Tuesday, November 9, 2010

The Great Recession in the long run

About two years ago I can recall sitting in the back of my econ 417 class. It was a class which focused on business cycles; what they're caused by, their effects, etc. I remember that this particular day, my professor had been thinking on the topic, and advised that given the recent cataclysmic economic collapse of our country, all of us students should probably just attend Miami's masters in economics program. Simply put, acquiring more human capital is never a bad thing, and entering the job market in days such as those could certainly be a bad thing. At the time of the first semester of my senior year, unemployment was around 6%, up from 4.5% just a year earlier, and who knew what the future may hold. As a student, I had mixed feeling as to whether or not I thought yet more schooling was a good idea. I loved my school, my teachers and economics, but getting that first job and no more exams sure sounded a sweet deal too.

I decided to keep that advice in the back of my mind, and try my hand at the job search before jumping to any conclusions about the market; 6% isn't so bad right? 100 handshakes, 50 resumes, and a few phone interviews later, I was signing up for grad school. I'm not sure if it was my discouragement, or my true desire to study economics at the graduate level that caused me to make that decision... I'm sure a mixture of both.

Two years later, I have now graduated... twice, from that school, and have been given no choice to enter the job market, only now with an unemployment rate of 9.8%. Yes, I have more "human capital," but now I'm overqualified for most part time work, and under qualified for most of the work that I'd love to do because of lack of experience. My goal here is not to complain... I am confident that the Lord has a plan for my life, and if I were expect that I deserve better or differently at this or any point in my life, that would be to say that I know better than Him, which I'm certain isn't the case. No, so I don't want to complain... the situation just causes me to wonder.

In the long run, say, 10 or 15 years... will it matter what decision I made during this fateful time in economics history... it's a significant question, because many Americans are in the same boat as I. Many students decided to delay entry in the job market, get more edjumucated in hopes to find a better chance at scoring that great job once they've graduated.Graduate and professional school enrollments were at unprecedented levels during this time. Students seemed to be doing anything they could rather than trying to find a job.

I can see two sides to this story. One: those that did delay that entry now are better educated. They took a step that many later in life wish they had. They got that extra degree while while they were still in a "student" mindset. While the job market sure does stink now, this could prove an asset later in life. From my perspective, had a gotten a job during that preliminary search, I probably would not have gone to grad school... I would have happily taken that first paycheck and said "keep 'em comin boss!"

On the other hand, those that did successfully enter the job market are among a unique set of people as well. They got hired when hiring was down, and more people than ever were looking for jobs. That makes them very hardened and qualified sector of the workforce, who will have a few years of experience under their belts when these overeducated and underworked grad students begin trying to take their jobs away in a few years once they've graduated. But these people also accepted jobs when firms were cutting back, profits were down, wages were down, benefits being cut, and companies were simply not growing at the pace that they had been for the previous decade. Could this have hurt them? It certainly may have caused them to accept less than they would have otherwise gotten a year ago... but in the long run??

One thing I learned as a grad student is not to oversimplify things (which I've done plenty of here). In other words, I am much more aware now of what I don't know. So I don't have an answer to my long run question. But it at least causes you to think. How much does the first few years of employment matter for the rest of your career? How much value does one extra degree add to your resume over the course of your lifetime?

I don't have the answers... just trying to begin asking the right questions.

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