By Steve Kelman

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The Lectern: The Financial crisis, students and jobs

Over the past few years, something like one-third of graduating MBA students at the Harvard Business School took jobs in investment banking (or "I-banking" in student lingo). A similar proportion of graduating seniors at elite universities have gotten their first jobs in that industry in recent years as well. It is a fair assumption that such jobs will come close to completely disappearing for students graduating this June.

Graduating students are always the canary in the coal mine for the economy: When employers cut back, they cut back first on new hires, before letting existing employees go. This year is shaping up as an extremely dramatic example of this phenomenon, probably at elite universities in particular, where there was so much recruitment into the sectors hardest hit by the current economic situation.

The current issue of the student newspaper at the Kennedy School reports that Harvard Business School has hired psychological counselors to help students suffering from anxiety attacks. Given the extent to which students sign on for MBA programs in the hopes this is a ticket to financial wealth, these students are probably particularly affected by this reversal of fortunes.

The same article in the Kennedy School student newspaper reported that anxiety levels among our public policy students seems to be somewhat lower. This is a time when government jobs start appearing more attractive again. Shortly after the article came out, I had lunch with seven of my first-year students (still 18 months away from looking for jobs) who had invited me out, and job market anxiety levels didn't seem overwhelming for them either.

In this job market, there are opportunities for federal agencies that have jobs available. Especially if you can move quickly, you will have a better choice of applicants than you might have had in other years. Agencies should go for it.

Incidentally, I asked my seven students at lunch what they thought the probability was that social security benefits with at least approximately the real value of social security benefits today would be available to them when they hit retirement.

The question was prompted by a similar question I had asked one of my daughters a few months ago, where she said she assumed she would get essentially no social security benefits (and I stated my surprise, venturing my judgment that the probability was .9 that her generation would get benefits relatively comparable to those today).

Almost all the students had a perception closer to my daughter's than to mine -- which gives an interesting insight into the thinking of young people today. When I raised the question at lunch, many expressed some (mild) anger that the older generation was funding obligations to be spent today that their generation would need to pay for.

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Posted by Steve Kelman on Oct 08, 2008 at 12:10 PM


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