Only a few months ago, the class of 2020 looked forward to a world of opportunities after graduation. But the coronavirus quickly squandered those opportunities, leaving the class of 2020 now known as the class of COVID-19.
After being forced to complete their senior years of college online and miss out on one-in-a-lifetime graduation memories, new college graduates must begin their professional careers during the most limited labor market in recent history.
Job Offers to New Graduates are Rescinded
Countless new graduates have found themselves in “survival mode” after losing their post-graduation job offers.
John Navakovich, a Northwestern University graduate with a degree in economics, accepted a job offer as an operations assistant with Uber in October 2019. He felt confident that his career path was set out for him long before graduation, but in the middle of May, he received a call.
“They basically let me know that they had to rescind my job offer because of economic conditions related to coronavirus,” Novakovich explains.
He was one of 3,700 employees to be laid off by Uber, one of countless large companies forced to downsize during the pandemic.
“While we believe Uber will recover when cities will start moving again, it is impossible to predict when that will happen,” a representative for Uber said in a statement. “We have therefore reduced our total headcount by approximately 3,000, which combined with [May 6th layoffs], represent a 25 percent reduction in the size of our global workforce. Unfortunately, we also had to rescind some job offers as part of this exercise.”
Graduates Face Large Initial Earnings Losses
Graduates who are lucky enough to secure employment this year face a high-risk of enduring lower paychecks than they would have received two or three years ago. Unlike college graduates who enter a robust job market, graduates from the “Class of COVID-19” may be forced to accept lower wages just to obtain employment.
According to the National Bureau of Economic Research, “Graduating in a recession leads to large initial earrings losses. These losses, which amount to about 9 percent of annual earnings in the initial stage, eventually recede, but slowly.” Studies show that most workers who graduate in a recession don’t entirely escape their earnings losses for a full decade after graduation.
Recession Graduates May Face Future Challenges
Unfortunately, some research indicates that recession graduates may face challenges beyond the initial difficulties of finding a new job or earning enough money.
In an article published by Stanford Institute for Economic Policy Research, researchers stated, “We find that negative impacts on socioeconomic outcomes persist in the long run. In midlife, recession graduates earned less, while working more. And they were less likely to be married and more likely to be childless.”
The bottom line? New graduates are counting on coronavirus recovery to launch their careers and, hopefully, avoid the historical pitfalls of graduating during a recession.