More Proof That Graduating in the Recession Was Awful

By Jeanna Smialek and Shobhana Chandra | Bloomberg News | March 20, 2015

The Great Recession and its aftermath was an exceptionally bad time to lack work experience or a college degree. As unemployment soared and jobs became scarce, U.S. hiring managers also grew pickier.

Businesses snagged skilled employees for less by “opportunistically” raising education and experience standards between 2007 and 2010, according to a new study from the Boston Federal Reserve. “Employers were able to get that college-educated worker on the cheap,” said Alicia Sasser Modestino, a Northeastern University professor and the paper’s lead author.

Now as the labor market strengthens and the pool of available applicants shrinks, prerequisites may ease — potentially good news for inexperienced grads and workers who haven’t gone to college.

Help wanted, skills wanted

Labor market slack caused the share of middle-skill job postings requiring a bachelor’s degree to climb by 2 percentage points nationwide between 2007 and 2010, the years encompassing the downturn and the start of the recovery. The share of positions asking for two or more years of experience climbed by 3.5 percentage points, the paper found. That response to high unemployment accounts for about 30 percent of all  such “up-skilling” in those years. Joblessness reached 10 percent in 2009.

High bar for fashion designers

The occupations most likely to increase education and experience demands back then? Fashion designers, commercial and industrial designers, business operations specialists, and various categories of middle managers, the researchers found.

Waiters and waitresses, massage therapists and hotel desk clerks saw little to no increase in skill standards. Other job postings  that traditionally require only a high school degree — including tool and dye makers and head cooks — asked for more years on the job, though not for more education.

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Brighter days ahead

The unemployment rate is dropping as the economy expands, reaching 5.5 percent in February, Labor Department data show. Still, the recession’s legacy lives on most acutely for lower-skilled workers: While unemployment for Americans with a bachelor’s degree or higher is down to 2.7 percent, the jobless rate is 8.4 percent for people with less than a high-school education.

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There’s some sign of hope ahead, according to the paper. Just as skill requirements climbed because of the labor market downswing, they could revert as  jobs come back.  That means for the less-educated and inexperienced, things could be looking up.

How they did it

The researchers, including Daniel Shoag and Joshua Balance, collected data on job postings from online sites including Burning Glass Technologies. They examined 74 occupations by state in 2007, 2010 and 2012, and their sample included 13.5 million job vacancies.

They also checked their work using a natural experiment — monitoring state labor forces as veterans returned from Afghanistan and Iraq. The conclusion: Requirements climbed for occupations in which veterans clustered, such as logistics.

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