David Czapka ’07 graduated from Princeton shortly before the financial crisis hit and enrolled in graduate school at Penn State, with plans to become a professor of English. Soon, however, he realized the life of an academic wasn’t for him. So he switched gears and, after getting his master’s degree, began to look for a job in publishing.
Bad timing. By then, the recession was on, and the publishing industry had stopped hiring.
Without a salary, Czapka moved back to his home in Wayne, N.J. He sent out 50 résumés, made calls, sent follow-up emails. “Truth be told, I didn’t get one response back. Not a phone call, not a single response,” he says. He picked up an application for a low-wage job at a nearby Barnes & Noble store, thinking he could make contacts in publishing by working with inventory.
Back in his boyhood room at home, Czapka pulled out the application and started to fill it out. He wrote down his name. His birth date. His Social Security number. But then he stopped and set it aside. “I had not worked a $7-an-hour job since I was 16 years old,” he says. “This seemed like an enormous step backward.
“Once I realized I didn’t want to do that, I felt pretty lost,” he remembers.
Those experiences are behind Czapka, who has found a stable job. And while his story isn’t typical of recent Princeton graduates, he’s far from the only young alum to be touched by the troubled economy. Millions of Americans who graduated from other colleges during the last five years have faced even more difficult circumstances.
“Graduation during a downturn not only affects young people’s career prospects when they graduate, but it will stay with them throughout their lifetimes. There’s a permanent impact,” says Cecilia Rouse, a professor of economics and public affairs at Princeton who specializes in labor economics and the economics of education.
But Rouse believes that Princeton graduates will come out relatively unscathed. “Might we anticipate that students’ lifetime earnings will be a bit lower than classmates who had graduated before 2008? Yes,” she says. “But will they struggle? I don’t think so. They will likely get a handsome return on an investment in a Princeton education.”
A growing body of research has documented that the financial crisis, the Great Recession, and the slow-going economic recovery have taken a terrible toll on recent graduates nationwide, who face high levels of unemployment, lowered expectations for pay well into the future, and heavy debt loads for student loans. Many have had to move back home.
Nine months after graduation, barely more than half — 56 percent — of those who graduated in 2010 had held at least one job, according to a May 2011 report by the John J. Heldrich Center for Workforce Development at Rutgers University, which was based on a survey of 571 graduates nationwide. Of all college graduates since 2006, 14 percent reported that they were unemployed or working part time and looking for full-time work.
According to the report, 23 percent of the 2009/2010 graduates took a job without health benefits, compared to 14 percent in 2006/2007. Thirteen percent of graduates accepted a temporary job, compared to 9 percent in 2006/2007.
“The dismal sense of college graduates’ financial future is yet another sign of the corrosive effect of the Great Recession,” Rutgers professor Cliff Zukin said in releasing the report. “Even young graduates of four-year colleges and universities, who are typically optimistic about their futures, are expressing doubt in another cornerstone of the American dream — that each generation can enjoy more prosperity than the one that came before it.”
While younger workers — including college graduates — always tend to struggle in recessions, the past few years have been especially bad. From April 2010 to March 2011, the unemployment rate for young college graduates averaged 9.7 percent, compared to 6.4 percent in the 2003 recession, according to the Economic Policy Institute, a think tank in Washington.
Not only do young graduates have more trouble finding jobs, they’re getting paid less: According to the Rutgers study, full-time employed recent graduates earned a median salary of $27,000, compared to $30,000 earned by new grads before the recession. And they viewed their jobs not as a first step on a career path, but simply as a way to make ends meet.
Students also are graduating with staggering amounts of debt. While Princeton’s financial-aid program allows most students to graduate debt-free, nationwide, 2010 graduates owed an average of $25,250 in student loans, according to the Project on Student Debt, a student advocacy group.
One result is that far more young Americans are living with their parents. From 2007 through 2010, the number of young people living at home jumped from 4.7 million to 5.9 million, a 26 percent increase, according to the Population Research Bureau.
And it will be difficult for these young people to make up what they have lost to the recession. “The effect of the very weak labor market for recent college graduates is likely to go beyond their current employment and earnings prospects. Graduating from college during a recession has significant and persistent negative effects on future earnings,” researchers at the Federal Reserve Bank of San Francisco wrote in a March 2011 study. “[W]e expect the labor market outcomes of the recent college graduate cohort to remain depressed well into the future.”
For most Princeton graduates, the outlook has not been as bleak. “You’ve got to keep things in perspective,” says Paul Oyer, an economics professor at Stanford Business School who has studied post-college career plans. “I’d much rather graduate from Princeton in a really bad time than from a not-very-good school during the best of all times.” Still, in other ways — some of them subtle — the slow economy has affected the experiences and choices of recent University graduates.
For many, finding a job has taken longer and been more difficult. In 2007, for instance, 37 percent of graduating seniors already had secured full-time jobs by the July following graduation. But in 2009, during the downturn, just 30 percent of graduating seniors had full-time jobs by that point.
Likewise, in 2007, 18 percent of the class still was seeking employment following graduation. After the financial crisis hit, the number jumped to 23 percent in 2009.
The downturn in the economy also seemed to affect the types of jobs young alumni took, according to Princeton’s annual survey of career plans. In 2007, 180 seniors accepted full-time jobs in finance by the July after graduation. The vast majority of these jobs were at investment banks. But two years later, just 111 seniors had entered finance by that time. The number of seniors joining investment banks was more than cut in half.
“It’s fair to say the recession had an effect,” says Beverly Hamilton-Chandler, director of career services. “Some alums were fairly concerned about their continuing in financial services.”
While far fewer seniors headed to Wall Street, many more secured jobs in the nonprofit sector or worked in government. Many more students also opted to go to graduate school: 240 students in 2009 versus 198 in 2007.