In Depth: Markets not all bad for students
In the last year, the number of unemployed people in the United States has increased by 2.2 million. In September, the number of people employed went down by 159,000 – the ninth straight month of job cuts – making this the worst job market in five years.
These numbers, provided by the Bureau of Labor Statistics in their September 2008 report Friday, do not bode well for future employment rates. Combined with the recent crisis on Wall Street, a lending disaster and the approved $700 billion bailout, the U.S. economy is looking grim.
For incoming and graduating USU students, this could change job outlook, career preparation and finances.
Tyler Bowles, USU professor and department head of economics and finance, said students should be concerned.
“There is some concern that the problems in the financial market will spill into the real economy and by that I mean output and employment. And it’s that ladder – variable employment – to the degree it affects employment opportunities in the future, it’s probably raising some anxiety among students,” he said.
Ted Karren, financial adviser for Edward Jones in Logan, said the crisis on Wall Street was caused by a number of things including the slowing economy, developments in the housing market, risky investment choices by corporations, lax lending standards and consumers’ excessive reliance on borrowing.
Karren agreed that this will influence job opportunities negatively.
“Unemployment is up,” he said. “Companies are cutting costs, being very careful with their expenditures, something that means less hiring.”
Locally, however, he said rates have been relatively steady because the city and state’s economy did not experience such a rapid rise and, therefore, didn’t have so far to come down.
The most important thing people can do in general, Karren said, is not panic.
“Stick with a good strategy instead of panicking and losing your head just because the herd is,” he said.
While Karren said he works mostly with people preparing for retirement, he said he has some investment clients who are students or have just graduated. Karren said for those interested in investing, it is OK to start small and now is a great time to do it. Because of the low prices, he said there are some real bargains.
“Now is a great time to be buying stocks and mutual funds. There are a lot that do,” he said.
Karren and Bowles agreed people need to consider their financial time frame when making decisions with their money. Timing is everything.
Bowles said, “It depends on when you need the money. If you need the money in the next two to three years, don’t take any risk. Put it in a bank. If saving for retirement 50 years from now, you can afford to take a lot of risk. Put it in a good stock mutual fund.”
To all investors, young and old, Karren said, “Keep saving. Keep investing no matter what the market is doing because eventually, things come back. The economy improves. The market goes up. At least historically, that’s what always happens.”
One warning Karren did have for students is to watch out for the fine print on credit cards. He said people need to look at them like a contract, make the monthly payments and just be smart. He said interest rates are relatively low so people can borrow at reasonable costs but when borrowing for school, students have got to look to grants before loans.
This is especially important because student loans have to be paid back. Steve Sharp, director of USU’s financial aid, said even if one declares bankruptcy, student loans are not forgiven, unless in cases of undue hardship.
“If the government loans you money, they are going to get it back,” he said.
In his 15 years working with financial aid, Sharp said he has heard of only one case in which someone was relieved of their student loans. Students have to be fiscally responsible, he said. If not, Sharp said it will “come back and haunt them later.”
“You can live like a student now or you can live like a student later,” he said.
Sharp said the lending and borrowing crisis is not an immediate threat to students and that measures are being taken to help. In the long run, however, if the unemployment rate continues to go down, it will be harder to get jobs and, by extension, pay loans. But students at USU are smart, he said, with only about a quarter of them borrowing due to USU being a relatively low-cost school and that students understand living within their means.
Aside from feeling anxious about finances and job outlook, Bowles said students should be angry at the generations who allowed the economy to get to this point, also saying the economic downturn is not young people’s fault.
“You should walk out of here frustrated with me and everyone over 40 that’s caused this mess,” he said.
Bowles said in the long run, the bailout will end up costing younger generations more than helping.
“This very, very expensive bailout bill has to be paid for by someone at some point in time and my generation seems pretty adept putting these debts onto your generation,” he said.
Despite the downturn in the market, Bowles said there will still be jobs. Students just have to prove themselves.
He said, “Stay in school. Graduate. Develop your skills. Live frugally. Develop good credit and keep a good credit rating. The advice of your mother and father is still relevant.”
But not all numbers are as discouraging as those released by the Bureau of Labor Statistics, at least fiscally. According to the National Association of Colleges and Employers, NACE, 94 percent of all fields experienced a 7.6 percent increase in starting salaries, equaling $49,224.
Donna Crow believes she offers the resources to make these numbers a reality for USU students, even in today’s market. Crow said she wishes she had “a crystal ball” to predict the future but as director of USU’s Career Services, she said she can guarantee students a greater chance at success in an uncertain future.
“What I do know is that we can help you be as marketable as you can be no matter what the job market might be like when you graduate,” she said.
Based on studies and focus groups done at USU and nationally, Crow said organizations like Career Services are affective.
“We know it’s a success based on statistics,” she said. “We know it’s a success from your success.”
When students come in for advice, Randy Jensen, assistant director of Career Services, said they are approached with a four-part mission to find the appropriate major, get an internship and then either prepare for graduate school or a career.
Services offered by the center include help with salary negotiations, resumes, personal statements, interview skills and networking, something Jensen said is crucial and cannot be done last minute.
“A friend who knows a friend who knows a friend – even that will get you in the door,” he said.
Career Services also offers one-on-one meeting between counselors and students, which Jensen said takes up about 80 percent of his time. Still, Jensen said the center is eager to see more students come through their door. A lot of people don’t know the center and its many resources are available but he said they still see thousands of student appointments, and many in-class presentations.
After determining the best major through tests and individual assessments, Crow said internships are the next big step.
“We want you to get an internship or two or three,” she said.
These are crucial because they help determine whether or not the chosen field is really what students want. She said she has seen students return with a greater enthusiasm or questioning what they were ever thinking. Crow also said students who graduate with an internship under their belt do better in the work force, as proven by national statistics. Crow said 60 to 70 percent of students take a job with their internship employer. Simply having an internship also saw graduates a 10 to 15 percent salary increase.
Career Services has a Facebook page and fairs including the Grad School Fair at the end of October, the Tech Expo in November and the Career Fair in the spring. They also have an alumni contact database where students can call those in a similar field who have experienced the same steps to finding a job.
Jensen said, “You may be calling a stranger, but at least it’s a fellow Aggie and someone who is willing to talk to you.”
While the future is looking bad nationally, Jensen agreed things aren’t nearly as dire locally but as long as graduates are prepared with the qualities employers are looking for, he said he thinks they can withstand the uncertain markets.
NACE created an employer’s wish list of skills desired in employees for 2008 including communication skills, work ethic, initiative and interpersonal skills. Jensen said everything is important but social skills are key.
He said, “Can you work with everyone else? I think that makes a giant difference.”
In Job Outlook 2009, conducted by NACE, the number one place employers find employees is on-campus recruiting. Other places include internship programs, faculty contacts, career fairs, job postings at career services and their Web sites, and resume requests by career services – all of which USU’s Career Services provide.
Crow said, “If you don’t use Career Services, bottom line, you’re missing the boat.”
–arie.k@aggiemail.usu.edu