Jobs Harder to Find
After five years of robust growth in the labor market segment that is focused on new college graduates, the opportunities will be shrinking this year according to information provided by more than 900 employers to Michigan State University's annual college recruiting study, Recruiting Trends 2008-2009. Companies are still seeking to fill a number of positions and have had a busy fall on many campuses. Do not expect the same level of intensity during second semester, however, as employers will be more likely to be very cautious as they monitor economic conditions. In this article the conditions in the labor market will be highlighted, including where seniors may find employment opportunities, and what they will have to do to be competitive for openings they do find.
The Basic Numbers
In two short years we have moved from a zenith of exuberant and aggressive college hiring through a period of cautious optimism, to a place of quiet desperation. Just last year, employers characterized the college labor market as very good. This fall employers could only muster a fair to good description. Only 29 percent of the respondents who plan to hire during the academic year have higher hiring quotas than last year; nearly 50 percent will decrease their total hires compared to last year.
Companies who provided complete information to this study indicated that they expect to make approximately 46 total hires per company (average not considering size of company). This figure represents an 8 percent decrease from last year. The following chart illustrates the first negative decline since the troubles experienced in 2001 when the dot.com bubble burst.
Companies increasing their hiring plans for this year plan to add 24 individuals this year - an increase of 50 percent over last year. This average suggests that many of the companies that will be adding personnel tend to be small or medium in size. Compare this figure to the average of 48 individuals being hired in companies that will decease their hiring; a decline of 20 percent from last year. This figure suggests that larger companies have cut out the fluff in their hiring targets this year and will focus on critical positions only.
Finding Opportunities
We continue to stress the importance of small, fast growth companies to the overall college labor market. The average size of firms reporting this year is slightly smaller than last year, as we saw a drop in the number of large employers contributing information and an increase in small-and-medium size firms. Hiring does vary by size. Even though large employers (those with more than 3,700 employees) report a decrease of 9 percent in their hiring levels, they will still make approximately 114 bachelor hires per company. Medium size employers (300 to 3,700 employees) expect to decrease bachelor hiring by only 4 percent, adding 22 bachelor hires per company. Small companies, especially fast growth firms (those past the entrepreneurial stage and are committed to growth), will increase hiring 1 percent or remain at the same level as last year.
Over the past five years employers have sought candidates from a variety of academic majors. The good times raise all boats; so the saying goes. This year employers are more focused. They are concentrating on engineering, technical, some science and business majors. They report that it is moderately difficult to find the engineering and computer science talent they desire. Despite this predicament they are being very picky. This may mean that some seniors may be targeted by several companies and be pressured to accept a job offer quickly. Other seniors from the same major may find it hard to connect with an employer. While accounting remains the top major companies are seeking, the market for accountants has softened this year. Hiring remains strong for supply chain management and agribusiness majors. Employers supporting agricultural production (seed, fertilizer, nutrition, etc.) report a shortage of graduates in agricultural sciences, particularly at the doctoral level.
Oil and gas extraction and utilities (the energy supply and delivery sectors) are increasing their hiring outlook for the year. The other sector where hiring is trending upward is insurance. Other sectors are headed downward. Manufacturing continues to shrink. This year they are joined by retail which has witnessed a dramatic reversal over the past two years. Banking, especially large banks located on the east and west coasts are cutting employees; fortunately these cuts are being offset by hiring in other financial service firms.
We looked at recession proof industries that often appear in the media as good places to find work. The defense sector is reducing their hiring quotas; however, they expect to make between 75 to100 hires per company. While their hiring quotas are trending downward, they have not been able to fill their hiring needs in recent years, so they will continue to hire aggressively. Health care has needs for nurses, therapists and technicians but will decrease their total hires by about 3 percent due to cost constraints within the sector. Other areas we had hoped to see increases included agriculture and food processing (down slightly) and environmental companies (down moderately). The bottom line is that recession-proof companies may be a safe harbor for those who already have jobs, but may not provide as many opportunities for graduates.
A trend we have followed for the past several years has been the number of sales and marketing positions that new graduates will fill. Two years ago 50 percent of employers were seeking to fill sales and marketing positions. This number declined to 42 percent last year, as the economy softened. In 2008-2009 only 30 percent of responding employers were seeking candidates for sales and marketing positions. Hiring quotas for marketing and sales are down 14 percent and 20 percent, respectively.
Could it Be Worse?
In an examination of historical evidence gathered in previous years, the yearly loss of jobs for new college hires during the 1989 to 1993 recession ranged from 10 percent to 13 percent. Throughout the more turbulent 2001 to 2004 period, annual decreases ranged from 11 percent to 17 percent. The decline this year is serious but somewhat muted in comparison to these historical events. What factors could be keeping the college market afloat?
Employers were asked two questions concerning the pending Boomer retirement exodus (personnel who are in the age group of 45 to 62). Over 50 percent indicated that Boomer retirement was not a serious problem while 27 percent believed the problem to be serious. Only 24 percent of the companies reported that 30 percent or more of their workforce could retire within the next five years.
