Harvard professor: here's how to 'escape the trap of graduating into a recession'
Last year, the college class of 2020 became known as the "class of Covid-19" after they were forced to forgo much of their senior years and enter a historically hostile labor market. The graduating class of 2021 will likely face similar challenges.
According to a recent survey from Monster of 1,500 U.S. adults ages 18-24, 45% of the spring 2020 graduating class is still looking for work and 68% worry future employers will unfavorably judge the gap on their resume caused by the pandemic.
A significant 69% of recent and impending college graduates say they expect lower salaries as a result of the pandemic.
"We're really starting to see the impact the pandemic has had on the last two graduating classes. The disruption is reflected not only in the fact that nearly half of last year's class is still looking for a job, but that nearly three-quarters of those who found work admit to accepting a job that wasn't the right fit out of desperation," Scott Blumsack, Monster's SVP of research and insights, tells CNBC Make It.
"The long-term implications are yet to be seen, but hiring managers and recruiters need to be aware of the setbacks and expectations of the newest members of the workforce as they rev up hiring in Q2 and into the second half of the year."
Among soon-to-be college graduates, 77% plan to work gig, freelance or temp jobs and 73% say they have previously accepted a job "out of desperation" — 45% indicating they did so out of a dire need for money and 20% indicating they did so because of a need to pay off student loans.
Though the economy has recovered significantly over the past several months, unemployment among young adults remains elevated. The U.S. unemployment rate is currently 6% overall, but 10.3% among adults ages 20-24, and 13.3% among adults ages 18-19.
College graduates tell Monster that they believe the pandemic has set back their career goals by an average of six months. Unfortunately, this may be an underestimation.
According to the National Bureau of Economic Research, individuals experience 70% of their overall wage growth during the first 10 years of entering the workforce, and individuals who graduate into recessions earn 9% less during the initial stages of their careers — significantly impacting future earnings.
In a 2019 paper titled "Recession Graduates: The Long-lasting Effects of an Unlucky Draw" Stanford researcher Hannes Schwandt indicated that "in midlife, recession graduates earned less while working more. And they were less likely to be married and more likely to be childless."
Schwandt also found that "recession graduates had higher death rates when they reached middle age. These mortality increases stemmed mainly from diseases linked to unhealthy behaviors such as smoking, drinking, and eating poorly. In particular, we discovered a significantly higher risk of death from drug overdoses and other so-called 'deaths of despair' among those who left school during a downturn."
Graduating into a recession, "has scarring effects on people that last for a majority of their career," says David Deming, a professor of public policy at the Harvard Kennedy School. "People who graduate into recessions never really catch up."
Deming himself graduated from his PhD program following the Great Recession and says he remembers how difficult the job market was — even for someone with an advanced degree.
"If you look at the careers of young people, even in normal times, the average worker holds about 10 jobs before the age of 40. And for young people especially, the way to get the job you want and to get the pay that you want is often to move. That's definitely true for people who graduate in tough times," he says. "You can't always be as choosy as you like, about your first job in times like these, but be on the lookout for opportunities to climb the ladder early in your career. Work hard, do a good job, but also seek out opportunities to move up and to move on to things that might be a better fit for you."
"That's the way you escape the trap of graduating into a recession."
As 72% of recent and impending grads tell Monster they are willing to relocate for a job, it seems many may be prepared to follow Deming's advice.
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