Are Experience Requirements for Entry-Level Roles Too High?

Are Experience Requirements for Entry-Level Roles Too High?

Even with talent in short supply, many US employers are seeking applicants for entry-level professional roles with several years of relevant work experience, disqualifying most fresh graduates, SHRM’s Roy Maurer reports:

A recent analysis of over 95,000 job postings by job-matching software firm TalentWorks revealed how difficult it can be for newly minted grads to find an entry-level job within their experience level. The research found that 61 percent of all full-time jobs seeking entry-level employees required at least three years or more of experience. Similarly, when labor market analytics company Burning Glass Technologies analyzed 25 million entry-level job postings from 2010 to 2016, it found an increase in the number of soft and hard skills being demanded. …

“We saw some employers increase experience requirements during the recession and decrease them during the recovery,” [Alicia Modestino, associate professor at Northeastern University School of Public Policy and Urban Affairs] said. “But another set of employers increased their requirements during the recession and have maintained them since then.” The organizations with those “sticky requirements” tend to be hiring for high-skilled occupations, which also require higher education and advanced degrees, she said.

Executives at recruiting and staffing firms tell Maurer that these experience requirements are often excessive and cause employers to discount candidates who would be successful in these roles. Skills learned at one job are not always immediately transferable to a new job, even in the same field, so the benefit employers gain from being able to train experienced recruits more quickly may not make up for them missing out on qualified entry-level talent without that experience. Besides, if every entry-level role required experience, where would newly-minted graduates work?

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In Tight US Labor Market, Unpaid Internships Continue to Decline

In Tight US Labor Market, Unpaid Internships Continue to Decline

More US employers are abandoning unpaid internships and paying to fill the roles these interns would perform, the Wall Street Journal reported on Monday, as historically low unemployment rates and a scarcity of available workers forces them to compete more extensively for even entry-level talent.

Internships in general continue to rise in popularity, the Journal notes, pointing to a survey from the National Association of Colleges and Employers (NACE) showing that around 60 percent of college graduates in 2017 said they had an internship at some point while in school—a marked rise from just under 50 percent who said so a decade earlier. However, just 43 percent of internships were unpaid in 2017, compared to about half in 2012, NACE found, while the average hourly wage for interns increased 3.7 percent to $18.73 in 2018.

Although unpaid internships are often criticized for exploiting young people’s labor and shutting poor students out of career opportunities, employers are not paying interns merely out of the goodness of their hearts. The Journal hears from several companies that have converted their unpaid programs into paid ones, or turned down opportunities to add unpaid internships, in order to remain competitive in the market for college student and graduate talent. Young people have more options in today’s job market than they did during the recovery from the Great Recession, so employers who want to cultivate future employees through their internship programs may need to offer interns something more than college credit and experience.

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It’s Not All Good News for This Year’s Graduates

It’s Not All Good News for This Year’s Graduates

Most of this year’s annual graduation season surveys in the US have indicated that the class of 2018 will enjoy a bright start to their careers, with a tight labor market and lots of demand for college-educated talent enabling them to demand the highest starting salaries in years. A new analysis from Korn Ferry, using a large data set of 310,000 entry-level positions from nearly 1,000 organizations, finds that new entrants to the professional job market this year might not be making big gains after all, notwithstanding their excellent prospects for finding a job:

Based on the analysis, 2018 college grads in the United States will make on average $50,390 annually. That is 2.8 percent more than the 2017 average ($49,000). “With the 2018 U.S. inflation rate hovering just over 2 percent, real wages for this year’s grads are virtually flat,” said Korn Ferry Senior Client Partner Maryam Morse. “However, with competition for top graduate talent so fierce, it’s critical that companies pay competitively, create an engaging culture and provide clear paths for advancement.”

In other words, this analysis points to the fundamental quandary of the US labor market right now: employers have every reason to pay more for talent, but wages aren’t growing as quickly as the law of supply and demand should compel them to.

Korn Ferry’s analysis also highlights the variation in starting salaries among major US cities: A graduate looking for work in Atlanta can expect to earn an average of just under $50,000, compared to over $60,000 in New York and nearly $64,000 in San Francisco (not adjusted for cost of living). The study also calculated average entry-level pay in various professions: A new customer service representative earns on average $35,000, an accountant $48,000, a registered nurse just under $55,000, and a software developer $67,000.