When we compared the seriousness of retirement across company size we found some interesting results. Small and many medium-size companies face little pressure from pending retirements and their projected hiring is comparable to last year. A group of medium-size employers, many of them second-tier suppliers to major manufacturing companies, reported not only a serious retirement problem but a sharp decline in hiring. The more dramatic comparison emerged within large companies where we found three different groups who appear to engage the labor market differently for very different reasons.
Serious retirement problem: Respondents, primarily representing manufacturing, insurance, professional and scientific services, and government, are expecting to decrease hiring by 8 percent; yet plan to hire 79 bachelor level graduates per company. What separates these companies from the others is their high level of activity on college campus with 93 percent conducting on-campus interviews, 90 percent attending career fairs, and 86 percent maintaining and expanding internship and co-op programs. They have a strong global presence with regional presence in the Northeast, Great Lakes and Upper Plain regions. Besides their efforts on campus, they are also seeking experienced labor. They face severe human resource needs over the next decade because of retirements and do not want to repeat their folly of not hiring during a downturn, leaving them with gaps in their workforce.
No retirement problem: The majority of these companies were from manufacturing (electronics, aerospace, defense, food processing, medical equipment, for example), retail and professional and scientific services sectors. Their hiring will be down 9 percent with an average 86 hires per company. These companies have a significant global presence and regional concentrations in the Southeast and Southwest. They are active on campus with 85 percent interviewing on-campus, 80 percent attending career fairs, and 63 percent with internship and co-op programs. They have a balanced strategy, recruiting a mix of new and experienced candidates. Many of these companies are seeking the best talent they can find so that they remain competitive when the global economy begins running again.
Moderate retirement problem: Represented by companies from finance, manufacturing, and professional and scientific services, these companies are not as active on college campuses. Only 85 percent recruit on campus and less than 80 percent attend career fairs and even fewer, only 76 percent, have internship and co-op programs. They report a decrease in hiring of 17 percent from last year and an average hire of 46 bachelor level candidates per company. These companies tend to be heavily focused within the U.S. and little presence in any region. Many appear to be drifting with no focused recruitment plan. With hiring declining dramatically, these companies are just trying to maintain their presence on campus in hopes of better days and the need to sustain their internship and co-op programs.
We can not say precisely how much retirement is shaping the college labor market this year but it is reasonable to speculate that large companies faced with sizable Boomer retirement - whenever that will be - or have broad global reach are keeping the labor market afloat. Without their commitments, the market could well be down an additional 4 to 9 percentage points.
Fast Start to Sitting on the Sidelines
Employers have expectations to complete hiring quickly this year. Some employers want interviews completed, offers extended and acceptances received before the end of fall term. They have tried to shorten the selection process to a very condensed timeline. Seniors might be surprised at the urgency employers may attach to accepting an offer, by only giving 10 days to make a decision. Top students who are being heavily recruited by multiple companies may find it difficult to juggle these timeframes while weighing different opportunities. Two opposing forces are pushing against each other: employers who want to capture their new hires as early as possible versus students who want to keep their options open.
Why are employers in such a rush? As the economic situation continues to deteriorate, employers are becoming more cautious. Employers are beginning to reevaluate their spring hiring targets because company finances are being reexamined. The outlook for the spring is for the labor market to contract even further. Employers want to insure they have their basic hiring needs met as early as possible in anticipation that recruiting activities will be reduced and possibly eliminated in 2009.
Advice to Graduates
The deteriorating conditions in the labor market should send a strong warning to seniors. This year seniors can not delay preparing for their transition from college to the job market. By the time you read this article fall semester recruiting will be over and most of the hiring done. If you are waiting for conditions to improve you might have a long wait. In fact, you can count on the labor market being much tougher by spring. Without retail, administrative services, finance, and other service oriented sectors hiring at full tilt, the employers who generally employ a wide range of new graduates are sitting on the sidelines. So students need to be prepared. For those students who have not initiated their job search or even framed their employment expectations, a call to urgency is warranted.In light of the employment dynamics in play, students need to be:
*FOCUSED
*DIRECTED
*CONNECTED
First, step back and map out the skills you have to offer employers. Add to this a strong sense of self - who you are, what you value and what you are looking for in a job. This is being focused. Second, figure out with the help of your career service office the best strategies to get where you want to go. Not only do you have to be able to read the job search map, you will also have to be able to execute your plan. This is being directed. Finally, use your connections which can include, alumni from your college, friends and their contacts, and family connections that will provide access to potential employers. Using your professional network efficiently will open doors that will bring your plan to fruition. This is being connected.
Finding a job this year will require a lot of work but even more patience and persistence in light of the economic situation. One final piece of advice that you might want to take into consideration is that pursuing a graduate degree never solves a labor market problem. Pursing a master, professional, or doctoral degree may seem like a safe bet. Unfortunately employers do not always reward advanced degrees without commensurate experience. So you may get stuck with more student loans at a salary you probably would have earned immediately after your completed your bachelor degree.
Avoid making choices that may not position you strongly in the labor market by making an appointment now with your career service office and work with them on a sound transition strategy. Do not wait until just before graduation to make career decisions - the sooner you decide the better off you will be!
Sidebar Reading
- Job Outlook for the Class of ‘09: Recruiters' Messages
Several corporate recruiters offer job search advice
