Welcome to Chatter, the Collegiate Employment Research Institute’s blog about transitioning young adults into the workplace.
Chatter will present interesting results from our studies and share emerging thoughts and ideas to advance our profession. New posts will be added on Fridays. We’re asking colleagues from a wide range of organizations to contribute. If you would like to initiate a discussion thread, just let us know and we’ll prepare your post.
Job Market Lags
In a recent interview for Knowledge@Wharton, I was asked when I expected the recession to end and the college labor market to turn around. I am asked this question frequently. Looking at post recession job recoveries since WWII, in most cases job growth corresponded to the improvement in the economy. However, in the last two recessions (1989-1992 and 2001-2003) job growth lagged significantly behind economic growth.
In 1992 the contributing factor was the “right sizing” of many organizations as they adjusted to a global economy. We witnessed several years of strong economic growth before hiring surged in early 1996. Why? The inability to absorb the huge number of IT-related personnel displaced by the dot.com burst, coupled with the mess Enron on other overextended companies left in their wake, delayed the rebound in hiring for several years.
Early indications suggest that this will also be a jobless recovery. The fundamentals aren’t present to stimulate job growth at the levels we need. The college labor market, which is only a sliver of the total labor market, may buck these trends because of the workforce demographics that many companies face. Small companies (fewer than 500 employees) typically hire 50% or more of new college grads. These companies need credit – something the banks are reluctant to supply at the moment. Hence the focus on small business credit and viability in President Obama’s recent address and those of nearly every state governor I have followed.
It looks like government is going to have to step in to get the small business engine going. Second and third tier suppliers are suffering and their recovery is going to take a long time. Who will they be supplying? Recent college grads are captivated by the allure of Fortune 500 companies, but it’s actually middle tier companies that drive a big segment of the labor market, and at the moment these are on the side lines.
Counting On Retirements
Young adults are counting on at least one ace in their deck of cards: the pending retirement of Baby Boomers. Boomers with minimal skills are, in fact, leaving—or being forced—from the workplace and going on early retirement. But it appears that skilled Boomers are holding onto their jobs, and there is some evidence that they plan to extend their stay up to ten years. Ten years! If that’s true, our young adults will be in their 30’s before they can find meaningful employment.
So what has to give if the new job creators (small businesses) are on the side-lines and the replacement pipelines (large employers) are still plugged? Do we continue to prepare young adults in the same ways—perfect resume, perfect network, and perfect dress for success? Or is it time to begin teaching them how to create their own niche? Job market recovery may come to our campuses faster than elsewhere, especially those in key geographic regions. But ultimately, the recovery is going to take a long time. When we come out the other side, a very different type of relationship between colleges and the world of work needs to be brokered.
Super Smart Boomers
Young adults may see opportunities as retiring Boomers leave holes throughout organizations. But according to DeLong (insert a hyperlink), the exodus of Boomers, especially the front end, could imperil some organizations. It turns out that the front end of the Boomer generation is particularly well educated. While only about 25% actually went to college, those who did were encouraged to continue in professional programs and graduate school.
My peers in high school were encouraged by the space race to pursue science and engineering degrees—and, of course, some saw it as a way to avoid the draft. Faculty pushed 50% of my own graduating class to graduate and medical schools, and classes just before mine sent almost 80% to post baccalaureate education. The front end of the Boomers was the highest native attainment of post BA degrees than any subsequent generation (the U.S. has since farmed out graduate school to foreign students). Thus, many key organizations in aerospace, chemicals, energy, insurance, government, etc. are going to face a major challenges in sustaining their workforce and, more importantly, their implicit, explicit and tacit knowledge.
In Over Their Heads
What does that mean for young adults? While opportunities may seem evident, there is much uncertainty as to when this transition will begin due to the implications of the recession on retirement resources and health care. A big challenge is the skill-ability gap. Young adults will not be stepping into the traditional starting job we’ve nurtured them towards for many years. Today’s starting job requires demonstrated skills at a much higher level, because they will in essence be filling in the positions the highly-educated and seasoned Boomers are leaving.
Are new college students ready? Are universities prepared to set higher expectations throughout the college experience so that they are ready? Before you respond, take a look at the skill gap report we just published. It’s available free from our web site.