People are fond of saying it is a time of great uncertainty, but it is certainly a terrible time to be hunting the job market. As the COVID-19 pandemic forces employers to cut costs and lay off or furlough workers, recent college graduates are having a hard time securing and keeping a job. These problems could throw college students’ futures into flux and damage their long-term finances.
Young people already face certain financial risks. Many young adults have little in savings even though money experts often recommend saving enough to pay for three to six months’ worth of expenses. Coupled with student loan debt, rent and other expenses, college students face a daunting financial hurdle while receiving an education and once they earn their diploma.
In addition, college students are more likely to lose their jobs during recessions. The old adage “last hired, first fired” is true. According to the New York Times, college students’ lack of on-the-job experience and seniority leave them particularly vulnerable to layoffs.
The Great Recession offers a clear warning. Some Americans who graduated from college during the Great Recession are still seeing the effects. Till von Wachter, an economics professor at the University of California, Los Angeles, told CNN in 2018 that it could take students who graduate during a recession 10 to 15 years to catch up. According to Von Wachter, students graduating during a recession often take jobs at lower-paying companies. When they are eventually hired by better-paying companies, it takes time for them to advance their careers and therefore earn enough money to pay their loans and expenses.
Another study by Jesse Rothstein, an economist at the University of California, Berkeley, found that in 2018, college graduates whose careers began in 2010 and 2011 still suffered from lower employment rates and wages than those who were the same age but graduated earlier.
Already, the current recession is disproportionately affecting younger people. Unemployment is rapidly spiking in the country due to the novel coronavirus. However, younger workers have been hit especially hard. Low-wage service employees — who are younger than the general population — have lost their jobs at high rates.
The pandemic has also forced states to cut funding to universities. The University System of Georgia, for example, had to reduce its budget by 14%. The University of Georgia already laid off many of its student workers in March. With a reduced budget, the university may be unable to hire as many workers, making it harder for students to pay for their education and other expenses.
Students have also been left stranded after companies were forced to cut costs by canceling internship programs. These programs prepare students for careers in the real world with valuable experience and skills. Entry-level job opportunities that require a bachelor's degree have also decreased on ZipRecruiter, an employment marketplace online. Without these opportunities, graduating students’ future job prospects could be limited.
It will take a long time for the U.S. economy to fully recover. Federal Reserve chair Jerome Powell said it could take the economy until the end of 2021 to make a full rebound. But the end of a recession doesn’t mean the end of hardship. In September 2010, the National Bureau of Economic Research declared that the Great Recession officially ended in June 2009, but Americans still felt the effects for years to come. Likewise, this recession will inflict lasting damage on college students and graduates.