"By Request: The Graduates"
I got an email yesterday from a reader concerned about the impact of the recession on people who graduated from college in 2008, and possibly in 2009 as well. He was mostly interested in the short-term effects, but it’s in some ways the long run effects that are more interesting. The short-term effects are bad—few places are hiring anyone and you’re competing in the job market with older, better-qualified, recently-laid-off people. But the long-run effects are surprisingly bad.
Indeed, the news is almost shockingly dismal. Research from Paul Oyer and Philip Oreopoulos, Till Von Wachter & Andrew Heisz suggests that the negative impact on earnings of first entering the labor force amidst a recession lasts anywhere from ten years to forever. And that’s research based on relatively mild recessions. Austan Goolsbee wrote this research up back in May 2006, and hopefully has some clever plans to whisper in Barack Obama’s ear.
So for my part, I think members of the class of 2009 ought to be looking seriously at applying to graduate programs. But even here there’s trouble. When I was a colllege freshman in 1999-2000, there were nutty dot-com firms handing out huge salaries to people for no reason. Consequently, it relatively easy to get into a prestigious law school’s class of 2003 and guarantee yourself a nice salary when you finished. But by my junior year, those kind of offers had vanished so more people wanted to apply to law school. And those applicants were competing with various 23, 24, and 25 year-olds who’d had a year or three of experience working in the bubble sector, so a lot of members of the class of 2002 wound up getting into less prestigious schools than comparable candidates scored in 2000. And, again, that kind of thing can have a life-long impact on your earnings.
Long story short, life is cruel and unfair, which is one of many reasons why we need economic and social justice and why talk about the infinite justice of market outcomes shouldn’t be taken too seriously.