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New Employment Stats and How Some MBAs, JDs, and Others Are Fairing

As everyone probably knows, the newest economic reports tell us that the official unemployment rate dropped from 9.5% to 9.4%. There seem to be two ways people are thinking about these numbers. Some people are happy to see the improvement and are growing optimistic about the future, especially those people with the MBA or JD qualifier. But there are an equal number of people who don’t feel that way and predict that things will continue to get worse. Which way of thinking is correct?

To be honest, I don’t know. I’m not an expert on labor issues, but I suspect that one’s perspective has a lot to do with what industry you work in, what school you went to, how long you’ve been at your current employer and your employment status. After chatting with lots of students, career centers, and professionals about career opportunities as a soon-to-be graduate student, my perspective is that the situation is still worse than it may seem.

First, the unemployment stats are not all inclusive. If you think about it for a minute, the unemployment stats don’t include those:

1) forced to work PT due to economic circumstances, but prefer FT work
2) with reduced FT hours. In some places FT is 32 hrs (20% reduction)
3) with expired unemployment benefits who are not current looking for work (i.e. maybe taking CFA exam, studying for Grad Tests, working in free internship, etc)
4) who’ve found new jobs that pay less or are not career jobs
5) headed back to school to avoid the economy (MBAs and JDs)
6) recently graduated in May 2008/9 that want to enter the workforce but haven’t found jobs yet (students, including MBAs & JDs)

If all these people are included, I suspect the “unemployment” numbers would raise dramatically, maybe to 2x what they are now.

Second, I’ve talked to a lot of MBAs since April, and there were a lot more than I would have expected that were still looking for jobs, even at the best ranked schools. I was completely shocked. The number of interns without jobs was as of this past spring was also staggering, because firms are taking full time hires before making intern offers. While the employment of interns may not seem as critical as graduates, not getting an internship will make one’s job search much harder the next year and for some may preclude certain job opportunities.

Third, in the legal field, a really large number of law firms have also curbed hiring. Many firms have decided to completely drop 1L summer hiring (1st year interns). I met an incredibly smart 1L from Stanford who I worked with at the Attorney General’s Office this summer, and she said that for the first time, many Stanford JDs didn’t get to summer at a corporate firm this year. She said it was the first time they struggled. I also lived with graduating JDs from Boston University this past year, and they have colleagues with really good grades still scrambling to finalize their plans. Many graduates were looking into non-paying internships in order to get work experience until they can find a paying job. What’s worse is that those jobs are not even guarantees, as the graduates now have to compete against 20 others for that non-paying job. As I said, the situation is a bit worse than it seems.

For me personally, I am not as worried about the economy just yet, because I’m headed to school for a few years. Hopefully I’ll be able to hide away from the worst of the recession. I also admit that I’m fortunate to be headed to a program with a track record of sending students to premier employers and a program where students take classes and can do research during the first summer, so there is less pressure to find a certain “type” of summer job.

But aside from my own situation, I have a lot of friends and family members who are affected, including JDs and MBAs. For that reason, I like to keep up with what’s happening and recently found a few stats that I found interesting:

1) More than 100k people have already used up their unemployment benefits (I have a former MBA co-worker and a JD friend that will have to worry about this soon)
2) These benefits range from 46 weeks in Utah to 79 weeks in Alabama, depending on the unemployment percentages in each state. This means that many residents have been unemployed and collecting benefits for well over a year now
3) By the end of Aug., an estimated 650k people will run out of unemployment benefits
4) By the end of 2009, the number is estimated to be 1.5 million. This number will include lots of MBAs from the financial services and other industries

Given those statistics, I’ve been doing a lot of reading and research about the economy. I recently found an article by late economist Arthur Okun (thanks to Robert Reich’s article for the reference), who once said that “a rule of thumb that every two percent drop in economic growth generates a one percent rise in unemployment.“ Robert said, that this is the first time that the rule no longer holds true. He said that it’s not even close this time.

Overall, I’m guessing that by the time I graduate in 2012, I will be living in a pretty different economy than I am today. I’m interested to see how that economy will look and thankful that I’ll have 3 years to observe, study, and prepare for what’s going to happen. What’s great about my JD-MBA program is that it will allow me to get a cross-functional, well-rounded perspective on everything that’s happening, as I’ll be able to interact with lawyers, politicians, judges, business people, recruiters, consultants, HR experts, academics, government officials, and students from a plethora of career backgrounds.

I’m definitely fortunate to be headed back to school during this defining period in our economy. Everyone who is applying this upcoming year should do the best they can to get in. Looking at the current economic environment and the unemployment trends, it’s probably going to be another tough year for applicants.

