Why this economist is 'really worried' about the grads of 2020
Post-secondary students set to graduate this year are being forced to make significant changes to their early career plans as the effects of COVID-19 hit businesses and the job market hard.
22-year-old Carleton University finance student Patrick Kealey is one of them. He had plans to graduate in December after completing a summer internship that would have started in May, but has come to realize that he will likely be without a position.
"I’ve had a number of late stage interviews cancelled, especially because I was very interested in the oil and gas and real estate sectors, and those companies appear to be under pressure at this time," Kealey says.
Kealey has now decided to finish his remaining school credits over the summer and graduate in August. From there he is hoping there will be full-time work or internship opportunities in the fall. And while he understands the gravity of the COVID-19 pandemic, having to make swift alterations to his plans has been a challenge.
"I think it is fairly common for business students, especially finance or accounting students to have a fairly detailed roadmap of their desired career progression and the steps they believe they’ll have to take in order to reach their long-term goals," says Kealey.
He intends to ramp up his networking skills in the hopes of building relationships that may help him with his job search. He says he wants to speak to as many people in the finance industry to get a sense of how the effects of COVID-19 could impact his long-term job prospects.
"I’ve heard stories of past bosses and co-workers who graduated into the [2008 recession] and have learned how that can be a drag on your career progression or just may lead to a less direct career path," says Kealey.
Indeed, career hurdles for students graduating during an economic downturn are quite common, and those hurdles can have deeper consequences.
"Graduating during a recession can have long lasting (10 years or more) effects on those graduates’ earnings and career path, with earnings declines in the range of five to ten per cent on average, with some graduates faring much worse," RBC Senior Economist Andrew Agopsowicz says.
Research by Agopsowicz showed those just graduating and entering the workforce during the Great Recession were among the hardest hit. The jobless rate rose from nine per cent in 2008 to over 12 per cent in 2009 for people aged 20-24.
"If your career gets off to a slow start, you are now building from a lower base, and so it can affect your earnings all through your life. The early portion of someone’s career is where we typically see the fastest growth in earnings, so events that disrupt this process can lead to long-term consequences for earnings down the road," Agopsowicz says.
According to long-time economist David Rosenberg of Rosenberg Research and Associates, a recession is not merely on the horizon — it’s already here.
As for how this economic slump will play out, Rosenberg says "the recession will be short but very severe, and the recovery will be very gradual."
For those graduating students who were planning to further their studies before launching their careers, the situation is also dire. With limited summer positions, paying for continued education along with other living expenses could become challenging for many.
Keith Bennett, 21, is expected to complete his bachelor of journalism degree this year and begin his master’s degree at Ryerson University in the fall, with hopes of securing a full-time summer job to pay for it.
"It has been extremely hard finding full-time job postings, let alone full-time job postings in my field. The few postings I do find include a notice stating that applications won't be reviewed until after social distancing measures have been lifted," says Bennett.
He kept four part-time jobs during the school year in order to save up for his master’s degree, but it was not enough.
"I was depending on a full-time summer job," he says.
In fact, Bennett is starting to question his decision to pursue another degree altogether, given the current economic climate.
"Investing in continued education feels like a gamble," he says.
Organizations like the Canadian Federation of Students have been urging the federal government to extend the Canada Emergency Response Benefit to students. While the federal government has not extended the CERB to students, it announced an up-to-100 per cent wage subsidy for Canada Summer Jobs program employers to cover the costs of hiring students. The Canada Summer Jobs program provides work opportunities for students within the small business, public and not-for-profit sectors.
This subsidy comes as the unemployment rate for youth ages 15 to 24 hit 16.8 per cent, the highest since June 1997 according to Statistics Canada’s monthly jobs numbers released last Friday.
Kealey says that while the move by the federal government last week is appropriate, it misses the mark.
"The subsidy will definitely help some students, but most student jobs aren't run through the Canada Summer Jobs program so there will still be many, many students who are unable to work this summer," he says.
Trudeau says the federal government does plan on announcing more help for students.