Report: This year’s grads face tightest job market of the century

CHICAGO, ILL.
February 26, 2009 8:46am

The graduating class of 2009 is entering the worst entry-level job market since the dot-com bust in early 2000, with many colleges and universities reporting declines in on-campus recruiting of up to 50 percent, according to a report Thursday from outplacement firm Challenger, Gray & Christmas Inc.

The increased competition for a shrinking number of jobs may compel spring graduates to continue their education, work for free or seek opportunities overseas, Challenger says.

But for many, the only option may be to return home and live with their parents until the job market rebounds.

“Hiring has slowed significantly. Companies that are adding workers can be highly selective as the pool of applicants continues to grow. Spring graduates will be vying for jobs not only with their fellow classmates, but also with young workers who already have two or three years of experience, returning retirees shocked by a stock market devaluation of savings, and even stay-at-home moms returning to the workplace for economic reasons,” says John Challenger, chief executive officer of Challenger, Gray & Christmas.

The biggest challenge this year’s graduates face is finding opportunities amid a retracting job market, he says.

Since last July, employers have announced nearly 1,000,000 planned job cuts. The climbing job-cut toll does not appear as though it will recede any time soon, having reached a seven-year high last month, with 241,749 layoffs announced, says Challenger.

Any downturn is especially hard on young people, as they are forced to compete with more experienced job seekers – and this downturn is no exception.

The unemployment rate among 20- to 24-year-olds rose to 13.5 percent in January, up from 9.8 percent a year ago. Among 25- to 29-year-olds, unemployment reached 10.1 in January, the highest rate since 1983.

The current business climate is causing many employers to forgo campus recruiting this spring. At the University of South Carolina, employer participation in campus career fairs is down 20 percent to 35 percent, while scheduled on-campus interviews are down 15 percent to 20 percent, according to Thomas Halasz, director of the university’s career center, says Challenger.

The Wisconsin School of Business at the University of Wisconsin-Madison has seen the number of companies coming to campus shrink by approximately 15 percent, compared to last year, says Steve Schroeder, assistant dean of the undergraduate program and director of the career center at the school.

“Students are getting fewer job offers and some companies have unfortunately rescinded some offers. Last year, a typical student probably had three-to-five job offers but this year students are excited to get one or two offers. There is general uncertainty and nervousness from recruiters as well as students,” says Mr. Schroeder in an e-mail to Challenger researchers.

In a recent article in the Houston Chronicle, Jamie Belinne, the assistant dean of the Rockwell Career Center at the University of Houston’s C.T. Bauer College of Business, reported that campus visits by recruiters were down as much as 15 percent. She noted that conversations with her counterparts at business schools in the Northeast revealed that some business schools have seen campus recruiting visits drop by 40 to 50 percent.

Schools that specialize in preparing students for industries that are being hit particularly hard in this downturn may have the hardest time attracting recruiters, says Challenger. The Milwaukee School of Engineering recently reported that only nine employers had registered for on-campus recruiting in the winter and spring, down from 54 at this point last year.

“While the outlook may appear grim from an on-campus recruiting standpoint, this year’s graduates should by no means consider the situation hopeless,” says Mr. Challenger. “The job search may take longer, but those who take an aggressive approach to networking and cast a wide net to include more industries and geographic regions should still be successful.”

He also says it may be necessary to lower salary expectations or possibly accept an undesirable position. “However, it is important to remember that this is your first job and does not define the rest of your career path. What is most critical at this stage is getting valuable on-the-job experience,” he says.

Despite the dire economic conditions, many employers continue to add workers. Even Microsoft, which recently announced that it would be cutting 4,000 positions by the end of 2009, said the cuts would be partially offset by the addition of as many as 2,000 workers in areas of the company targeted for expansion.

One area that could provide strong opportunities for entry-level job seekers is the non-profit sector, a fact that has not been lost on soon-to-be graduates, the Challenger report says.

“The slow economy can be a boon for non-profit organizations seeking skilled candidates. This downturn may prove to be particularly fruitful, as many associate the economy’s ills with greed and irresponsibility,” says Mr. Challenger.

“The disenchantment with the system that got us into this mess may push a lot of people into public service posts with organizations such as the Peace Corps, which has seen applicants increase 16 percent in fiscal year 2009,” he says, citing figures reported in a recent Arizona State University student newspaper article.

Non-profits will not be the only employers to benefit from a larger pool of highly-qualified candidates. Occupational categories that have recently suffered from skilled labor shortages, such as accounting, nursing, and education, could see more interest from this year’s crop of graduates as well as the graduating classes over the next three to five years, the Challenger report says.

“While job opportunities still exist, many of the students preparing to exit their undergraduate studies are simply extending their education by applying immediately for graduate-degree programs,” says Mr. Challenger.

The Duke University School of Law has received more than 6,300 applications this year, a record high, according to officials at the school. As of January, the Thayer School of Engineering's master's and Ph.D. program at Dartmouth was seeing an 18 percent to 20 percent jump in applicants over 2008. The parallel programs in arts and sciences saw a 6 percent to 8 percent increase, according to a report in U.S. News & World Report.

Those who are unable to continue their education or secure post-graduation employment may have not choice but to return home to live with their parents, says the Challenger report. Seventy-seven percent of 2008 graduates moved back home upon completion of their college careers, according to a survey by entry-level job search site CollegeGrad.com. That was up from 73 percent in 2007 and 67 percent in 2006.

“The percentage of graduates returning home could reach even higher this year. We may even see young people who have been out of school for two or three years and had jobs and apartments returning home following a layoff,” says Mr. Challenger.

“More and more people are exiting college already burdened with heavy debt loads. The inability to obtain more credit in this economy, combined with the difficulty of finding a job quickly, are likely to send a lot of graduates back to the shelter of their parents’ homes,” he says.

“An unemployed college returnee could put an unexpected financial burden on parents, who may be dealing with their own job loss or other financial pressures related to the downturn. Having an extra person to feed, house and clothe may force these parents to cut spending in other areas,” adds Mr. Challenger.