The Leavey Center buzzed last Friday as juniors, seniors, and graduate students chatted their way through a maze of corporate logo-laden tables at Georgetown’s Career Fair. Students looked for welcoming signs from recruiters representing over 100 employers, but amidst the din and the flurry of strong handshakes, a sense of uncertainty loomed.
“A lot of people, I think, aren’t going to get interviews. The companies either aren’t hiring or are firing,” Monica Munn (SFS `09) said. “Everyone’s very careful not to be like, oh, we’ll give you an interview.”
Munn already has an offer from CitiBank, but she wasn’t going to leave it at that: with the economy caught in rocky straits, she was hoping to hedge her bets, “just in case.”
When asked how the job hunt was going, Domenic Vallone (SFS `09) had a ready reply: “Poorly.”
The American economy has stood on a shaky foundation for over a year, and in the past few weeks, it has collapsed completely. A crisis in the nation’s financial markets gathered force over the summer, and in September it brought major companies like Lehman Brothers Holding, Inc. and Merrill Lynch & Co., Inc. to their knees.
As these former giants of investment banking fall, their demise is wreaking havoc on job prospects for current students and recent graduates, many of whom had planned to pursue jobs in the financial sector.
“The problem is, investment banking as we know it doesn’t exist,” Reena Aggarwal, a professor of finance in the McDonough School of Business, said. “The nice thing about investment banks [was] they had a really structured recruiting process, they had a real structure in place, and for us at Georgetown, the Merrill Lynches, J.P. Morgan, Goldman, Lehman—they were all major recruiting firms for us.”
For years, such companies have been major employers of Georgetown graduates. Of students receiving Masters in Business Administration from the McDonough School of Business in May 2008, 45.4 percent took on jobs in the financial industry, according to the MSB’s 2008 Employment Profile. 17.3 percent of respondents to the Career Education Center’s 2007 Senior Survey said they were entering jobs in banking or investment banking.
The significant drop in the number of investment banking positions available means that students are facing stiffer competition, not only from one another, but also from older graduates who have been displaced by the collapse of these long-time giants, according to Mike Schaub, Executive Director of the Career Education Center. And Heidi Shierholz of the Economics Policy Institute, a Washington think tank, said that new entrants to the job market tend to suffer most when the economy goes sour. Last hired, first fired is the rule of the game.
Last week, Georgetown’s MBA program hosted a town hall-style meeting to address the origins of the financial crisis and to provide advice on finding work after graduation. A memo distributed at the meeting offered students “5 Actions for Career Success During Turbulent Times.” The first item on the list warned students to “Be prepared—Competition is keen.”
Students at last Friday’s Career Fair seemed well aware of this advice already.
Brian Or (MSB `09) is interested in finance and consulting, but on Friday he mentioned possibly staying out of the industry for a while and heading to Taiwan for graduate school.
“It’s not looking too good around here,” he said. “A lot of those banks that were still recruiting have stopped.”
The absence of companies like Lehman Brothers and Merrill Lynch was particularly evident. After approaching the representatives from Barclay’s PLC, Bryon Jansen (COL `09) stepped away and said he had just been told that the company wasn’t recruiting full time workers this May. They were only looking for summer interns.
“They just found out as of yesterday that they’re taking Lehman’s employees,” he said, and shrugged with cheerful resignation about the dwindling job prospects in finance. “Whatever’s meant to be will be.”
When Lehman Brothers filed for bankruptcy, many students who interned with them over the summer and had received full-time job offers for this coming May were left wondering whether the offers were still any good.
“No one knew what was going to happen,” Jane Chiao (COL `09), one of Lehman’s summer interns, said. “The Thursday when their third-quarter numbers came out ,which were bad, they called us and said we’re still going to send out your job offers next week, but then on Sunday they declared bankruptcy.”
Barclay’s stepped in to acquire Lehman Brothers’ North American investment banking operations, but no one knew for sure what would happen to the interns. In limbo, Chiao and many others began to search for other jobs in finance or consulting. Meanwhile, rumors started circulating that Barclay’s would make good on the job offers for Lehman’s interns. On Friday, it became official for Chiao: Barclay’s offered her a full-time position.
Most students who were offered a position with Lehman Brothers received an offer from Barclay’s, according to Schaub. But some issues remain unresolved. While Barclay’s says that the company will honor Lehman Brothers’ commitments, it is unclear whether or not the company will issue new employment contracts with different terms.
And, as Jansen learned, since Barclay’s is already saturated with employees they picked up from Lehman, there will be fewer positions for other applicants this year.
Moreover, not everyone is as lucky as Chiao was. Since the disintegration of Merrill Lynch and Lehman Brothers, it’s not uncommon to hear stories of retracted job offerings and firings.
“Offers have also been rescinded,” Aggarwal said. “It happened with Bear Stearns, it happened with Lehman… [Students] really need to think long-term—there’s going to be so much consolidation in the industry.”
Several students whose offers had been rescinded were contacted for this article, but most declined to comment.
Ken Spano (MSB `08), graduated intent on a job in investment banking. Last fall, he received offers from banks in New York, Washington, and Miami, and in November he accepted a position with the Stanford Group in Miami. A week before graduation, he received a call informing him that the company was rescinding the offer due to market conditions and internal restructuring.
“A Georgetown alum from the bank called me a few days later to let me know me and the other [Georgetown] student were two of the best candidates they have ever seen but with the unexpected turmoil, they couldn’t keep us on board,” he wrote in an e-mail.
Immediately, Spano called the banks whose offers he’d turned down, but the story was the same everywhere: the banks were on a hiring freeze until the market cleared up. With no end to the crisis in sight, Georgetown’s alumni and recent graduates find themselves competing not only with each other, but with the multitudes of graduates bent on finance from other top business schools.
