As if graduating into a sour job market, with record levels of education and credit card debt isn't enough, the Wall Street Journal (subscription required) reports that members of the class of 2009 who do get a job will be cursed by low starting salaries for years to come.
Based on past data, classes that graduate when unemployment is higher than 5.7% have a tough time recovering from the drastically reduced starting salary they agreed to just to get a first job.
What difference does a year and a 3% rise in unemployment potentially mean for recent graduates? According to the research presented in the Wall Street Journal, it could mean up to $100,000 over an 18-year period.
The research, which was done by Lisa Kahn, an economist with Yale, shows that for each percent that inflation rises, salary decreases for graduates of that year by 7-8%. That's not all; this decrease in earnings is still evident 18 years later even after student loans have been paid back.
I won't argue facts, because the research obviously backs up this historical trend. And it's not like you can walk into your boss' office in 2010 when the recession ends, and ask for a recession adjustment to your salary of 30-40%. In fact if you do, I hope you upload his or her reaction to YouTube because it's bound to be priceless.
So assuming this generation behaves the way their parents and older peers did upon graduation they are screwed based upon not much else than their date of birth, and that is where an apples-to-apples comparison falls apart.
Thankfully, just because a recession robbed an earlier generation of years worth of salary increases doesn't mean it will hold true after the current recession dissipates. Where Generation X set a precedent of changing careers more than their parents, current graduates are apt to raise the bar on job changes over their life.
Last year The Wall Street Journal, reporting on the fickleness of young employees, cited a study in which, "two-thirds of the millennials said they would likely 'surf' from one job to the next."
If you still need validation that young workers will switch jobs when the compensation no longer suites them let this gem sink in: "These workplace nomads don't see any stigma in listing three jobs in a single year on their resumes." Would a member of Generation X feel comfortable even listing more than one job in a year's time on a resume? Not likely.
So despite poor timing, the class of 2009 is hardly set up with a curse just for graduating in the midst of a recession.
The same characteristics which have employers worried about their ability to manage and retain millennials will be their saving grace. By switching employers when the economy recovers these graduates will have the opportunity to cash in on their time spent working two or three jobs at once and score their dream job.
Like my colleague Zac Bissonnette puts it, "In the long run, success -- financial and otherwise -- is most likely to come from following your passion."
I have no fear that the class of 2009, those who have passion and drive anyway, will happily "surf" to employers who compensate them well once the recession ends.
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