Graduation is an exciting time for students. While the prospect of no class or homework is undoubtedly thrilling for the almost-graduates, students are also looking toward the future, ready to enter the workforce. However, with some experts predicting a possible recession on the horizon, new graduates may face unique challenges that people graduating other years won’t.
What do the experts think
According to multiple projections, the United States is likely to enter into a recession at some point in 2023. The Conference Board, a non-profit think tank organization designed to help companies understand the economic landscape, predicts that the United States has a 96% chance of entering into a recession within the next 12 months. A probability model from economists at Bloomberg predicts a 100% chance that the United States enters into a recession in the next 12 months.
If predictions are correct, students graduating at the end of this year and next semester could be looking for jobs in the middle of a recession.
A recent CNBC article mentioned a Goldman Sachs internship survey indicating that 86% of Gen Z college interns believe a recession is imminent. The article mentions two things that these Gen Z interns are doing differently due to the current economic climate: going to graduate school right after finishing the undergraduate degree, and proactively networking more to secure employment.
Historically, a recession hasn’t been the best time to graduate and enter into the job market. Hannes Schwandt suggested in a 2019 study published by the Stanford Institute for Economic Policy Research says, “research shows that college graduates who start their working lives during a recession earn less for at least 10 to 15 years than those who graduate during times of prosperity”.
In a study with the North Carolina Department of Commerce released in September 2022, evidence of “wage loss scarring” is found for those who graduate during a recession, meaning those who graduate during times of economic prosperity will experience higher wages than those who graduate during a period of recession.
BYU associate professor of economics Jeff Denning suggested that among several things that happen typically when a student graduates around a recession, “it leads to students in jobs that are mismatched in skill.” These students are unable to afford “investing in a low-paying job of the sort they trained for.”
Denning also echoed what the CNBC article stated previously, which is that there’s evidence suggesting “students who graduate during a recession go to graduate school more often.”
BYU associate professor of economics Dr. Christian von Lehm views this time as unique compared to potential recessions of the past.
“I think in general, economists would say we’re not in a recession presently, in large part due to the fact that the labor market is really strong right now,” he said. “Unemployment is really low, people are finding jobs at really high rates, so that’s good.”
Von Lehm doesn’t downplay the economic struggles that Americans are facing, however.
“There’s a lot of economic pain for Americans due to ongoing inflation,” von Lehm said. “There’s some concern that the economy could be headed into a recession as we’ve seen consumer spending and economic production slowing down, but they haven’t fully dropped or gone down in a way to be fully indicative of a recession.”
The managing director of BYU Careers & Experiential Learning, Jodi Chowen has seen an uptick this semester in the number of employers that are reaching out and attending BYU career fairs.
“There’s certainly a lot of indicators that a slow down could be on the horizon, but it hasn’t hit yet,” Chowen said. “The fact that we’re seeing high engagement on campus from recruiters indicates that there’s still plenty of jobs out there.”
Sterling May, director of the employer engagement team for BYU Careers & Experiential Learning, noted that there are over 16,000 full-time jobs listed and 6,000 internships available for students on the BYU job board. He is aware of hesitancy among students who are wary of technology layoffs and other indicators, however.
“I graduated in 2012 right off the great recession, so everything in me says, ‘It’s been a decade! Time for a dip,’” May said. “What we’re not seeing right now is mass layoffs across the board in other industries (outside of big tech companies)… it feels like a recession is coming and the signs are there, but there’s still so many jobs available.”
How do students feel?
While those graduating in the near future undoubtedly have concerns about the effects of a potential rescission, students like Trent Pomar have faith in the future of their careers. Pomar, a BYU marketing student graduating this semester, has a few prospects for jobs after graduation, but hasn’t accepted any offers.
“For most entry level positions, they want you to start in June or July,” Pomar said.
If he had the money, Pomar said it wouldn’t be a problem waiting to find a job until summer. Pomar doesn’t want to find something temporary while he looks for his ideal job, which makes the search that much more stressful. Pomar said he knows he’ll be able to do what’s necessary to make ends meet if it takes him a bit longer to finish the job search.
Donovan Smith, another student graduating soon from BYU, isn’t too worried about the effects of a potential recession on his work career. Although he doesn’t graduate until the end of winter semester, Smith has already accepted a position as a software engineer for after he graduates. Recessions are marked with higher rates of unemployment, but Smith is entering a field where moving around and jumping from job to job is common. While being unemployed doesn’t sound fun, Smith said that he’s prepared to look for another job if necessary.
“I’m not super worried about salary as long as it’s enough to live on, because I’d rather enjoy what I’m doing,” Smith said.
Smith said he and his wife have been blessed by living principles taught by the church, and that those principles have put them in a good spot financially.
“I’ve learned to live within my means by a large margin. My wife and I have enough in the bank where we can live for a year with no income and be completely fine,” Smith said.
As far as battling any emotional challenges that a recession might bring, the two had different responses. Smith focused on the importance of finding enjoyment in whatever current work situation you find yourself in.
“I think (I’ll) just try my best to create value wherever I end up working,” Smith said about potential employment challenges. “It can be easy to just sit into a groove and just go to work, and not be that focused while you’re there.”
Smith also said this same principle provides job security too. “Deliberately creating value for your employer is one of the best ways to have job security.”
On that same topic, Pomar said that being around people he cares about will be something that he focuses on in the next year.
“One of the things that I’ll definitely do is make sure I’m surrounded with people I love,” Pomar said. He plans on moving to Chicago to be around his best friend, someone he knows will be able to emotionally support him.
Hope for the future
While von Lehm isn’t ready to put all his money on this prediction, there’s “certainly hope” that things will turn around for the economy soon.
“I think early signs are slightly optimistic that inflation might be coming down,” he said. “We will see high interest rates, maybe even increasing interest rates until we see inflation come back down… there’s reason to be mildly optimistic that perhaps early in 2023 we’ll see things come together.”
“There’s been glimmers of hope in the last month or two to say maybe it will be a soft landing as some have described it,” he added.
As for advice he gives to soon-to-be college graduates during economic troubles, von Lehm emphasizes patience.
“Be patient in that your first job does not define your life or career even,” he said. “It can be a great stepping stone… make the most of your opportunities.”
“My advice even in good times is to be patient, not be anxious, do your best and things will work out as you keep trying and working hard,” he added.
Chowen encourages those that are feeling trepidation or fear to engage with BYU Careers & Experiential Learning or other organizations that help students find jobs out of college.
“There are a number of info sessions that we help to facilitate as well as recruiting events,” Chowen said. “Learn about your industry of interest that you feel your major has prepared you for, and through having those conversations and attending information sessions you’ll start to see that the opportunities are out there… that awareness will counteract the fear.”
