MBA Hiring’s Improving Outlook in 2021: Three Encouraging Developments
Finally, there’s great news for MBA hiring, even after 2020 marked one of the most challenging recruiting years in the history of graduate management education.
The outlook for MBA hiring now seems much more encouraging than it did only a few months ago at the start of 2021. At that time, the pandemic continued to disrupt recruiting for many summer internships and MBA jobs following graduation, leaving many students with uncertain plans following the current academic year.
But since then, three encouraging developments have emerged to help drive late-season hiring offers to MBA students: the tech industry’s MBA hiring bonanza, the revisiting of budget reconciliation in congress to drive job creation, and the Nobel Laureate-predicted “Biden Boom.”
Development 1: The Tech Industry’s Unexpected MBA Hiring Bonanza
Despite the pandemic, MBA recruiting openings for tech jobs increased at 57 percent of full-time programs this past fall. That’s according to the 2020 MBA CSEA Fall Recruiting Trends Survey from the Gainesville, Florida-based MBA Career Services and Employer Alliance, which polled almost 100 business schools for its latest report.
Megan Hendricks, the association’s executive director, told Patrick Thomas of the Wall Street Journal that three tech firms whose businesses boomed during the pandemic were some of the biggest recruiters. And two of these pandemic “winners” based in Silicon Valley have turned into household names, even though they’re relative newcomers to business school recruiting.
The first of those companies is Zoom Video Communications, the San Jose-based web videoconferencing provider whose brand has become almost synonymous with virtual meetings and classes during the pandemic, and who benefitted handsomely from the remote-work surge. Zoom told the Journal that the firm intends to hire additional MBA grads as part of its new Global Emerging Talent Program. We couldn’t locate a web page explaining the program, but through LinkedIn found copywriting targeting college graduates:
Zoom’s Global Emerging Talent Program is an immersive program for college students and recent graduates to learn and develop their skills at our fast-growing company. We’re looking for well-rounded students with a passion for technology and helping people communicate, who are ready to offer fresh perspectives and unique ideas to everything we do at Zoom.
The second firm Hendricks mentioned is Netflix, the Los Gatos, California digital entertainment provider whose ratings had soared while viewers found themselves stuck at home during shelter-in-place orders. (Netflix declined to comment on the Journal’s story.)
The third firm she cited is no stranger to BSchools readers. When it hired 1,000 MBAs for the first time in 2017, Amazon took over from McKinsey & Company as the world’s number one employer of MBAs, based on hiring volume during a 12-month period. However, just before the pandemic hit in February 2020, Amazon announced a significant modification of the firm’s MBA recruiting strategy.
Instead of exclusively recruiting at elite, top-25 business schools as it had done previously, the firm claimed it would broaden hiring. Amazon said it extended job offers to students at 80 business schools. However, the new strategy also slashed campus visits in favor of heavily emphasizing online interviews.
With high demand continuing to drive increased sales because of the pandemic, Amazon once again plans to hire more than 1,000 MBAs throughout 2021. The Journal suggests that Amazon has even extended offers to mid-career graduating MBAs without technical training or experience, including grads forced to pivot after plans to work in industries hard hit by pandemic slowdowns didn’t pan out.
Development 2: More Opportunities for Budget Reconciliation to Fuel Job Creation
In our February 2021 article “Why MBA Jobs in 2021 Depend on Federal Budget Reconciliation,” we explained the critical role that the Capitol Hill budgeting process known as reconciliation would play this year in stimulating economic growth.
Since that report’s publication, the Biden Administration and Congressional Democrats successfully applied that mechanism to pass the $1.9 trillion American Rescue Plan. But now, it turns out that—as we correctly predicted in that report—the stimulus plan’s passage will in fact amount to only the first of several opportunities for the Democrats to apply the reconciliation mechanism during the 116th Congress.
