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"It’s a bizarre time to be job searching": College graduates looking for first jobs face catastrophic economic conditions

As 2020 college graduates prepare to enter the workforce, they are having to contend with a historic economic recession. Experts say those who do get jobs in the recession may accept lower wages and salaries than they’d have otherwise settled for.

Sidney Smith poses for a photo outside Baylor Law School in Waco, Texas on Sunday, May 17, 2020. Smith, a recent graduate ...

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For four years, Aman Dontula successfully navigated the grueling world of software engineering at the University of Texas at Austin. He maintained high grades in rigorous computer science courses and participated in hackathons, all while ceaselessly competing for prestigious internships.

It seemed as though his hard work had paid off. In October, Dontula was offered a job as an entry-level software engineer with Uber, a position that he was told would be waiting for him after he graduated this month. Satisfied with his post-graduation plans, Dontula was prepared to relax for the rest of his final semester in college.

Cue the pandemic.

Uber, hammered by mandatory stay-at-home orders intended to stem the spread of the new coronavirus, rescinded Dontula’s job offer, along with hundreds of other positions. Back to square one, Dontula allowed himself “two days of stress” and then threw himself into job hunting. But the job market Dontula and other 2020 college graduates are preparing to enter is projected to be one of the worst in history, according to economists.

“I feel like I did everything right. I was on a solid path, and in literally any other situation than a pandemic, I would be safe,” Dontula said. “So this has been an awakening to the real world.”

While economists say it is difficult to paint a holistic portrait of job availability and market vitality, snapshots of the economy have revealed a grim post-pandemic reality for first-time workers eager to get their start in the workforce.

Falling wages, hiring freezes, furloughs and rescinded job offers are quickly becoming commonplace. And newly minted graduates will have to compete with experienced candidates, recently displaced, for the available jobs that remain. Experts say those who do get jobs in the recession may accept lower wages and salaries than they’d have otherwise settled for.

Although Texas is moving swiftly toward a full economic reopening, it has not been immune to the downturn sweeping the country and spurring a record 14.7% job unemployment rate, according to the latest national numbers. In Texas alone, more than 1.9 million people have filed for unemployment benefits since the pandemic began.

But for first-time job seekers, a more crucial number may be the number of job openings, which have fallen as businesses shut down temporarily or close their doors for good. Job openings nationwide fell by 813,000 in March from February, according to federal survey data. In Texas, the number of new job postings fell from 255,000 in March to 175,000 in April, according to the Conference Board, a research association that tracks business trends.

Dontula says he feels the pressure of job competition.

Aman Dontula

“I realized that I had no time to waste,” Dontula said. “Right now, it feels like there are not as many jobs available.”

Pia Orrenius, a senior economist at the Federal Reserve Bank of Dallas, said there is no way to determine how many of those jobs would have gone to college graduates entering the workforce. But typically, “if you look at who's taking a new job, it's overwhelmingly younger people,” she said. “Older people tend to be more settled in their careers.”

Some experts project the post-pandemic economy will begin seeing improvements by the end of the year, but Orrenius points to research that has shown that people who graduate into recessions will generally see lower wages, which for the average graduate will persist for many years into a career.

“Every case is different, and of course there's lots of things that people can do to avoid that from happening,” Orrenius said. “But [the wage gap] can have medium- to long-term effects unless you as a worker are very proactive about taking advantage of conditions as they improve.”

Orrenius and other economists have been looking to the 2008 financial crisis to draw comparisons about how graduates will fare in their respective job markets.

Although Texas rebounded earlier than the rest of the country in 2008, Orrenius and other economists predict that Texas may not be so lucky this time, largely due to the decline in the energy sector. She predicts the travel industry, service-related sectors, and government and university jobs will have a slower recovery ahead.

That’s unwelcome news for Sidney Smith, 25, who was hoping to land one of those government jobs after graduating from Baylor University’s Law School.

Smith, the first in her family to get an undergraduate degree and then a graduate degree, interned for the Texas Municipal League last summer and spent a year specializing in administrative law, all with an eye toward landing her dream job as a local government lawyer.

But small and local governments have been hit particularly hard by the economic fallout. While Smith studies for the Texas bar exam in July, hundreds of furloughs and strict hiring freezes that have been announced in Texas' largest cities have her questioning if there will even be jobs to apply for in a few months.

Smith said she took out $250,000 in loans to fund law school, opting to take advantage of a federal program that offers loan forgiveness to public service workers. Now, weighing her options, she will have to decide whether to take whatever job she can find, most likely in politics, and forego the loan forgiveness — or stick it out and hope the government begins hiring again.

“The final year at Baylor Law is painful,” Smith said. “The only way I could get through that was to tell myself, ‘This will be worth it. I’m going to have a job, working for a city, and it’s going to be amazing.’ This is what I’ve wanted to do for forever. Now I just feel like I’m floating in the middle of nothing — and I don’t know what the way forward looks like.”

Michael Green, an employment law professor at Texas A&M University’s Law School, said he's started seeing many students consider a range of options to delay joining an uncertain and turbulent job market.

“There’s a lot of angst, a lot of flux, a lot of uncertainty,” he said, noting that law schools and other graduate programs are expecting to see upticks in applications next school year.

That’s the option Clare Shellooe, another 2020 graduate from the University of Texas, is taking. As a public health major, she wants to attend graduate school in a year and thought she would use the intervening months gaining relevant work experience and saving money. But she has cast a wide net, and all of the workplaces she has applied to have been unresponsive.

For now, Shellooe has been working as a volunteer contact tracer at Dell Medical School, tracking the locations and interactions of COVID-19 patients, and hoping she gets upgraded to a paid position soon or is able to secure another job.

“It’s a bizarre time to be job searching,” Shellooe said. “It’s totally not what I imagined out of college.”

But before graduates panic, Orrenius said to keep in mind that the long-term forecast does not look as dire. Before the pandemic, economists had noticed slow labor force growth as more baby boomers began to retire, leaving more gaps for incoming hires to fill. The pandemic hasn’t changed that labor demand, Orrenius said, just clouded it temporarily.

“Once we’re out of this pandemic, it should be a very strong labor market for people coming in future years,” Orrenius said. “Maybe this is three years out, and the next year or two might be a bit rough. But past that horizon, it should be robust.”

In the meantime, Dontula’s job search has already yielded some promising leads, and he’s even gotten a few interviews.

He’s taking an optimistic approach to losing the job opportunity with Uber. Now might be his chance to do something riskier, so Dontula is leaning toward startup tech companies, which are still recruiting.

And at the end of the day, Dontula said he knows he still has time to figure it out.

“I’m freaking 22,” he said.

Disclosure: Baylor University, the University of Texas at Austin, Texas A&M University and the Texas Municipal League have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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