The Great Recession of 2009 has fostered a deserved and growing distrust of the United States’ financial sector over the past half-decade. In light of enormous scandals like Worldcom’s bankruptcy, Bernie Madoff’s ponzi scheme and Enron’s colossal audit failure, the aversion is decidedly understandable. A survey conducted by Accenture, a global management consulting firm, shows that millennials are about four times more unwilling to act solely on the advice of financial advisors than Baby Boomers or Gen Xers. A particularly significant, yet largely overlooked, manifestation of this distrust is the rapidly declining pool of college graduates seeking jobs in finance.
The decline is strikingly conspicuous even at schools that are notorious for funneling large portions of their graduates onto Wall Street. In 2007, just before the collapse of the financial markets, Harvard reported that 47 percent of its graduates took jobs in finance. In 2013, the number fell to less than 15 percent. In 2010, Yale sent a 20-year low of just 14 percent of its graduates into finance. Although not as dramatic, Princeton, too, hit a low of 22 percent in 2011. Promisingly enough, however, students across the nation have turned their talents to more “altruistic” fields. A study of over 6,500 employers (the largest of its kind) conducted by Michigan State University shows a 20 percent rise in healthcare employment, an 11 percent rise in applications to nonprofit firms and a nine percent hiring increase in education.
LinkedIn’s 2013 assessment of the most sought after employers, which allegedly “[analyzes] billions of data points between members and companies and [compares] the data with surveys of thousands of members,” supports this trend. Companies like St. Jude, The Mayo Clinic and Children’s Healthcare of Atlanta have knocked many large financial firms off their usual top-50 ranking. Careers in federal agencies and other public services have also rallied in their popularity. These trends suggest that college graduates now, more than ever, are finding fulfillment in giving back to society rather than seeking financial success. This change, one can argue, is one of the few potentially positive side effects of the financial crisis.
That said, this shift and diversification of interest does not come without risks of its own. Millennials’ growing distaste for finance has even begun to affect enrollment into graduate programs. Applications to two-year MBA programs declined significantly and consistently between 2008 and 2012. Despite the MBA providers’ enormous investments in marketing and improving the quality of their programs, applications in 2013 only rose marginally. Consistent with vocational trends, enrollment in other professional programs has fared far better since the start of the recession.
The same Michigan State University study discussed above provides a bleak forecast for even those students who have taken the time to finish their two years at business school. MSU’s Collegiate Employment Research Institute predicts that the hiring of new MBA graduates will fall by over 25 percent compared to 2013 statistics. According to Phil Gardner, an economist and director at MSU, these trends leave the American financial sector with a severe skill shortage.
The Bureau of Labor Statistics reported almost 4 million job vacancies in 2013 that could not be filled because of skill mismatch. According to Dan Schawbel of Forbes, almost half of CEOs in the financial industry alone view inability to find workers with the required talent and skills as a top threat to their company’s growth. Another 25 percent of CEOs report having to reorganize major company initiatives in the past year due to a lack of qualified labor.
The financial meltdown has irrefutably engrained a deep aversion to financial services in the United States, especially in the minds of new job-seekers. Despite increased regulation in the wake of the recession, the industry only continues to become increasingly complicated and hard to police. Wall Street has managed to alienate itself from the country’s newest and brightest minds in a time when it might need their help the most. For its own sake as well as the public’s, it will have to find a way to repair its damaged reputation. The order is certainly tall, but hopefully not impossible.