When Kelsey Pullar graduated from Colorado College in 2009 after studying sociology and Spanish, she figured her language skills would help her get a job at a nonprofit. But after months of fruitless searching, she tapped into her savings, went to Madrid and got certified to teach English as a foreign language. After returning in 2010, she landed a temporary position with a community health outreach program, interviewing Hispanic clients.
The job lasted four months. Eventually, she applied to AmeriCorps, the national organization that channels volunteers to local nonprofits, and headed to work at a youth-development program in New York. But as her year of service winds down, she’s bracing for another brutal job hunt. “I was not prepared for the difficulty in finding a job after graduating in 2009,” she says. “I now understand exactly what the ‘economic downturn’ means in terms of finding meaningful, challenging employment.”
For Pullar and many of the other 4.8 million undergraduates who received bachelors’ degrees during the toughest years of the downturn —2008, 2009 and 2010— it’s likely to mean unemployment, underemployment and depressed wages for years to come. The job market has remained stubbornly weak, and even as it recovers, experts say those who received their degrees a few years ago will have a hard time competing with grads that come after them. For recent grads, the impact can be disastrous. But the consequences are likely to ripple through the broader economy: Employers are missing out on the contributions of well-educated, vital employees, just as baby boomers start counting on a younger workforce to support them during retirement.
“Employers favor most recent grads. If you graduated two years ago, you’re going to have a very difficult time getting hired by a Fortune 500 company.”
The statistics are grim: Only 19 percent of 2009 grads who were seeking employment had accepted an offer before they finished school, according to The National Association of Colleges and Employers. By comparison, 51 percent of the class of 2007 had a job before getting their diploma. For those under age 25 with a college degree the unemployment rate is 9.6 percent , compared with 4.4 percent for older grads, according to Heidi Shierholz, a labor economist with the Economic Policy Institute. That doesn’t include grads who are working as baristas to pay the bills. “It’s a huge nightmare,” says Shierholz. “It is a misfortune to be born at a time that dumps you into this kind of labor market.”
That misfortune is likely to be deep and long-lasting. Grads who started their careers during the recession of the early 1980s had lower salaries for at least 17 years than those who entered the workforce in a stronger economy, according to a 2003 study by Yale economist Lisa B. Kahn. And the employment picture is even darker now than during previous recessions. Because the U.S. economy has shed 7 million jobs since the recession started in December 2007, Shierholz figures that the Great Recession will hang over the early careers of a 15-year cohort, those born between 1984 and 1998. And that’s assuming we get back to pre-recessionary levels of employment within five years – a fairly optimistic projection.
And even though college hiring has improved slightly in the last two years, grads from a few years ago aren’t likely to benefit. Not only do they have to compete for positions with the 2.1 million older college graduates who are currently unemployed, they also have to worry about younger grads. College-educated workers with little professional experience may seem interchangeable, but job placement experts say that’s not the way it works. “Employers favor most recent grads,” says Steven Rothenberg, founder of CollegeRecruiter.com, the big Internet job board. Rothenberg says his company sees twice as many job seekers who have been out of school for a year or more as they did five years ago. “If you graduated two years ago,” he says. “You’re going to have a very difficult time getting hired by a Fortune 500 company.”
In part, that’s because anyone who is unemployed for a stretch of time can start to seem like damaged goods to employers. But it’s also because of the way the entry-level job market works, according to according to Philip D. Gardner, director of research for the Collegiate Employment Research Institute at Michigan State University, which conducts an annual survey of 4,600 employers about their hiring plans. For big companies that seek to hire entry-level employees, it’s often simply easier and cheaper to recruit on campuses. “Employers keep telling me this group is vulnerable,” Garner says. “They’re just not going to get picked up as quickly as the newer grads.”
“We were told to figure out what we wanted to do, get good grades in college and we would get great jobs.”
Economists say there’s a risk that lost grads will become demoralized, less motivated and connected to the workforce. Stephenie Aguirre, who graduated in 2010 from California Polytechnic State University with a B.S. in food science, thought she took all the right steps. She has strong technical lab skills. She held a prestigious internship position at one of the world's top food corporations. “But it’s not enough,” she says. “To feel somewhat useful in society, I fill my life with volunteer work and participation with non-profit organizations waiting for the day I get offered a full-time position.” Aguirre says she is considering looking for work abroad.
Certainly, it’s impossible to measure which demographic group has suffered more during the recession. Older employees who lost jobs near the end of their careers have seen their retirement dreams fade. And for young workers without a college degree, unemployment over the last year has averaged 21.5 percent.
But for people who worked hard to get into college and then took on record-high levels of student debt to pay for it, it’s hard not to be discouraged by their career prospects, and they’re usually not eligible for unemployment benefits until that have landed, and lost, a job. “We were told to figure out what we wanted to do, get good grades in college and we would get great jobs after,” says Anjani Webb, who graduated in 2008 from Liberty University with a degree in communications studies. After college, she worked for a sports agency, but the company folded. She landed at The Salvation Army in public relations, but she’s already at the top of her department. “The pay is terrible,” she says. “I’m one of the very few people here who have a degree, and with that degree comes debt.”
A big debt load can make life miserable for the newly unemployed. The average undergraduate in 2009 left school with $24,000 in IOUs, while a small but growing number of grads take on more than $100,000 in student loans. Federally guaranteed loans usually can be deferred because of unemployment, which means taking a menial job would require students with a lot of debt to start paying them back. (Private loans are much harder to put off, and typically come due six months after graduation, whether or not the borrower has a job.) “If you’re making $18,000 a year, you can’t afford to pay your student loans,” says Rothberg of CollegeRecruiter. “You are financially better off not working in that situation.”
Job placement experts encourage unemployed grads to consider volunteer work at an organization like AmeriCorps or Teach For America. Volunteers are allowed to defer federally guaranteed loan payments during their service, and can request a break from private lenders. Plus they get experience that can help them land a private-sector job. Students have gotten the message: applications to Teach For America have grown from 18,000 in 2007 to a record 48,000 in 2011. “Everyone knows the job market has been bad, but if that’s the only story [job seekers] tell, employers will not be impressed,” says Katharine S. Brooks, director of Liberal Arts Career Services at the University of Texas at Austin. “Their resume needs to show that they used their time to build new skills, learn new information, and demonstrate a strong work ethic. Volunteer experience is an excellent example of that.”
Brooks says she worries that all the “doom and gloom” predictions about the fortunes of recent grads will become a self-fulfilling prophecy. While on-campus recruiting is a great way to get a job, a minority of students find jobs that way, she says. Recent grads may have to search longer and settle for a less-than-perfect position, but plenty of UT grads from 2008 to 1010 now have jobs. The University of Texas used to offer free career services for six months after graduation, it recently extended that benefit to one year. “I think it creates a victim story, which may be quite accurate at the moment,” she says. “But it isn’t necessarily a predictor of the future.”