Are you among those who invested a good part of your retirement savings into your child's college education? Factors in today's job market in the U.S. will affect both recent grads and future retirees for a long time.
The Good:
Companies plan to hire 19% more graduates than they did last year, according to the National Association of College Employers.
Ernst & Young, the big accounting firm, hired 2,800 grads and undergrads this year, 22% more than in 2010. I hope that's a sign of things to come.
The Bad:
The graduates that are marching out there in search for a job, are now facing about 3.5 other people (or 4.6 in total) competing for the same job.
Did you know that companies are hoarding a record amount of cash? Wall Street Journal columnist Jason Zweig wrote recently that "hundreds of billions in cash remain available -- and idle" at American companies. Why? Large companies who see their growth slow tend to get nervous about any spending.
That mentality may not only impact hiring, but delay returning benefits like 401(k) matches to their pre-recession levels. One executive at a Fortune 500 bank told me that companies have done away with everything; there are hardly any benefits. In other words: cuts and more cuts in an effort to show profits and hoard cash.
The Ugly:
- Lower earnings: Students who can't find a job may literally see their longer-term earnings impacted by thousands of dollars. That's because studies show the longer you're out of work, the harder it is to get a job as skills become dated. And, haven't you generally experienced employers asking what your latest earnings were when making an offer? Why would one offer $50,000 if they know you've been at $25,000 or even $0? Like many adults who can't find jobs, students may quickly lose confidence, too.
- New family dynamics: The job market means more students are moving back home. While this isn't necessarily a bad thing -- it can be a great way to save for that first home or car -- it can create some new family dynamics and challenges: Should students pay to live at home? On the flip side, maybe a returning child brings new purpose to a spouse or couple now out of work themselves.
- Competitiveness: Finally, we can't forget that all of these factors impact our ability to compete on a global scale. If we can't create jobs, harness the minds and talent of youth, and equip them with skills to succeed, how will we as a nation compete?
Bottom Line:
Young people, as Reed Schwimmer, an associate professor of science at Rider University told me, are not necessarily equipped with key communication skills upon graduation.
"Local business people have told me that when hiring, they look for graduates who can effectively communicate, both written and orally, to other employees and to the general public," Schwimmer said. "Companies assume that college graduates have the fundamental knowledge and skill sets for their discipline, but if they can't communicate well, then that is difficult to teach on the job."
Give a Gift for a Super Future:
The greatest gift we can give our grads -- and our country -- are the tools to succeed in the real world, in good times and in bad. If we can achieve that, we can also continue to be the leader in innovation and job creation.
A version of this piece appeared at MarketWatch.com.