Profs, students fearful of economy

‘ ‘ ‘ Students dressed in everything from jeans and T-shirts to business suits and sweaters… ‘ ‘ ‘ Students dressed in everything from jeans and T-shirts to business suits and sweaters crowded booths and seats in Jazzman’s Cafe on the ground floor of Mervis Hall last week, reading books, doing work and buying coffee. Gerry Jin, an international graduate student studying finance, and others watched as the latest news streamed in on the big-screen TV in the corner. ‘ ‘ ‘ Another 240,000 people lost their jobs in October, bringing the total unemployment rate to 6.5 percent and the jobless ranks to more than 10 million, according to ABC News. Consumer confidence dropped by 23.4 points, the largest drop since 1973. ‘ ‘ ‘ ‘This crisis is very severe,’ said Jin, as he finished his meal while watching the news. ‘It’s going to be a lasting period, and it’s definitely going to take awhile for things to get better.’ ‘ ‘ ‘ With constant layoffs and fluctuating numbers on the economy, Pitt students like Jin face unexpected decisions about their futures in the upcoming months and years. Some might change career paths or postpone them longer than expected. Others might accept employment with lower starting salaries. Whatever changes Pitt students endure in the future, they, along with professors, agree on one thing: With time, America will recover. ‘ ‘ ‘ Ken Lehn, a professor of finance in the Katz Graduate School of Business, said the financial crisis was initiated by subprime mortgages and ‘credit default swaps,’ ways to credit and pay off loans in case a person or company did not pay their loans. ‘ ‘ ‘ ‘Creditors thought this was a good way to hedge their investments,’ said Lehn. ‘But those two, along with foreclosures and the housing market plunge, created the ‘perfect storm’ that led to so many collapses in banks and loaning agencies.” ‘ ‘ ‘ ‘ Jo Olson, an economics professor in the College of Business Administration, agreed. ‘ ‘ ‘ ‘I think this whole thing started with bad mortgages,’ she said. ‘Too many people were getting these easy mortgages, and now everybody has started to panic, especially on Wall Street.’ ‘ ‘ ‘ Lehn said the ‘volatility in the market’ and the bailout plan were definitely results of panic among investors and politicians. These were ‘hard problems to solve,’ but the measures ‘instilled more confidence in the financial sector,’ he said. ‘ ‘ ‘ ‘The government probably did the right thing,’ he said. ‘If this bailout is to be successful, it has to be temporary, and it can’t allow taxpayers to pay the brunt of it. Otherwise, it’s doomed to fail.’ ‘ ‘ ‘ Both Olson and Lehn agreed that the economy will bounce back in time for students to find jobs and be successful. ‘ ‘ ‘ ‘I would say it’s much better to be 21 than 65 right now,’ said Olson. ‘Younger people have a lot more time to recover from this and to learn how to manage their money better, a lesson I hope all of us will learn.’ ‘ ‘ ‘ Lehn noted the same thing. ‘ ‘ ‘ ‘The big problem right now is with older, elderly people,’ he said. ‘They had all their money in the stock market and have no way to recover. Pitt students and younger people in general don’t have a huge problem right now. Their biggest problems will be within the next six months when they’re looking for jobs and internships.’ ‘ ‘ ‘ Andrea Dunn, a junior majoring in accounting, said she, like many other students, is nervous about the job market. ‘ ‘ ‘ ‘I really wasn’t afraid until recently,’ said Dunn. ‘I had heard that there was a need for accountants, especially now, but then I heard about some firms laying off some accountants. Obviously nobody’s completely safe now.’ ‘ ‘ ‘ But J.P. Matychak, the director of the Career and Leadership Development Center in CBA, said accounting was one of the best fields to go into now as a business student. ‘ ‘ ‘ ‘Accounting has had, and will have, tremendous growth over the next few months and years,’ he said. ‘People need accountants now more than ever.’ ‘ ‘ ‘ But Dunn said she was thinking about changing career paths as a result of the crisis. ‘ ‘ ‘ ‘I was thinking about going into teaching, actually,’ she said. ‘I was thinking about getting my MBA, but this economic situation has definitely affected how I want to do things later on.’ ‘ ‘ ‘ Jim Chambers, a part-time graduate student pursuing an masters of business administration, said the job market’s outlook had the opposite effect on him. ‘ ‘ ‘ ‘I have a job already,’ said Chambers, ‘but I’m definitely more hesitant to look into other things. Bottom line: Seniority matters, especially now.’ ‘ ‘ ‘ Matthew Hilliard, a law student, said he was seriously considering switching into other career paths, at least for a while. ‘ ‘ ‘ ‘The job outlook is pretty bad right now,’ he said. ‘Pennsylvania issued a hiring freeze, which is obviously not good. Nobody wants to hire interns, either. I’ve applied to places, but still no answer.’ ‘ ‘ ‘ Jin agreed. ‘ ‘ ‘ ‘I’m an international student who plans on going back home when I finish,’ he said. ‘But I still think it’s going to be hard for a student like me to find a job in the next few months, especially here in the U.S.’ ‘ ‘ ‘ Matychak, from the Career and Leadership Development Center, said he has seen more students adopting this mentality. ‘ ‘ ‘ ‘Everybody is worried about where they’re going to be next year. I have to remind them that these are hard times, not impossible times,’ said Matychak. ‘Companies are still hiring. It just takes more careful planning to find these jobs right now.’ ‘ ‘ ‘ The National Association of Colleges and Employers surveyed 146 organizations and found that government jobs are expected to increase by 19.8 percent, despite a 6.2 percent drop in finance and insurance jobs and a 3.1 percent drop in business services. ‘ ‘ ‘ ‘Students are going to have to readjust their expectations,’ said Matychak. ‘Students planning on going to Wall Street should probably consider taking a government job for a couple of years, or getting a job from a company that’s not in the news. It may not be exactly the money or the experience that they were looking for, but at the very least they can be great stepping stones to a bigger, better career later on.’ ‘ ‘ ‘ Lehn agreed and said students should pursue less commercial firms on Wall Street and around the country. ‘ ‘ ‘ ‘The best advice I can give is to go after jobs at second-tier banks and firms,’ he said. ‘These places like Friedman, Billings, Ramsey and even PNC are all poised to take the place of the former huge banks and firms like Lehman Brothers. Go for places that are under the radar.’ ‘ ‘ ‘ Both professors and students said they were optimistic about the economy over the long run and were anxious to see what changes would come about over the next few years. ‘ ‘ ‘ ‘The major risk we all have is that policy-makers may create policies that would worsen the situation just to make it look like they were doing something,’ said Lehn. ‘I hope with the election and everything, politicians will make good, positive changes that will help rather than hurt.’