From the Black Collegian Web site: http://www.black-collegian.com/issues/2ndsem08/job_outlook.htm
College Graduates Benefit from Large Retiree Pool
By Phil Gardner
Despite the cautious and sometimes gloomy economic news released throughout the past several months, particularly in December and early January 2008, the college labor market outlook appears bright. College students have baby boomers (those born between 1945 and 1962) to thank for the growth in opportunities this year. Many large companies are faced with serious concerns as baby boomers prepare to retire and exit their current positions.
Companies are aggressively searching for new talent who can be trained and ready to assume mid-level or higher responsibilities within four or five years (just when those retirements start in earnest).
Dollars, Oil, and Copper
Several forces are conspiring to dampen economic growth. While it is difficult and premature to predict a recession, the weakened housing sector and its impact on financial (credit) institutions have injected uncertainty into the economy. The ripple effect from the sub-prime lending fiasco has now reached firms and individuals initially thought immune from this crisis. Credit rules have tightened making it more difficult for companies to borrow money; to raise necessary capital that could be used to expand operations.
Firms are also facing higher costs for inputs such as metals, chemicals, and energy. As countries such as India and China continue their strong growth patterns, the demand for resources to use as inputs for industry, housing, transportation, and other key sectors has risen sharply worldwide. Higher demand has consequently caused prices to rise. Employers are also feeling the pinch as labor costs have also crept upward, especially for health care and related benefits. Medium-size employers who need to maintain in a competitive position are finding it difficult to expand hiring.
If you have been to the gasoline pumps recently, you know that the price of gas keeps inching up. The energy sector is under stress from increased demand. From all corners of the globe people are using more oil-based products from gasoline, fertilizers to pharmaceuticals. Further complicating oil prices is the weak U.S. dollar. Oil is priced internationally in dollars. As the dollar’s value against other currencies has dropped, oil producers have raised prices to hold revenues the same.
A weak dollar does help us in some ways. Export-oriented manufacturers and service providers are seeing strong growth. Tourism to the U.S. is also growing, as foreigners with strong currencies can find real bargains in the U.S.
Finally, the U.S. consumer may be tapped out. Over 60 percent of the U.S. economy depends on consumers spending money on products and services. Over the past decade, Americans have spent well (aided by rising housing values); in fact, they have spent like no other group in the entire world. The result has seen the U.S. savings rate dip below zero (we spend more than we earn) and credit card debt has grown. Consumers may run out of juice just as the other side of our economy has slowed down.
As employers began to firm up plans on their hiring intentions in the fall, 34 percent expected to increase their hiring over last year while 39 percent would decrease their hiring. The remaining employers expected to hire the same number of college graduates as last year. These figures are very similar to other labor studies conducted in the fall by Manpower and Career Builder, for example. These studies described employer intentions as cautious. Federal employment statistics, even though they have been fluctuating unexpectedly during the fall, paint a similar picture.
When the figures are disaggregated by degree level, the figures suggest a much stronger labor market for bachelor’s and MBAs than for other degrees. These figures reveal that employer intentions for college hiring across all degree levels are not increasing as rigorously as last year.
From information provided by 910 firms and organizations (not including school districts), respondents to our survey estimate they will hire approximately 40,000 college graduates. Overall total job opportunities will only expand by 2 percent over last year. However, bachelor’s degree hiring, which accounts for 77 percent of the total hires, is expected to increase by 7 percent.
Large employers, those with more than 4,000 employees, are aggressively pursuing college graduates this year. Large companies are beginning to deal with the implications of the looming exodus of baby boomers from their employee ranks. Some companies face the arduous task of replacing up to 60 percent of their current work force over the next decade. Last year these companies began to ramp up their recruiting efforts. This year companies with more than 4,000 employees plan to increase bachelor’s-degree hiring by 10 percent. Importantly, their focus is on graduates with bachelor’s degrees. Their total hiring across all degrees will only increase by 5 percent.
Companies with 9 to 100 employees that have the capacity for rapid growth are labeled second-stage growth firms. Start-up companies with generally fewer than 10 employees and second-stage companies comprise 78 percent of all firms and establishments (does not include education and government) and are responsible for 36 percent of all employees in the U.S. Companies with fewer than 100 employees comprise 34 percent of the employers responding to our study. This group expects to increase bachelor’s degree hiring by 13 percent and total hiring by 16 percent – almost all of these positions will be new positions and are not earmarked as replacements for retirees.
The news is not as good for companies with 100 to 300 employees, as they expect to decrease bachelor hiring by 13 percent and total hiring by 12 percent. Their comments suggest that the weakness of the economy and rising costs have caused them to take a more conservative approach to the labor market. For companies with 301 to 3900 employees, the news is slightly better as they will increase bachelor hiring by 1 percent. This group was also very cautious, injecting comments that if the economy continued to weaken they may have to pull back their hiring goals for the year.
To be continued...