New Employment Stats and How Some MBAs, JDs, and Others Are Fairing

As everyone probably knows, the newest economic reports tell us that the official unemployment rate dropped from 9.5% to 9.4%. There seem to be two ways people are thinking about these numbers. Some people are happy to see the improvement and are growing optimistic about the future, especially those people with the MBA or JD qualifier. But there are an equal number of people who don’t feel that way and predict that things will continue to get worse. Which way of thinking is correct?

To be honest, I don’t know. I’m not an expert on labor issues, but I suspect that one's perspective has a lot to do with what industry you work in, what school you went to, how long you’ve been at your current employer and your employment status. After chatting with lots of students, career centers, and professionals about career opportunities as a soon-to-be graduate student, my perspective is that the situation is still worse than it may seem.

First, the unemployment stats are not all inclusive. If you think about it for a minute, the unemployment stats don’t include those:

1) forced to work PT due to economic circumstances, but prefer FT work
2) with reduced FT hours. In some places FT is 32 hrs (20% reduction)
3) with expired unemployment benefits who are not current looking for work (i.e. maybe taking CFA exam, studying for Grad Tests, working in free internship, etc)
4) who’ve found new jobs that pay less or are not career jobs
5) headed back to school to avoid the economy (MBAs and JDs)
6) recently graduated in May 2008/9 that want to enter the workforce but haven’t found jobs yet (students, including MBAs & JDs)

If all these people are included, I suspect the "unemployment" numbers would raise dramatically, maybe to 2x what they are now.

Second, I've talked to a lot of MBAs since April, and there were a lot more than I would have expected that were still looking for jobs, even at the best ranked schools. I was completely shocked. The number of interns without jobs was as of this past spring was also staggering, because firms are taking full time hires before making intern offers. While the employment of interns may not seem as critical as graduates, not getting an internship will make one’s job search much harder the next year and for some may preclude certain job opportunities.

Third, in the legal field, a really large number of law firms have also curbed hiring. Many firms have decided to completely drop 1L summer hiring (1st year interns). I met an incredibly smart 1L from Stanford who I worked with at the Attorney General’s Office this summer, and she said that for the first time, many Stanford JDs didn’t get to summer at a corporate firm this year. She said it was the first time they struggled. I also lived with graduating JDs from Boston University this past year, and they have colleagues with really good grades still scrambling to finalize their plans. Many graduates were looking into non-paying internships in order to get work experience until they can find a paying job. What’s worse is that those jobs are not even guarantees, as the graduates now have to compete against 20 others for that non-paying job. As I said, the situation is a bit worse than it seems.

For me personally, I am not as worried about the economy just yet, because I’m headed to school for a few years. Hopefully I’ll be able to hide away from the worst of the recession. I also admit that I’m fortunate to be headed to a program with a track record of sending students to premier employers and a program where students take classes and can do research during the first summer, so there is less pressure to find a certain “type” of summer job.

But aside from my own situation, I have a lot of friends and family members who are affected, including JDs and MBAs. For that reason, I like to keep up with what’s happening and recently found a few stats that I found interesting:

1) More than 100k people have already used up their unemployment benefits (I have a former MBA co-worker and a JD friend that will have to worry about this soon)
2) These benefits range from 46 weeks in Utah to 79 weeks in Alabama, depending on the unemployment percentages in each state. This means that many residents have been unemployed and collecting benefits for well over a year now
3) By the end of Aug., an estimated 650k people will run out of unemployment benefits
4) By the end of 2009, the number is estimated to be 1.5 million. This number will include lots of MBAs from the financial services and other industries

Given those statistics, I’ve been doing a lot of reading and research about the economy. I recently found an article by late economist Arthur Okun (thanks to Robert Reich's article for the reference), who once said that “a rule of thumb that every two percent drop in economic growth generates a one percent rise in unemployment.“ Robert said, that this is the first time that the rule no longer holds true. He said that it's not even close this time.

Overall, I’m guessing that by the time I graduate in 2012, I will be living in a pretty different economy than I am today. I’m interested to see how that economy will look and thankful that I’ll have 3 years to observe, study, and prepare for what’s going to happen. What's great about my JD-MBA program is that it will allow me to get a cross-functional, well-rounded perspective on everything that's happening, as I'll be able to interact with lawyers, politicians, judges, business people, recruiters, consultants, HR experts, academics, government officials, and students from a plethora of career backgrounds.

I'm definitely fortunate to be headed back to school during this defining period in our economy. Everyone who is applying this upcoming year should do the best they can to get in. Looking at the current economic environment and the unemployment trends, it's probably going to be another tough year for applicants.