Another new report, from the left-leaning Economic Policy Institute, considers this graduating class’s prospects by analyzing data on recent college graduates aged 21 to 24. While EPI does not dispute the strong labor market position of these graduates compared to recent years, it also argues that the class of 2018 can and should be doing better than the class of 2007:

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Class of 2018 Has High Expectations for Pay and Career Progression

Class of 2018 Has High Expectations for Pay and Career Progression

Every spring, the talent acquisition software company iCIMS surveys college graduates in the US to gauge their expectations and ambitions as they prepare to enter the workforce. This year’s survey, which SHRM’s Roy Maurer flagged earlier this week, finds that this year’s graduating class is expecting higher starting salaries than their peers in recent years: On average, they expect to earn $54,010 in their first job, slightly more than the class of 2017 and almost $8,000 more than the class of 2016. Last year’s graduates were a bit unrealistic in their pay expectations, despite a tight labor market, with recruiters reporting starting salaries well below grads’ aspirations.

This year, Maurer notes, employers’ pursestrings are looking a little looser:

“This year’s graduates are confident in their ability to find the job they want after graduation, and a well-paying one at that,” said Susan Vitale, chief marketing officer at iCIMS. … The data revealed that recruiters estimate they will pay entry-level employees $56,532 on average this year—a substantial jump of more than $10,000 since last year, when the estimate was $45,361 on average. “For employers, even with an abundance of educated candidates, nearly 80 percent of recruiters are finding filling entry-level positions more challenging than they did three years ago,” Vitale said. “In response, recruiters have upped their game by offering better salaries and benefits, increasing training and development, and enhancing their employee referral programs.”

Maurer also highlights another survey from Yello, which found that a majority of graduates were putting priority on career advancement in their first job searches. Nearly half of respondents to the Yello survey said they were planning to stay with their first employer for more than three years, in another point of evidence against the myth of the millennial job hopper (though these graduates might properly be classified as members of Generation Z). These findings, Yello CEO and co-founder Jason Weingarten told Maurer, suggest that recruiters should be focusing their value propositions for graduates on opportunities for long-term growth and development. Some employers are already responding to the demand these surveys show for higher salaries and clear career paths, such as Morgan Stanley, which recently raised starting pay and accelerated the promotion path for its junior investment bankers.

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Goldman Sachs Reports UK Gender Pay Gap, Reveals Plans for Gender-Balanced Workforce

Goldman Sachs Reports UK Gender Pay Gap, Reveals Plans for Gender-Balanced Workforce

Goldman Sachs on Friday reported its gender pay gap data in the UK in accordance with the law requiring most employers to do so by next month. According to Reuters, the bank reported a mean gender pay gap of 55.5 percent at its international business, with a bonus gap for that unit of 72.2 percent. The company’s data showed that within the international unit, 83 percent of those earning the highest hourly pay were men, while 62.4 percent of those earning the lowest hourly pay were women.

The median gaps were smaller than the mean, the BBC adds, coming in at 36.4 percent for hourly pay and 67.7 percent for bonuses. Goldman Sachs UK, a smaller unit that employs people in non-revenue positions, reported much smaller, though still significant, mean gaps of 16.1 percent in hourly pay and 32.5 percent in bonus pay. As other banks have reported, the disparity in bonuses widens the overall gender pay gap significantly and reflects the underrepresentation of women in senior roles with greater bonus potential.

Perhaps in anticipation of this disclosure, Goldman announced a plan last week to improve its gender balance. In a memo, Chief Executive Officer Lloyd Blankfein and President David Solomon stressed that men and women at the company are paid equally for equal work, but acknowledged that women are underrepresented, particularly in senior roles. The bank’s leaders declared a long-term goal of having women make up exactly half of the company’s workforce, Bloomberg reported on Thursday. They did not set a timeline for this ambitious goal, but as a first step, will ensure a 50/50 gender split in each class of fresh graduates Goldman hires by 2021:

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Study: Alcohol at Work Doesn’t Necessarily Attract College Graduates