Tags: Careers, Current Events, Labor/Employment, Recruiting

Lessons from Jack Welch and the Online MBA

Business guru, Jack Welch, recently announced that he’s launching an online MBA program (“The Jack Welch Institute”). This event is pretty interesting to me given that he doesn’t even have an MBA. However, Welch is clearly no stranger to business school. He’s hired MBAs for the past 20+ years and has spent the past 3 years at MIT Sloan’s School of Management teaching its most popular course. I think there are a couple of lessons to be learned here:

1. Power of Brand
As we all know, brand is important, that’s why applicants try to flock to the top schools and top firms. Jack Welch has impeccable business brand, with a resume including being the CEO of GE, being Fortune “Manager of the Century”, writing an award winning business column for BusinessWeek; a new show on MSN; and the most popular course at MIT Sloan. With this type of business brand, it’s clear why Welch has gotten so much traction with his idea. What I think is particularly interesting is that Jack Welch has garnered all of this buzz even though he will not actually be teaching a course at the school.

2. Importance of Leadership
Welch is know for his management and leadership techniques. In a recent interview, Welch said that his MBA program would be based on his philosophy of leadership and human resources. While many businesses and schools tout the importance of analytical skills, Welch is attempting to demonstrate through his curriculum that management and leadership skills are equally as important, just as they were in his career progress.

3. Upside in Online Education
Online education is a hot industry. Take the University of Phoenix (UoP) as a case study. UoP today has nearly 400,000 students and 200 international locations, only 20 years after the online campus was established (1989). What’s also impressive is that UoP has not been affected by the economy. Since the downturn in 2008 until now, UoP hasn’t declined in profitability but rather grown 20%. According to U.S.News & World Report, more than 4 millions Americans took an online course last year, up from less than two million in 2003. These types of stats are unheard of in today’s economy.

4. Leaders Take Risks
Creating a new business school today is a really risky endeavour. Nearly all the top MBA programs have been around for about 100 years (Stanford ~85 years), and were originally built with bricks and mortar … not with wifi, internet applications, and software. And while UoP is a great case study for online education, it has not established itself as a top MBA program, so the Welch institute would be the first. Clearly, Welch has an appetite for risk and doesn’t mind spending a little money in hopes to revolutionize the industry.

5. You Don’t Need an MBA
Another lesson to learn is that you don’t need an MBA to be a leader, not even in the business school industry. Don’t get me wrong, an MBA is incredibly useful and the brand of a top school can’t be denied. However, in America an MBA is not a necessity for advancement. Welch’s career is proof that business skills, leadership lessons, and management techniques can be learned on the job.

Tags: Current Events, Leadership/ Management

Michael Jackson and the economy

I’m sure everyone has heard of what happened to MJ by now. I first heard the news on the radio while driving home from my summer job in downtown Phoenix. At first, I didn’t think much of it. I figured that Michael probably had a personal doctor and a local police department that would resolve things pretty quickly . I was completely shocked to get home just minutes before the LA Times pronounced him dead.

Like a lot of the world I’ve been watching the news and surfing the internet about MJ non-stop for the last two days. But what really caught my attention was what I heard about the sheer number of people that were doing the exact same thing. In fact, CNN recently pronounced this the biggest internet event in history, far bigger than Barack Obama’s Inauguration on November 4.

At first, the last fact was surprising as the Obama story is historically a more significant event, perhaps the most significant in history. What’s especially astonishing about this fact is that a very large number of people even stayed home on November 4th just to stay online and watch the inauguration, whereas on Thursday, nobody stayed home because the event was so unexpected.

The economic impact of this is undeniable. First, I know quite a few people who left work early to catch coverage of the story, even in this economy where workers should be staying late to ensure they are as productive as possible. Right away business lost productivity and money.

Also so many people online have flooded to relevant articles, looked for TV and radio stations covering the story, and doing everything they could to get copies of old records and movies. I’m guilty of the internet, radio, and TV surfing. The competitive impact is that other businesses have been forced to follow suit and maintain all-day coverage, even if they didn’t want too, because too many consumers wanted coverage. It’s simple supply and demand.

It’s also interesting to see that some of the biggest and most respected companies had problems with their online sites due to the Internet traffic. To list just a few of the incidents Twitter temporarily crashed, Wikipedia overloaded, AIM went down for 45 minutes, and Facebook had a bit of trouble uploading video. I suspect that many media stores probably had long lines, had slow internet speed, and spent a lot of time on the phone answering questions about MJ items rather than making sales.

What’s also interesting is the clear trend that is demonstrated. Most notably, it demonstrates the uptick in social media, and although social media is already prominent in most of our lives, it will mostly likely continue to increase for years to come. More people will continue to use these websites, stream coverage online, and use their mobiles networks to stay connected. Mobile companies likely made out best in the short term as they made immediate profits from millions of calls and text messages during the event. Additionally, I-Tunes also had their best day in years in terms of revenue and hits to the website.

Just like companies were forced to cover of MJ, I think that companies and people will feel the pressure to accept and increase their usage of social media to be a central part of their daily lives. While the casual internet user can get by just fine now, I think this event ultimately shows us that significant usage of social and online media is inevitable. Our society is rapidly changing, that’s why CNN and other businesses have already become power users. The only question is, when will the volume seen on Thursday become the norm.

When alive, Michael’s social and economic impact can’t be disputed. Looks like the same is true even in his death.

Here is the CNN article about the mass internet overload:
http://www.cnn.com/2009/TECH/06/26/michael.jackson.internet/index.html

Tags: Current Events