The Bear Meltdown Rattles B-Students

New hires wait to hear the fate of their jobs with Bear Stearns as financial hiring in general appears shakier

by Alison Damast

The stunning collapse and fire sale of investment house Bear Stearns (BSC)—a major employer of business graduates—has added another worry to an already shaky hiring outlook for business grads, college officials say. While major career services organizations haven't entirely reversed earlier predictions that the hiring market for 2008 grads is going to be strong, reports of recruiters cutting back on the number of job offers and, in some cases, lower starting salaries are beginning to surface.

Reductions are not just happening in the financial-services sector but across the board, from consulting companies to those in various manufacturing sectors, said Tom Kozicki, board president of the MBA Career Services Council, the umbrella group of school career placement officers. The officers are pointing out that most grads are still receiving one or more offers, but these latest cutbacks will mean they will have fewer options to choose from—and less bargaining leverage for salary. "What I'm hearing from people within the major companies who bring on intern classes each year is that they are still doing recruiting, but they are bringing on many fewer interns as compared to last year," Kozicki said. "It is hypercompetitive anyway, and this just makes it that much more competitive."

Cooling Effect

The news of the Bear Stearns takeover by JPMorgan Chase (JPM) was followed by a Mar. 19 report by the National Association of Colleges & Employers that said the economic climate is having a cooling effect on the hiring prospects of undergraduates looking for jobs. Although employers expect to hire 8% more new college graduates from the class of 2008, that figure is still down from the fall of 2007, when employers projected a 16% increase in college hiring. The drop-off is being acutely felt in the finance industry, according to the report.

Several days after the Bear Stearns-JPMorgan deal was brokered, it remained unclear whether Bear Stearns would continue to hire—although one career services official, who asked that his school not be named, said an MBA student had accepted an internship offer from Bear Stearns just last weekend and was told shortly after that the position was not being filled. A Bear Stearns spokesperson, asked to comment on the company's hiring outlook, did not call back with any information.

The potential loss of a major employer such as Bear Stearns will make it even harder for students to find internships and jobs, said Kim Molee, associate director of undergraduate career management for Emory University's Goizueta Business School. "With a big player like Bear Stearns out of the picture, it just makes it that much more narrow as far as students' options," Molee said.

Lower Starting Salaries

Deans and career service officers at business schools—who have been monitoring the hiring situation closely since the financial sector began showing strains—said this week that placement numbers for internships and full-time offers remain similar to last year, but they are already seeing signs of stress in the marketplace. Kenneth Keeley, director of Carnegie Mellon's career office, said the job market isn't "dire," and noted that 85% of MBAs had job offers this year, compared with 79% last year. Still, he added, "the story is certainly not good for anybody who has anything to do relating to Bear, and certainly there are not brilliant job prospects if you're interested in financial services overall."