Study: Alcohol at Work Doesn’t Necessarily Attract College Graduates

Companies that allow or provide alcohol in the workplace often do so in order to attract young talent with an image of a fun, friendly, work-hard-play-hard culture, but a recent study suggests that booze might not be as attractive a perk as many startup founders seem to think it is. Oregon State University’s Michelle Klampe presents some new research from OSU business professor Anthony Klotz and Serge da Motta Veiga of American University that investigated the reactions of college students and recent graduates to the availability of alcohol in prospective workplaces. finding that in fact, drinking cultures often turn them off:

“Students preparing to enter the workforce ask a lot of questions about alcohol and job interviews and the best way to navigate those situations,” Klotz said. “And generally, people are confused about how to deal with alcohol in the workplace. Not everyone finds it appealing.” …

In both studies, participants were also asked questions relating to their level of political skill, which refers to the a set of social abilities that helps them effectively understand others at work, influence others in ways that enhance their own objectives and navigate social situations with confidence. Klotz and da Motta Veiga predicted that those with high political skill are more likely to be comfortable at alcohol-based events, while those with low political skill may be unable to take advantage of the social benefits that the combination of alcohol and work provide.

The studies showed that participants with lower levels of political skill were less likely to see themselves as fitting in and wanting to work at the company when the recruiting advertising and dinner out included alcohol. “This is a specific condition where alcohol is harmful in recruiting prospective employees,” Klotz said. “However, we didn’t find any significant upside to including alcohol for the participants that showed high levels of political skill.”

The authors don’t take a position on whether a culture of drinking at work is good or bad in general, but recommend that employers be up-front with candidates about the role of alcohol in their culture in order to avoid hiring employees whose interests and values don’t align with it.

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Finance Losing Ground to Tech as Employer of Choice for MBAs

Finance Losing Ground to Tech as Employer of Choice for MBAs

For a very long time, investment banks and other financial institutions were the preferred destinations for business school graduates. Those companies offered the highest salaries, the greatest prestige, and the opportunity to live in the world’s most vibrant cities, particularly New York. Today, thanks to numerous factors, the tech industry is displacing finance as the preferred employer for newly-minted MBAs because it can offer similarly high salaries, better office conditions, and the flexibility to either live in a major city or work remotely from anywhere—a growing preference among workers of all types. Even though tech jobs can be demanding, that’s less of a concern for people who have experienced the long-hour, high-pressure work of finance or consulting.

In October of last year, the Wall Street Journal‘s Kelsey Gee reported that Amazon had become the top recruiter at Carnegie Mellon, Duke, and the University of California, Berkeley; and the most prevalent internship destination for students at Michigan, MIT, Dartmouth and Duke. All of those schools’ MBA programs are ranked in the top 20 in the country by US News & World Report, and some are in the top 10. The Seattle-based e-commerce giant has deliberately lured these graduates away from the big banks with an aggressive recruiting strategy, which involves hosting events before school even starts, sending armies of recruiters to campus, and sponsoring case competitions. Gee noted that while tech companies had previously been hesitant to hire business school grads, they are finding an improved culture fit. Given that Amazon and other tech companies need to scale their businesses rapidly, it makes sense to have more people around who know their way around a balance sheet.

This week at the Financial Times, Jonathan Moules spotted this same trend developing internationally as well, noting that banks in Europe are also feeling pressure to compete for MBA talent with Amazon, Google, and Microsoft. JPMorgan Chase ceased its on-campus recruiting program at European business schools entirely in 2013, as it was hiring too few graduates. The bank continues to recruit MBAs in the US but has changed its approach, putting greater emphasis on quality of life, stable holidays, and international rotation opportunities in a counteroffer to some of the tech sector’s main draws. It’s not just big tech companies that are luring these grads away, however: One European student told Moules that most of his classmates wanted to start their own businesses.

In general, the MBA is currently at a bit of a crossroads. Full-time enrollment and applications have gone down for three years in a row while companies are less likely to pay for their employees to complete them than they have been in the past. More specialized business programs have also cut into their prospect pool, with many opting for programs in analytics, operations, or finance to better fit their needs. There will always be a market for managerial talent, but now that the tech sector is becoming a leading buyer in that market, business schools themselves may need to change to cater to students whose career goals lie outside finance or management consulting.