In the SMH last Friday, there was a warning that the economic downturn may have a scarring effect on new jobseekers:
“Invariably in a recession we have this problem where a generation can get lost,” said the deputy director of the Melbourne Institute, Mark Wooden.
Most at risk are youth from disadvantaged areas who, in the past, have stood a chance of finding decent-paying jobs and learning skills they will hold for life.
Though they are not ‘disadvantaged’ in the sense meant by the SMH article, I have wondered in the past about graduates who enter the labour market during a recession. Does it have has long-term effects on their career success?
More than at other times, during recessions new graduates need to take jobs that don’t use their qualifications but give them an income. At the very least, they delay accumulating experience that should be rewarded in future professional or managerial jobs. At worst, employers for jobs that would use the graduate’s qualifications might infer from a CV of full-time clerical or sales jobs that there is a reason the graduate has been overlooked for more demanding or responsible positions. The early bad luck of graduating into a recession could have a lasting, scarring effect on job success.
The early 1990s recession provides a guide as to what might happen in this downturn. The Graduate Destination Survey records that 1992 and 1993 were the shocker years for graduate employment. From the mid-1980s to 1990, un- or under-employment of graduates had been around 10% (the measure is percentage of graduates who are looking for full-time work who have found it). In 1992 and 1993 un- or under-employment was nearly 30%.
If I assume that someone going straight from school to university would graduate at about age 21, this affected people who were born in 1971 and 1972, who would have been in their mid-30s at the time of the 2006 census. I had two census tests of how well they are doing, occupation and income. The strongest test would be if a slightly younger group was doing better, but any marked difference would be interesting.
For occupation, I judged success on the proportion of graduates working as managers or professionals. And it does seem possible that there is a small scarring effect, with those born in 1971 and 1972 slightly less likely to have a mangerial or professional job than those born in 1973. It could just be a fluke, however.
Age Professional or managerial
For income, I judged success as earning $1,600 a week or more. Here, there is no evidence of scarring. The proportion of graduates with those earnings keeps on climbing through their mid-30s.
So if there is any scarring effect it is very small. Graduates working in non-graduate jobs is common, but when you graduate doesn’t seem to make a big difference in the long term.