Jeremy Andrus figured he was destined to join the business elite when he accepted a spot at Harvard Business School in the fall of 2000. He set foot on the fabled campus during the greatest wealth-creation boom in history, when there was a sense that the Jeremy Andruses of the world didn't just control the future, they owned it. By those standards, Andrus would have been courted like an NBA lottery pick by graduation--with earnings potential to match.
Little did Andrus know that by the time he graduated in June, he would be launching his career in an altered MBA job market so dismal that even Harvard's cachet wouldn't be enough to land him the real estate venture-capital job he wanted. Instead, the resigned 30-year-old packed his bags and, for the first time in his life, stepped backwards, moving to the ski-bum paradise of Park City, Utah, to live with his parents. "I never thought I would move back home," says Andrus, "but that's what it came to."
Andrus is just one of hundreds, if not thousands, of newly minted MBAs who feel jilted. Having left good jobs and doled out thousands in tuition to earn an MBA degree, they now find themselves out of work and short on prospects. When they first came to campus two years ago, job offers were so plentiful that companies were waging fierce bidding wars over grads. Five-figure signing bonuses and equity stakes in startups were the norm. But a weakened economy, the dot-com bust, September 11, and now a prolonged bear market have created an increasingly bleak landscape for this year's whiz kids.
At the Top 30 schools, some one out of five of this year's grads are without jobs even three months after graduation, while just two years before, the number was a mere 3% or so. Even during the early 1990s recession, about 96% of grads were working by this time. What's worse, grads' bank accounts are quickly draining, tapped by an average of $41,300 in MBA debt and loan payments now coming due. These days, for many, MBA is taking on a whole new meaning: mighty big albatross.
So the educated unemployed have little choice but to retrench and reassess their career pursuits along with their dreams of $150,000 salaries. For one thing, they're beginning to consider that second-choice job offer--less than ideal, but a job nonetheless--as they wait for the economy to shake off its blahs. "[Grads] have to realize the first job you get won't be your last," says Patrick T. Harker, dean of the University of Pennsylvania's Wharton School, where about 100 grads, some 13%, remained jobless three months after graduation, the largest number Wharton has experienced in more than a decade.
For some 2002 grads, the job search has become an all-consuming endeavor. Andrew Hodson is looking for a position in sell-side equity research or buy-side portfolio management. He has had nearly 30 interviews in the past five months, but zero offers. "I'm getting interviews, but interviews don't pay the bills," says Hodson, who, like Harvard MBA Andrus, moved home after graduating from Indiana University's Kelley School of Business. It was the first time he had lived at home since he shipped off to prep school at 14.
To stay on his toes, Hodson keeps a strict schedule: He wakes up early, so he will be accustomed to it when a job comes around. Then he scours Internet job boards. He is holding out for the job he wants, but as student loan bills mount, it's getting harder. Hodson remains hopeful that he will not have to settle for a job that is less than ideal. "Something is going to fall [into place] for me before that," he says.
B-schools often encourage that kind of stubborn optimism, exhorting students to wait for the "right" job and shun anything less than an offer in the industry they know they want to work in. But as time passes, many job-seekers are losing heart and instead are going for the "right now" job. After six months of holding out, says Paul Danos, dean of the Amos Tuck School of Business Administration at Dartmouth College, "there won't be too many people who will be particular."
One still attractive outlet for recent grads: entrepreneurship. A small percentage of grads--an estimated 2% to 3%--have started their own companies, down a couple percentage points from the heady days of 1999 to 2000, when any graduate with a business plan could get funding for a new idea. "Some students have said that instead of waiting a few years, this is the time to start a business," says Allan Cotrone, director of career development at the University of Michigan Business School. Andrus, for one, got tired of waiting for his dream position to materialize and instead began working on a business plan for a frozen-drink supply startup with his cousin.
Experiences like Andrus' are making administrators in the career-service offices across the B-school world cringe. This was the year their once-noisy offices became quiet, as mainstay companies retrenched. They already postponed offers for the Class of 2001 and barely showed up on campus in 2002. Administrators became shock absorbers for a cadre of disillusioned grads. Dartmouth, for one, got hit badly. The school's graduation placement rate averaged about 99% for the five-year period ended in 2001. But for its Class of 2002, the number placed in jobs at graduation plummeted to 74%. At Emory University's Goizueta Business School, the rate of those with jobs fell to 60%, from around 90% two years ago.
But B-schools can't point fingers just at the economy. At some programs, like New York University's Leonard N. Stern School of Business and Washington University's John M. Olin School of Business, career-placement officials encouraged students to use inward-focused self-assessment tools to decide on the type of job that was right for them--and then tailor their job search to get that "it" job. The approach was well-suited to the boom days when there were enough jobs to go around. But in an economy verging on a double-dip recession, it's unrealistic. Critics contend some B-schools created a cult of finickiness--and lulled grads into avoiding Plan B, just when having a back-up was key and safety plays were best.
Other schools, though, are now stepping up assistance from career counselors, extending access to libraries, and keeping grads up to date on any job leads that come through the office. At Harvard Business School, travel grants were awarded after graduation to help grads who trekked around the country to sell themselves to companies.
Meanwhile, the jobless 20% are watching their classmates settle down in new jobs and bring home paychecks, while they soldier on, pinning their hopes on the next quarter. Yet if history is any indication, there could still be jobless MBAs from the Class of 2002 well into 2003. In both the early 1980s and '90s, the depressed MBA job market didn't fully recover until nearly mid-decade--and took even longer to show a job surplus. That could be bad news for the Class of 2003 and beyond. Says MBA recruitment consultant Maury Hanigan: "If I were considering business school, I would wait it out one more year and try to crest the wave." Good advice for folks considering applications for the fall--but cold comfort for this year's grads still pounding the pavement.
By Geoff Gloeckler in New York
Get BusinessWeek directly on your desktop with our RSS feeds.
Add BusinessWeek news to your Web site with our headline feed.
Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.
To subscribe online to BusinessWeek magazine, please click here.
Copyright 2002, by The McGraw-Hill Companies Inc. All rights reserved.
Printer-Friendly Version
Jeremy Andrus figured he was destined to join the business elite when he accepted a spot at Harvard Business School in the fall of 2000. He set foot on the fabled campus during the greatest wealth-creation boom in history, when there was a sense that the Jeremy Andruses of the world didn't just control the future, they owned it. By those standards, Andrus would have been courted like an NBA lottery pick by graduation--with earnings potential to match.