In 2007, 47.6 percent of the University of Pennsylvania’s Wharton School took jobs in finance. At the University of Virginia’s Darden School of Business, 40 percent of the 2008 class entered the financial sector, and Jack Oakes, Associate Director of Darden’s Career Development Center, said that this year’s class doesn’t show any less interest in breaking into finance.
With numbers like these and a financial market that has virtually disintegrated, business schools are taking a hard look at how their students are transitioning into the working world. Oakes said he didn’t think anyone could predict how schools will have to change in the long term, but he stressed the ability of business schools to adapt to new environments.
“This is nothing new compared to what’s been going on in the past 10 to 15 years,” Oakes said. “Business schools are used to seeing these changes in the landscape.”
Part of the solution, according to the MSB’s Aggarwal, is to point students toward work in the finance departments at companies that have a broader focus. Companies with government contracts, like defense technology companies Lockheed Martin and Raytheon, are likely to take less of a hit from tumultuous conditions, she said.
Jeannette Frett, Assistant Dean in charge of Career Management in the MSB, said that she is hoping to encourage students to find jobs in different sectors by changing the way recruiting works at Georgetown. Her desk is scattered with the debris of the past several weeks’ excitement. She has been working on a letter informing students and alumni of the University’s concern about the impact of the financial crisis on its students, and she has a copy of the memo that was distributed at last week’s town hall meeting. After its understated warning about job market competition, the memo suggests that MBA students “Be flexible.”
“We know that right now about 40 percent of our graduates are going into financial services, and we know we need to change that,” Frett said. “We’re not asking people to give up their dreams, we’re asking them to be creative in pursuing their dreams.”
Before Frett came to the MSB, she worked as Vice President of Recruiting at Fannie Mae, Senior Vice President of Human Resources at Banco Popular, and in senior management positions at Verizon’s human resources department. Now she wants to use her experience in the private sector to broaden students’ access to recruiters from new companies and new sectors. While Frett said the number of employers who are recruiting at Georgetown has not eroded significantly, she added that efforts are being made to change the composition of the recruiting base.
In part, this has meant bringing smaller consulting companies and investment banks to Georgetown. But it has also meant shifting the focus away from finance and toward sectors like non-profit and healthcare.
The Career Education Center is reacting similarly for undergraduates by attempting to attract employers who haven’t recruited at Georgetown in the past, but these companies are still primarily from the finance, marketing, and consulting sectors, Schaub wrote in an e-mail.
Some undergraduates are looking into the industries that Frett considered potential alternatives to finance, though. Julia Liang (MSB `09) is hoping to find a job in healthcare consulting, and she, like Frett, is optimistic. She thinks that healthcare is probably one of the safer professions in today’s tumultuous job market. Even so, she remains concerned.
“You really have to research the companies and make sure they don’t go under next year,” Liang said. But she added that she is not overly anxious: “Not every company is going to go under.”
Industries outside of finance are by no means safe from the long term effects of the market crisis, though. Congress is in the middle of negotiating a bill that will allow the federal government to provide a bailout to some of the failing companies. Aggarwal warned that the proposed bailout package, in whatever form it ultimately takes, will mean a significant increase in the budget deficit. When the government borrows more, demand for loans increases, and, following the laws of supply and demand, the price of loans—the interest rate—will go up. That means it will cost more for businesses to borrow the money they need to invest in capital. As it becomes more expensive for firms to do business, hiring rates will fall.
“I do think the economy is going to be hit even further,” Aggarwal said. “Nobody’s sure how long it’ll last, but certainly next year doesn’t look good.”
Despite the grim outlook for the near future, Aggarwal and Frett both said that the MSB’s dominant mood is not one of panic. Like Liang, many are concerned, but this summer over 99 percent of graduates from the MBA program were employed within three months of graduation. And according to Schaub, nearly a quarter of the graduates in the undergraduate class of 2007 went on to attend graduate or professional school, circumventing the job market entirely.
Applications to business school, Aggarwal said, tend to be counter-cyclical—that is, when the economy does poorly, MBA programs see a marked rise in applications.
This year, the MSB’s graduate program saw “a tremendous increase,” and Aggarwal expects a further rise in applicants for next year.
Some students who had intended to pursue careers in finance said they might look for other options. Matthew Schmitt (COL ’09) has been planning on a finance job, but said that he’s willing to take what he can get. If firms are hiring more conservatively, it will be harder for students like Schmitt to get their feet in the door, and that has encouraged Schmitt to look into other fields.
“I’m not your standard I-need-to-get-a-job-in-finance,” he said. “I wouldn’t mind [taking a job in] service or anything.”
“Or I’ll just live in my parents’ basement. Or go to Thailand and play poker,” he joked.
Although last week’s town hall meeting with MBA students was intended to serve as a forum for career advice, students were much more interested in understanding the origins of the crisis, both Frett and Aggarwal said.
That doesn’t mean students aren’t concerned about their employment opportunities. They will have to recognize that they are going to have to work harder to find jobs this year, Aggarwal said. They’ll have to be creative and flexible, and Career Management will have to work harder to help guide them through the process.
Xu Chen (MSFS ’09) hopes to spend some time working in the financial markets after graduation this spring. His long-term goal is to work in international development, but he thinks that a few years in financial consulting would be a valuable skill-building experience. The downward economic spiral of the past few weeks has, understandably, been on his mind, but he has found his own silver lining to this foreboding economic cloud.
“When we are older, we can look back and say we have seen a lot,” he said.
But, he added, he is certainly more than a little concerned.
