What Does The Future Hold For College Students Graduating During The COVID Recession?

from Challenger Gray and Christmas

New college grads are entering the job market during a confirmed recession, according to the National Bureau of Economic Research, as the unemployment rate for the nation hit 13.3% in May. Looking at past recessions, this does not bode well for these workers' overall career trajectories in terms of average wages and available jobs, according to one workplace authority.

"Job prospects for college grads who enter the job market during a recession could take years to recover. This group tends to have higher unemployment, even years later, than bachelor's degree holders who graduated at other times. Meanwhile, wages rose slowly during one of the tightest job markets in recent history pre-COVID, but that could turn to stagnation during a recession," said Andrew Challenger, Senior VP of global outplacement and executive and business coaching firm Challenger, Gray & Christmas, Inc.

In May, the unemployment rate for those holding a bachelor's degree or higher was 7.4%, compared to 2.5% in March and 1.9% in February, according to the Bureau of Labor Statistics (BLS).

A survey of 2008 college graduates conducted in 2009 and 2012 by the Department of Education found the unemployment rate of these graduates in 2009 was 9%, about on par with the national rate, but well above the 4.9% unemployment rate for those who held at least a bachelor's degree, according to the BLS. In 2012, the unemployment rate for these graduates was 6.7%, compared to 4.0% for all workers with a bachelor's degree or higher.

Meanwhile, wages for new college grads were stagnant even prior to the downturn. According to a study conducted in 2019 by executive search firm Korn Ferry, entry-level salaries for 2019 college graduates averaged $51,347, up 1.9% from the $50,390 2018 college grads were compensated. The study noted that adjusting for about 2% inflation year-over-year, wages remained effectively flat.

"While the country was experiencing record-low unemployment and employers reported labor shortages in a number of industries, wages were still rising much slower than expected. It was the one area that did not seem to see a boon from the hot economy," said Challenger.

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Isaac Pomerance 1 month ago Member's comment

Thank you for this article. What would you recommend being the right path for a Class of 2020 Graduate. Would you recommend staying in school another year- or do you see the repercussions of COVID-19 on the overall economy playing out these next few years?

Dick Kaplan 1 month ago Member's comment

It really depends on the industry/sector. Some will fare better than others. Tech is a great field to be in now as many tech companies are experiencing record growth as many users are forced to utilized technologies in ways they never did before. Others like the travel industry will take years to recover.

Isaac Pomerance 1 month ago Member's comment

Right, so what would you propose those students do? Try to transfer into other industries?

Dick Kaplan 1 month ago Member's comment

People do need to pivot and adapt. It would be foolish as a new graduate, to apply for a job in an industry that has laid off millions. You will be competing with countless others with far more experience who are desperate for work. Yet, being a recent graduate, you are far more able to apply for an entry level position in one of the industries are growing.

Mike Nolan 1 month ago Member's comment

Either that or wait a few years and do something in the meantime. Travel is out of the question but you could always go get master degree.

Isaac Pomerance 1 month ago Member's comment

Getting a master degree, while sometimes affording more opportunity and is an important part of investing in oneself, also comes at a large cost. Do you think it is more effective to incur a current cost on that, as opposed to entering the work force?

Mike Nolan 1 month ago Member's comment

While that's true, many undergraduate schools have a 5 year program where you graduate with both an undergraduate degree and an MBA. IT can be far more cost effective and time effective than doing a separate MBA program later and can make you more competitive when the jobs start opening up again. Besides? What's the alternative? Staying home with your parents and playing video games?

Isaac Pomerance 1 month ago Member's comment

While that program might be fitting for current applicants, I was referring to the dilemma that current undergraduate students are facing, and as we have been discussing, the alternative is to go full force ahead for this population to try and find entry-level positions.

Farah Kincaid 1 month ago Member's comment

Millions are now unemployed. I'm sorry to say that I think you'll be hard pressed to find a job. But hopefully things will turn around sooner rather than later.

Isaac Pomerance 1 month ago Member's comment

Thankfully, I am not in that position. Yet, I was trying to creat a dialogue focused on a solution- as opposed to just giving up. Do you have any constructive ideas for a possible solution for some people?

Flat Broke 1 month ago Member's comment

Personally, I've just given up. :(

IB Trading 1 month ago Member's comment

Maybe some companies still offer unpaid internships, though those likely disappeared with the other jobs as well.