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Prospects for majors across all disciplines affected by current market, credit troubles

John Tierney | Tuesday, October 14, 2008

Flexibility is the key for Notre Dame students looking for jobs and internships in rough economic conditions, according to Ray Vander Heyden, associate director of the Career Center.

“And don’t overlook the power of networking,” Vander Heyden said.

The current economic crisis will affect more industries than investment banking. “Certainly there’s going to be a trickle-down effect,” Vander Heyden said. “Any industry where credit plays a role” will be hit the hardest, he said.

But Abigail Wozniak, an assistant professor of economics who is on leave teaching at Princeton University this academic year, said jobs prospects in every industry are affected by the economy.

“It’s going to be a problem for everyone,” she said. “The bad news is that it’s not just the stock market, which is fluctuating wildly. The bigger, underlying problem is that growth is expected to be flat.”

The United States is headed either for a recession, which is a period of negative growth, or a sustained period of flat growth, Wozniak, who has done research in the area of the evolution of the job market for college graduates, said.

“Typically, when a country has entered a recession, those years have been tougher for everyone, but also for college graduates entering the job market,” she said.

Graduates with a variety of majors will be affected, Wozniak said.

But there are job opportunities in the market, according to Vander Heyden. “There may not have two or three offers, but all you need is that one right one,” he said.

Graduates will earn lower wages than they would have a few years ago once they are able to find a job, according to Wozniak. “They’ll earn lower wages typically, but they will find jobs,” she said. “They’ll just be earning less than similar college graduates who graduated a couple of years earlier.”

She said that the hourly wages of graduates from the Class of 2009 will catch up to the hourly wages of their older peers at the same point of their careers in about 5-10 years.

“Over their lifetime, their total earnings will be lower, but eventually, their hourly wage will catch up,” she said.

The amount that their total earnings will be lower by won’t be too significant, she said. “It’s better to earn a lower wage in your 20s than it is to earn a lower wage in your 40s,” Wozniak said.

But not all careers will remain unchanged by recent economic developments.

“Some of these careers on Wall St. paid a lot of money,” she said. “Some of those jobs are gone or at least severely curtailed for the foreseeable future. The huge earnings they were making are also gone.”

Many students who had previously planned on pursuing investment banking will have to consider other routes, according to Vander Heyden.

“Investment banking isn’t the only option open to finance students,” he said. “Students should look at different alternatives, and be flexible. They should be able to do OK.”

Greg Dock, a junior finance major, had an internship in investment banking last summer and had planned to pursue a career in the field after college.”

I’m still looking at investment banking, but I’m also expanding my horizons to looking at corporate finance,” he said.

“I was going to work for Lehman Brothers, but then they went belly-up,” senior finance major Mike Cikos, who had an internship with Lehman last summer, said.

Cikos said he isn’t focusing on finding a job with another bulge bracket bank, because if they haven”t gone under, they have cut down on new hires.

“If you didn’t intern with [a bulge bracket], they’re not recruiting,” senior finance major Conor Douglass said.

Bulge bracket banks that haven’t gone under are also able to recruit banking veterans who lost jobs in layoffs or because of bankruptcy. “There’s a whole bunch of talent on Wall Street that they can choose from,” Cikos said.

Douglass and Cikos are instead concentrating their job searches on middle market investment banks that haven’t been exposed as much to the credit crunch.

The mid-market banks haven’t had any layoffs are are still focusing on growth, according to Douglass.

Douglass said that in addition to mid-market banks, he is looking outside to assent management and sell-side insurance companies. Corporate finance is also an option, but he’s not actively looking at those jobs.

Cikos, on the other hand, views corporate finance as an option for him. “I’m thinking corporate finance because a job’s a job,” he said.

The long-term economic future and how to prepare for it

The current economic distress should affect students graduating this year, 2010, and probably 2011, Wozniak said. She said that the recession will be caused by the confluence of two main problems – the financial crisis’ real effects on the economy and fundamental factors that will lead to flat growth.

It is generally accepted that the fundamental factors include the overextension of American consumers, which will cause the consumers to curtail their spending and cause the inflation of housing prices.

“That will have real spending effects,” Wozniak said.

Wozniak also said that there will be another fundamental factor leading to flat growth.

“I don’t think the human capital skills of the American worker have kept pace with the demand so we won’t have industries which will produce with the demands of the global economy … ” she said. “We’re quickly reaching the maximum production point with our highly skilled worker we have.”

The remainder of the work force “doesn’t have the skills to keep pace,” she said.

With a prolonged recession, jobs will continue to be difficult to come by. But the good news is that it can’t get much worse.

“The indicators are pretty clear that we’re going to have flat or negative growth. That’s pretty much as bad as it gets,” Wozniak said. “I wouldn’t worry so much about it getting worse. We’re pretty much already there.”

Wozniak advised graduating students to start investing early in their careers to try to take advantage of the rough economic times.

“They should buy into the market and ride it out,” she said.

As far as students who still have time left at Notre Dame, Wozniak said they should worry about taking the right courses, and not so much about their actual major. “Employers are going to start getting pickier,” she said. “Doing whatever you can do to make yourself look like more than a major in x” is a good idea.

She especially encouraged students to develop skills in math, statistics and foreign languages. “Employers can look at those as real bonuses,” she said.