberal arts $28,000 - $33,000
Sciences $31,900 - $39,000

College seniors have their work cut out for them as they search for employment. Employers highlighted their key hiring strategies. Working with your campus career center is a major plus. New college hires will be identified through on-campus interviewing, job fairs and participants of co-op or academic internships. Smaller employers will use regional job boards. In addition to registering with your on-campus service, you must see what job boards may be serving the geographic areas you wish to reside. Many of these sites are sponsored by state economic development agencies and tend to be very current. Do not forget the best way – networks. Build a strong web of friends, especially those who recently graduated, family connections and relatives who can help you identify employment opportunities. Most jobs are filled by word-of-mouth or referrals by current employees.

As you work at your job search, remain confident that you can find the type of job you want. The labor market is improving. As the economy continues to improve, you should see additional job openings – hopefully more than the 9% already anticipated.

You need to be ready for that next job posting.

Dr. Philip Gardner is the director of research for the Collegiate Employment Research Institute at Michigan State University. His research focuses on the transition from college to workplace readiness of college students and career development. He is the author of the annual Recruiting Trends report published by Michigan State University.