Job prospects for college seniors about to graduate are looking up this year following an overall hiring boom, but lackluster wages and the burden of student debt might make new hires feel like they are still at a disadvantage.
The nation has more job openings and higher demand for college graduates than in years past, and students are certainly motivated to work, especially if they are saddled with thousands of dollars — or tens of thousands of dollars — in school loans. Nearly 75 percent of employers surveyed by CareerBuilder, a job search engine, say they plan to hire graduates fresh out of college this year, the highest it has been in nearly a decade.
“Most industries, outside of energy, are really doing quite well, and that makes the environment much more receptive than in times of higher unemployment or in times of recession,” said John Challenger, chief executive of consulting firm Challenger, Gray & Christmas. “The market is generally strong, companies are filling their pipeline with new grads and they have strong recruiting programs out there.”
Job vacancies are at near historic highs, hovering around 5.4 million at the end of February, according to the most recent data from the Bureau of Labor Statistics. Openings are on the rise in educational services and the federal government, though positions in health care, finance and insurance have started to contract.
“There are still pretty promising opportunities for the graduating Class of 2016,” said Nicole Smith, a research professor and chief economist at the Georgetown University Center on Education and the Workforce. “But they need to be concerned about their majors because the market is very picky about competencies,” she said, noting that employers “want students to demonstrate what they know above and beyond the credential they earned.”
Many companies are favoring graduates with internships under their belts, she said. Researchers at the Georgetown center found that 63 percent of college graduates who completed a paid internship received a job offer, compared to 35 percent who never interned during their time in school. Those graduates with paid internships also scored an average starting salary of $52,000, 28 percent higher than their peers without internship experience.
Colby Bender, 22, did not pursue internships as a student, pouring all of his free time at Virginia’s Radford University into student government and campus activism. The political science major figured that all of his trips to the state capital to advocate for students and his interactions with local politicians would impress potential employers. But of the 65 jobs for which he’s applied, just five have resulted in interviews, and none of those have proved fruitful.
“While they say entry-level, if you don’t have internships, they don’t end up choosing you. It’s frustrating because if it’s entry level, it’s entry level,” said Bender, who graduates May 7. “I’m looking for any possible job I can get. I’m not too good for anything. I’m willing to do whatever I can to try and get some income.”
Bender said many of the politicians and advocates with whom he’s worked are helping in his job search, but few local lawmakers are hiring, and the ones who are want students who have interned for them in the past. Though Bender is studying to take the LSAT in June and hopes to enter law school, he feels pressure to find work before he has to start repaying his $60,000 in student loans this fall.
Looming loan repayments also are making Guadalupe Triana, 21, uneasy about her job prospects. Finishing up a semester abroad in Paris, she has perused a few listings, but wants to wait until she gets back to Lewis and Clark College in Portland to really dive into the search. As much as she wants to enjoy her last few weeks studying overseas, Triana said it’s hard not to worry about how she’s going to repay $30,000 in school loans.
“Student debt got scary after I hit $20,000,” said Triana, who is majoring in rhetoric and media studies. “I just want to pay it off as quickly as possible. I won’t be able to do that with any job I get now, which is why I started thinking about the military. The military helps you pay back student loans.”
If the last few years are any indication, the average Class of 2016 graduate will leave school with five-figure debt. That albatross likely will force graduates to accept jobs without long-term prospects for career or wage growth, according to a new study from the Economic Policy Institute. Analysts at the think tank say that despite the rosy overall employment picture, graduates actually face a tougher labor market than they would have before the 2008 recession. Degree-holders, they say, still contend with elevated levels of unemployment and underemployment, and a large share are neither employed nor pursuing advanced degrees — in other words, they are idling.
“Although there have been small improvements, there is still a lot that’s problematic about this economy for young college grads,” said Teresa Kroeger, a research assistant at EPI who co-authored the study. “Wages are still performing poorly. And we see still disparities between genders and racial groups.”
While there is only a tenth of a percentage point difference in the unemployment rate for college grads these days than before the recession — 5.6 percent now compared with 5.5 percent in 2007 — the number of degree-holders in low-paying jobs is much higher. Nearly 13 percent of young college graduates are currently underemployed, compared to 9.6 percent nine years ago.
“This recovery is unlike any other we’ve seen,” said Smith, of Georgetown. “It has taken such a long time for us to get back on track. But you have to bear in mind that the initial recession was so deep. The number of jobs lost, we’ve regained that and more in terms of totals.”
Of the 11.6 million jobs gained in the economy in this recovery, she said 8.4 million have been for workers with at least a bachelors degree.
Analysts at EPI say unemployment for young black college graduates hovers at 9.4 percent, higher than the peak unemployment rate for young white college grads during the recession. And gender wage inequality has grown, with male college grads earning 8 percent more this year than in 2000, while young women with degrees earned 6.8 percent less than in 2000.
Perhaps the most troubling prediction from the institute posits that newly minted grads as a whole likely will earn less and have more spells of unemployment during the next 10 to 15 years than if they had graduated before the downturn.
“If your wages are starting lower than they would have been in the past, the potential for growth moving forward is diminished,” said Tanyell Cooke, a research assistant at EPI who co-authored the report. “What’s happening now could effect these young workers into the future because they’re starting at a point of weakness.”
Wages have crept up during the past year, with average hourly earnings rising 7 cents to $25.43 in March, according to the Labor Department. There also are promising signs that employers are ready to set aside a few more dollars for entry-level positions. More than a third of employers told CareerBuilder that they plan to offer newly minted grads higher pay than last year’s class, with 27 percent saying they will pay a starting salary of $50,000 or more.
Demand, according to the survey, is highest for students with business and technical degrees, something to which James Madison University senior Jessica Reed can attest. Practically all of the job listings advertised on campus are for business majors, she said.
“I don’t want to be a burden on my parents by living at home, but I’m not financially sound without them,” said Reed, 22, who is studying French and International Affairs and graduates May 6. “I’d really like to be able to provide for myself.”
Reed said she has spent most of the semester looking for full-time work and applied for approximately 30 different jobs. She hasn’t yet landed an interview, but Reed has secured a summer internship at a French academy. It’s not what she wants to do full time, but at least it will keep her working on her French language skills. Reed is studying for the foreign service exam, but was hoping to get some work experience first.
“It’s always tough coming out of school to get your first job because you don’t have too much experience,” Challenger said. “Companies are more careful than other periods of time, they don’t want to over do it, so they keep a tighter control. There are concerns about a global slowdown, but most companies focus not on what might happen two years from now, but more on what their needs are right now, and right now the job market is relatively hot.”