As the credit crunch roils financial markets and the U.S. economy sputters, new college graduates are plunging into the rockiest job market in recent years.
The bleaker picture is in stark contrast with last year, when colleges and employers reported robust hiring, and students in finance, accounting and other hot fields were choosing among numerous offers. Now, companies that just a few months ago were planning substantial increases in entry-level hiring have scaled back their plans as economic conditions have worsened. In turbulent areas such as financial services, some firms are slashing the number of fresh graduates they intend to employ and students are curtailing expectations of finding their ideal position.
Ken Goldstein, a labor economist at the Conference Board, a New York business research group, says the shift in mood is going to be particularly difficult for seniors who haven't secured a job, "especially those graduates with C or B-minus averages." Employers "tell folks, 'Don't call us, we'll call you,' " Goldstein says. "That sort of has been the modus operandi when the economy gets this slow."
The latest unemployment figures reinforce the gloom. The jobless rate rose to 5.1 percent in March, the highest since September 2005, the Labor Department reported this month.
To cope with the gloomier outlook, some graduating seniors are opting for jobs they think are less likely to be affected by tumult in the financial sector. James Auger, a 22-year-old human communications sciences major at Northwestern University in Evanston, Ill., had hoped to start a career in banking, but he recently accepted a job at Health Care Futures LP, a consulting firm in Itasca, Ill. Part of the reason, he says, was "because they weren't really attached to the market as much as the banks were."
There are some bright spots for the Class of 2008. Government hiring remains robust. In fields such as health care and technology, some businesses are hoping to sign on more newly minted grads than last year, while companies in other fields say they're keeping their hiring goals steady.
Meanwhile, some seniors headed for careers in finance, consulting and other hard-hit sectors locked in offers from employers last fall, when the outlook for the U.S. economy was less gloomy.
Sarah Quarterman, global head of campus recruiting at Merrill Lynch & Co., says that despite the downturn in finance, banks are unlikely to cut back on hiring to the extent they did in 2000.
"Everyone learned the lesson that it wasn't the smart thing to do because students that get hired from campus are a pipeline for the organization," she says. "What a lot of firms experienced in 2005 and 2006 was a shortage of talent at the VP level," typically five or six years out of school.
Still, the overall mood in the job market has taken a dramatic downturn from just a few months ago. According to a survey conducted last fall by the National Association of Colleges and Employers, a Bethlehem, Pa., nonprofit, large employers initially expected to boost hiring of new graduates 16 percent, on average, this year from last year's levels. After redoing the survey in February, NACE found employers planned a more modest 8 percent increase overall. Within financial services, hiring is now anticipated to fall 7.5 percent this year, as investment banks announce sweeping cutbacks.