Job Prospects a Bit Slim for New MBAs : Shortages Aren’t as Widespread as Feared After Crash

Nathan Schwam will receive his MBA in corporate finance in two weeks and does not have a job offer yet. But the USC student, a former editor and director for a New Orleans television station, says he’s not worried about the effects of the Oct. 19 stock market crash on his career and feels confident that he can soon find a job in the entertainment industry, if he doesn’t set his sights too high.

“I’ll find something. I know what I want to do in the long run. Even if I find a ‘non-MBA’ job, I’m sure I’ll move up in the long run,” he said. “That’s where a lot of good jobs start from, from the bottom somewhere.”

Corporations and MBA students alike are taking longer to make up their minds this spring, dragging out a hiring season that usually reaches a peak in mid-April, say job placement directors at 10 leading business schools in Southern California and across the country.

But the same directors maintain that, except for a dearth of positions on Wall Street, last October’s stock market crash has not had the widely predicted effect of closing down job opportunities for graduates with a master of business administration degree. They tend to blame much of the lag in offers on dwindling interest from investment banks, which traditionally started the MBA hiring season with offers as early as January.

“It has made the market more lethargic than it has been in past years. It’s stringing out the students,” said Robert C. Bruce, director of career planning and placement at the Peter F. Drucker Graduate Center in Claremont.

“Come April, students get very uptight if they don’t have an offer in the bag,” he observed.

A few students are growing very worried. Jennifer Lawrence, a marketing major at USC’s business school, said she is spending four hours a day looking for work and is getting depressed. “Like very down. About as down as you can get. Zero comes to mind,” she said, staring disconsolately at a USC computer terminal as she drafted more job letters.

Lawrence initially posted her rejection letters in her room but now throws them away. “I ran out of wall space,” she explained.

Yet for most students, finding a suitable job remains not that much tougher this year than last, with consulting firms and major industrial corporations making up much of the shortfall from hiring cutbacks on Wall Street. And salary offers are up very little, if at all, from last year, placement directors and students say.

Refusal to Panic

“In the last few years, it’s been fairly easy to get a job if you’ve got an MBA. . . . Now you’ve got to dig a little more,” said Gregory R. Fine, a second-year MBA at UCLA who has found a job in corporate lending at First Interstate Bank in Los Angeles.

“Even though firms came to interview, they weren’t coming to hire. . . . A lot of people who got hired last year lost their jobs,” said Steven H. Wadsworth, a second-year MBA at UCLA who said he had several strong leads on jobs with venture capital firms.

Some students without jobs refuse to panic. “What I’m looking for is something in waste management or in management consulting. . . . I’m not really that concerned, because where I’m looking for work is not in the areas that are hard hit” by October’s crash, said Bill Graham, a second-year MBA student at USC with concentrations in corporate finance and entrepreneurship.

And some students are lowering their sights. Steve Martinez, another second-year MBA candidate at USC, somewhat reluctantly accepted an auditing job offer from a Southern California oil company. “I would have really liked a pure finance position as opposed to something in audit control. . . . (But) I’ve got a lot of friends (who) don’t have jobs.”

Placement directors vary in their assessment of this year’s job picture. Some are quite pessimistic. “I just talked this morning with an employer who canceled a visit. Employers are running lean and mean,” said Carol H. LaRue, director of professional development at the Pepperdine University business school in Malibu.

Hiring by financial services companies is down, and other fields have not expanded to compensate, she said. “There isn’t anything making it up.”

Jean M. Moe-Cathro, director of MBA placement at UC Berkeley, was also downbeat. “We have not had a reduction in employers coming to campus. There certainly seems to be a reduction in the number of people they are coming to hire.”

But job offers to second-year MBA students at the Wharton School in Philadelphia are running slightly ahead of last year’s pace, said James J. Beirne, director of career development and placement. Through April 3, the school’s graduating class of 770 students had received about 350 offers, compared to 320 offers at the same time last year, he said. “Traditionally we have 85% of the class reporting offers by graduation, and I’d be surprised if that isn’t true this year.”

A Lot of Depression

Consulting firms are taking up much of the slack in recruiting from investment banks, he said, with 15% to 20% of this year’s graduating class going into consulting, compared to 12% last year.

“A lot of the financial people that would have had jobs by January are scrambling around looking for consulting jobs,” said David L. Fellows, a second-year MBA student at UCLA and vice president of the business school’s consulting career club.

“There were some students that were totally dedicated to the investment banking field and put a lot of energy into it, and when it became clear that the field was closing down, there was a lot of depression,” said Glen Payne, USC’s director of MBA career services.

The average salary offer at Wharton is up only fractionally, to $51,000 from $50,600 last year, Beirne said. Investment banks in particular had been raising their offers by 10% a year during the bull market, but such offers are only 1% or 2% higher this year, he said.

Bargaining for top-dollar pay has become tougher at financial services companies, as Craig Warren, a second-year MBA candidate at UCLA, discovered when he tried to dicker with a California bank. “They came back at me and said this isn’t the best year to be negotiating salary at Wells Fargo. We were both out of line. So I took a different job at Wells,” said Warren, who accepted a position in lending to medium-size companies.

Jobs in finance are few but also are becoming less sought after, said Sami El-Saden, another second-year student at UCLA. “There has been a serious falloff of interest on the part of the students as well as the corporations that are coming to campus. I think Oct. 19 was part of it. But it started before Oct. 19” with Wall Street’s insider trading scandals, he said.

If Bankers Trust had not recently offered him a job in the corporate finance section of its Los Angeles office, El-Saden said, “I’d be pretty worried. I’d be seriously worried. There’s no doubt there’s a dearth of opportunity out there.”

Wall Street firms are reluctant to release hiring figures as they continue to lay off current employees. But a First Boston spokeswoman admitted that “it’s hard to say how many we will be hiring, but it will definitely be fewer” than last year.

First Interstate Bank in Los Angeles hired 17 MBAs last year for its corporate and merchant banking arm. But the bank abruptly suspended recruitment efforts for the division following an announcement Oct. 21 that it would refocus on such consumer-oriented businesses as taking deposits and lending, a spokesman said.

Security Pacific has not cut back its recruitment of MBAs, said Kirk Cypel, vice president and group manager for financial strategies in the merchant banking section. But he conceded that the availability of recently laid off, experienced bankers has made it tougher for MBAs to find work.

Increase in Competition

“We are looking for aggressive and smart people, and if they have a couple years of experience, then that makes them more attractive to us. . . . In a couple of departments, they’ve hired experienced people where they could have put MBAs,” he said.

But the bank continues to hire MBAs for jobs that require less expertise. “Why have an experienced person doing basic cash flows?” he asked.

Heightened competition this year has slowed growth in salary offers, Cypel added. “I think that salaries are flat, that there might be slight increases.”

Yet the shrinking number of bright, young business people headed to Wall Street may not mean renewed interest in so-called operations management--running the day-to-day affairs of businesses that manufacture cars or soap instead of leveraged buyouts or debt flotations, several job placement directors said. “I would like to sit here and say that more people are going into manufacturing operations, but that’s not what I’m finding,” said Wharton’s Beirne.

Instead, he said, those MBAs who cannot find jobs at investment banks or who worry about job security on Wall Street are heading for the finance divisions of major industrial corporations, where they may yet be involved in mergers and acquisitions after all.

Hughes Aircraft in Los Angeles made 13 job offers to MBAs last year, said John G. Wilhite, manager of corporate college relations. Only five offers were accepted.

“Somehow manufacturing hasn’t seemed to have been an area of interest to them,” he said, adding that Hughes nonetheless plans to try again this year by making a similar number of offers.