NATIONAL NEWS — Welcome to the jungle, 2008 graduates.
At the end of the academic year, many UCSD seniors will don
their caps and gowns, rendezvous with college buddies and perhaps go to a party
or two after graduation ceremonies come to a close.
Then they’ll begin looking for jobs. And to their dismay, it
may be much harder than usual to find vacancies thanks to the subprime loan
crisis, which has contributed to the market’s recent softening for labor
demand.
The housing mess that started in fall 2006 has spread, big
time. Billions of dollars in assets have been written down, or lost, by banks
lending to borrowers with subprime (less than optimal) credit ratings. But just
as people began to think the housing crisis would only affect those facing
foreclosure notices, a new twist courtesy of a vicious trend has reared its
head: nationwide unemployment.
The U.S. Department of Labor just posted its December 2007
unemployment readings. The reading was 5 percent, up 0.3 percent from November
and the highest reading in two years. Additionally, job creation was especially
weak in December, at around only 18,000 new jobs. That figure is the weakest
since 2003, a year when the country was ascending out of a recession.
As it stands today, the United States is closer to facing a
recession than it was just a couple of months ago. And with a recession there
inevitably comes a weakened job market, which is especially bad for recent
college graduates.
“Graduating in a recession leads workers to start at smaller
and lower paying firms,” said Matt Nesvisky, contributor to the National Bureau
of Economic Research. Thus, pending any improvements within the general job
report, it appears 2008 graduates will face a tougher-than-usual task seeking
the most coveted jobs.
So what should a student do to hedge against the prospect of
increasing weakness in labor demand? According to Nesvisky, “Among graduates,
those with the lowest predicted earnings suffer significantly larger and much
more persistent earnings losses than those at the top.”
The point to take away is to head a course of academic
diversification. Students majoring in subjects related to job sectors most
susceptible to unemployment swings — such as economics, urban studies and
planning and potentially engineering —
should take courses in a curriculum that relates to a relatively stable
job sector, like biology. Doing so will allow them the opportunity to explore
fields not directly correlated with their particular area of study.
Moreover, although UCSD’s six colleges have various general
education requirements, it would be more effective for students to branch off
from those requirements and to pursue traditionally in-demand courses such as
biology, chemistry and physics. Undergraduates intending to broaden their
horizons — and thus broaden their appeal to future employers — are increasingly
cramming double majors and minors into their time spent at school. But even if
students aren’t keen on deviating from their field of study, work experience
related to their major helps better position students within their intended career
path. Finally, electing to get involved on campus also attaches undergraduates
to a set of attractive characteristics that may aid them in their search for
that first, major job.
To understand where young workers are headed within this
slump, and what job sectors may be the most affected, it helps to review why
unemployment figures are influenced by the subprime credit crisis in the first
place. It can be explained in three words: softening consumer spending.
Traditionally, analysts worry that rising mortgage
delinquencies would force banks to hoard their cash reserves so that investors
wouldn’t fret a bank run. As a result of the policy, banks would then tighten
their lending standards so that even individuals with good credit ratings would
find it difficult to get loans to purchase economy-supporting big-ticket items
like homes and other prohibitively expensive goods. And because consumer
spending accounts for about 75 percent of total U.S. gross domestic product,
any sort of significant waning in consumer spending would lead the economy to
stagnation. If the economy stagnates, the employment rate will follow.
The U.S. Department of Labor reported that some of the
primary employment sectors directly affected by the housing crisis include the
construction, retail and financial services sectors. But unemployment rates are
not expected to confine themselves strictly within these fields. Just recently,
telecommunications giant AT&T reported a weakening consumer base, which
prompted analysts to rethink just what type of job fields will be spared.
Indeed, all three of the major U.S. stock market indices are
trending lower. And because their health can be used as a tool to measure the
overall well-being of the economy, the fact that the broad S&P 500’s
five-day start in 2008 was the worst in history does not help the situation.
Even the Nasdaq, an index composed mainly of technology stocks based in the
United States and abroad, has not dodged the bludgeoning.
All of this information foreshadows a softening job market, sooner rather than
later, so students need to start gearing up now by diversifying their range of
study in order to look more appealing to employers.
