For students graduating with their degree during an economic boom, the prospect of higher wages and full-time employment seems likely. Newly minted graduates are renowned for their hope and enthusiasm—their drive to better themselves and commit themselves to a life of hard work in exchange for tangible and intangible rewards. Though during an economic downturn graduates may share in this optimism and demonstrate a willingness to work hard, a Wall Street Journal article published last year indicates that these graduates won’t reap the same rewards as those students whose graduation date corresponded to a less gloomy economic time. Put differently, the income gap that emerges between each set of graduates is the result of plain and simple bad luck. Even though 2010 is shaping up to be a better year than 2009, new graduates face many of the same hurdles faced by the class of 2009.
The Wall Street Journal reported that, according to Yale School of Management economist Lisa Kahn, “those with the misfortune to graduate during the [1980s] recession earned 7% to 8% less in their first year out than comparable workers who graduate in better times.” Though the gap does close somewhat over time, Kahn found that even after 18 years the two sets of graduates are separated by a couple of percentage points in terms of income. What is the actual, structural, cause for this gap?
According to economists, “The caliber of jobs available in a recession, and their accompanying wages, tend to suffer;” that is, “High-end firms hire fewer people and drive down salaries because jobs are in such demand.” Although the existence of such a gap makes rational (and economic) sense, it does seem a bit unjust—that, despite will and self-determination, Fortuna (the ancient Roman goddess of fortune) is actually the one in control. I do have some general recommendations for the class of 2010 (and the class of 2009), however.
First, keep that hope for which new graduates are so renowned. Labor markets, despite the addition of a few to several tens of thousands of private sector jobs each month, are, as I have mentioned before, still quite “taut.” However, do not allow this fact to dissuade you: work on developing your professional network; be persistent and methodical when looking for jobs; and, most important, don’t become preoccupied with the bleakness of the job market. If you do get a job that pays less, then as economic conditions improve, strive for more and set your sights higher; that is, readjust your outlook and don’t assume that what you made initially is in any way connected to your actual moneymaking potential (i.e. what you ought to be making).
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