Job Prospects for B-school Grads
June 23rd, 2008Mish had an excellent post today on layoffs and the economy (see Job Cuts Increase Economic Stress). In that post he focused on the most recent spate of job cuts and what that means for our economy. I agree with Mish, and many others, who have pointed out that unemployment is a lagging indicator of recession. Therefore, not only can’t we rely on unemployment statistics to predict when we will enter a recession, but we can’t really look to unemployment statistics to gather insight into when we’ll come out of a recession.
However, that’s not what I’d specifically like to write about today. The focus of my post will be on how this recession has affected the job prospects of graduating MBA students, and how current students are likely to be affected moving forward.
Interestingly, few Stern students had difficulty finding jobs or had offers rescinded. In fact, most of them seemed to have weathered the storm just fine (for now at least). Nevertheless, I found the article Tips for College Graduates Seeking Work from yesterday’s Chicago Tribune fascinating. The column began:
It could be a long summer for college graduates looking for work…Although the college labor market could remain positive overall…some companies have rescinded offers. Other employers that delayed hiring may continue to hold off on recruitment through the summer.
I will not argue with the author of this article. I mostly agree. However, some of this information seems at odds with the data as I experienced them here at Stern. Let me explain why.
Earlier, I suggested that Stern students did just fine this year. And that’s true. In fact, none of my 150 or so students had a job offer rescinded, and most of those who were seeking employment found it relatively easily. But to understand why, you must understand the hiring cycles at Business Schools.
For the most part, the recruiting season begins in the Fall. It is usually finished by early Spring. So many of the students I had spoken with were locked in early on – they had accepted job offers in Fall 2007 and Winter 2008. By the time the real turmoil began (after the Bear Stearns collapse in March, 2008), most of my students had already been hired, as were, I suspect, graduates from most business schools.
But it’s true that it will be rough going for those who graduated without jobs, and even some of those who graduated with jobs (i.e., some will show up to start their new jobs only to find out that they don’t exist anymore). But the overall numbers for the graduates of 2008 will largely look ok. Unfortunately, they don’t tell the whole story. They are also a lagging indicator.
The students who will really, truly feel this recession are the graduates of 2009 (and maybe even the graduates of 2010). I expect the job market moving forward to be abysmal, and for the hiring season of 2008-2009 to largely be a bust.
In April, BusinessWeek published a wonderful section on the employment outlook for 2008 business school graduates (see Graduating Into a Recession, and especially the article It’s Looking Grim for New Grads). I’d encourage you to take a look – there are some neat facts in there about the earnings potential of those who graduate during recessionary periods. In the section they claimed that the goings would get tough for 2008 grads. Personally, I think they were slightly off on timing. We ain’t seen nothing yet.
So fear not for the grads of 2008, but for those of 2009, …and beyond.
June 23rd, 2008 at 7:09 pm
I Liked your article on the plight of MBA’s.
I would like a clarification.
You said that
2008 Grads with Job Offers – A.OK.
2009 Grads Prospects – Bleak
What are 2008 Grads w/out Job Offer.
I am currently employed, but not in
my chosen MBA profession.
Please Respond.
June 23rd, 2008 at 7:29 pm
Backspan, if you have a job, consider yourself fortunate. And congrats!
I hope it didn’t come across as if I suggested that everything is A.OK if you are a grad with a job. In fact, the economy is likely to deteriorate to a point where everyone is at risk. That said however, the grads of 2009 will be especially challenged when it comes to employment.
Now, since you are employed (albeit not in your chosen vocation), the issue is what next. Unfortunately, when the economy turns as it has, many MBA grads have to accept a few years of under-employment – a few years in which they may have to accept periods of underpayment relative to what they could be making in better times, and a few years of immobility, stuck in a job that they might not exactly want. I’ll call your attention to that BusinessWeek article “It’s Looking Grim for New Grads” cited above. It has some good information for folks in your situation.
Good luck!
June 23rd, 2008 at 7:44 pm
Good stuff Robert. I read an interesting article the other day about how employment sites are changing as employers abandon the “pay to post” model found on most sites like Monster, careerbuilder, industry associations etc. A lot of people that look on these sites falsly think there are less jobs when in fact employers have begun posting their jobs on free employment sites like
http://wwwRealmatch.com
http://www.craigslist.com
http://www.simplyhired.com
And others…Just a thought for those looking!
June 23rd, 2008 at 8:16 pm
Correction to Rachel’s Post (above):
http://www.realmatch.com
June 23rd, 2008 at 9:28 pm
Hello Rob,
Any comments on the recruitment of business PhDs as new faculty members by business schools? Will we see similar dynamics as in the market for MBA hiring going into 2009?
Thanks!
Hakan
(Currently in Singapore)
June 24th, 2008 at 12:54 pm
Good question Hakan. I have not been in the business long enough to have lived through several downturns. I was, however, on the market however during the 2001-2002 recession, and it was not a great year, but not awful either. Believe it or not, 2002-2003 was worse.
My understanding from those more knowledgeable than I is that universities tend to lag the general economy by several periods (both on the way down and the way up).
So while I believe that the job market will certainly be rough going for MBA grads in 2009, my priors would suggest that it won’t be as bad for Ph.D. graduates looking for academic jobs. In fact, when the economy goes sour, applications to business schools generally increase as displaced workers look to go back to school. So demand for the MBA degree often increases during recessions. But executive education and employer-sponsored part-time programs dry up. Alumni giving also begins to wane.
With all that in mind, I believe that 2008-2009 academic year will be so-so for Ph.D. graduates – not great, but not awful either. Private universities will likely continue with their hiring plans. State universities, whose hiring budgets are largely determined by state budgetary considerations, will have difficulty. I am not optimistic about the 2009-2010 academic year. By then, private and public schools alike will feel the pinch.
August 18th, 2008 at 11:12 am
I think this is an oversimplification of the MBA job market’s state. If you’re a recent grad who is trying to find a position in real estate or investment management, it’s a very, very challenging environment and has been so through much of 2008. There are still plenty of opportunities in marketing, industry finance and other areas. Are these areas lagging? Possibly, but the impact has not been nearly as dire as you suggest.
If an MBA graduate chooses to seek employment outside of his/her core interest due to this environment, it may never be possible to get back on track. This is especially true for career switchers who have little relevant experience.
There are always opportunities, but they are harder to find. Hearing all of this doom and gloom from my alma mater (http://www.rgemonitor.com/roubini-monitor/253363/new_york_times_article_on_nouriel_roubini_as_dr_doom) makes me glad that I didn’t attend b-school there. Most MBA career placement departments are projecting a “realistic optimism” – when it comes to morale of quality job seeking students, this is just as important as an honest assessment of the economic environment. I’m not inferring that it’s ok to tell an sub-par student that he/she can get a position at Goldman Sachs or McKinsey tomorrow, but quality people are in demand in any market.
March 11th, 2009 at 6:22 am
Could someone please comment on class of 2010 MBA grads’ job prospects/strategy in UK ? Wawick , Leeds and Strathclyde are in my list . The cover is blown agreed, but can an Indian consultant with 9 years IT expertise (PRINCE2 , ITIL , BCI certified ) hope to land a job by /within 3 months of graduation ? Would the olyympics in 2012 have a positive impact on my job hunt early 2011?. Appreciate some tips.
October 17th, 2009 at 6:23 pm
Ok heres what I have to say. The market sucks, especially for international students. The H1 thing is a big hurdle now.
A lot of people have been laid off and they will be competing as well.
I think it will take 2012 or later for the scene to get back to 2005