On April 6, the Senate parliamentarian, Elizabeth MacDonough, ruled that Democrats may use the federal budgeting process known as reconciliation at least two more times during 2021, with two such opportunities specifically available before the end of the fiscal year on September 30. Much as we had predicted here on Bschools in February, the ruling gives Senate Democrats additional opportunities to advance President Biden’s agenda through simple majority votes:
Most immediately, Democrats believe the ruling could provide additional flexibility for winning enactment of Mr. Biden’s plans for as much as $4 trillion in new economic investments — including rebuilding electric grids, fighting climate change, reducing poverty and helping millions of women work and earn more.
That’s terrific news for MBAs who care about jobs after graduation. The ruling makes it much more likely that Congress will pass additional expansionary economic measures during 2021. And thanks to MacDonough, those initiatives will no longer be limited to President Biden’s sweeping $2 trillion infrastructure proposal known as the American Jobs Plan which he unveiled on March 31, only days before her announcement. Her ruling also gives the Democrats more flexibility, since it obviates the need to cram the rest of the President’s vast, historic economic agenda into a single bill.
Now not one, but several enormous surges in federal spending—along with unleashed pent-up consumer demand previously curbed by Covid—raise the odds that this year’s MBA Class of 2021 will graduate into the kind of vigorously growing economy that only weeks ago few believed would catch fire. But those few believers include someone who just so happens to understand dynamics like these pretty well.
He won the Nobel Prize in Economics.
Development 3: Here Comes the Biden Boom
A few days before Thanksgiving in 2020, the legendary Nobel laureate Paul Krugman wrote a New York Times column titled “Making the Most of the Coming Biden Boom.” In that prescient essay, he argued that the economic outlook back then was brighter than most of us thought at the time:
What held recovery back after 2008? Most obviously, the bursting of the housing bubble left households with high levels of debt and greatly weakened balance sheets that took years to recover.
This time, however, households entered the pandemic slump with much lower debt. Net worth took a brief hit but quickly recovered. And there’s probably a lot of pent-up demand: Americans who remained employed did a huge amount of saving in quarantine, accumulating a lot of liquid assets.
All of this suggests to me that spending will surge once the pandemic subsides and people feel safe to go out and about, just as spending surged in 1982 when the Federal Reserve slashed interest rates. And this in turn suggests that Joe Biden will eventually preside over a soaring, “morning in America”-type recovery.
However, at the time of this writing in early May 2021, America isn’t yet experiencing anything resembling the kind of vigorous recovery that Dr. Krugman envisions. And for MBA students currently interviewing with recruiters, a few economic developments might indeed cause concern.
One development was the Commerce Department’s announcement of only about 266,000 new jobs created in April. That report shocked observers because the total amounted to only about a quarter of the million new jobs that the financial press and analysts had led the public to expect.
However, one should recognize that the Bureau of Labor Statistics’ raw total was “seasonally adjusted” to arrive at this disconcerting report. It turns out that the Bureau started with a raw estimate that did in fact exceed a million jobs, mostly created within the low-wage hospitality and leisure sectors that the pandemic nearly destroyed. Nevertheless, the BLS adjusted that amount downward based on its past experience, since normally the economy creates many jobs during springtime. This adjustment indeed seems curious, given that there’s nothing “normal” about this particular spring, and there hasn’t been a comparable economic situation during the agency’s past 113 years.
More concerning for MBA students was an aspect of the report that garnered little attention. As this interactive bubble graph depicts, in contrast to the hospitality and leisure industries, employment in almost all of the high-wage sectors in which the vast majority of MBAs will work after graduation was flat. What’s more, the professional services industry that includes the lucrative management consulting sector actually continued to lose jobs, shedding almost 80,000 during the month.
A less serious concern was that the Consumer Price Index for April climbed 4.2 percent from a year earlier when the economy was essentially shut down. That amounted to the sharpest rise in 12 years since the Great Recession in September 2008. Moreover, core inflation gained the most since 1981.
Yet there’s a couple of principles to recognize about reports like these. First, at the time of this writing (June 2021), little more than 40 percent of all the individuals in the United States have been fully vaccinated against Covid. The pandemic continues to distort our economy and its measures: our national income accounting and our economic statistics. One month’s worth of data cannot amount to a trend, and It doesn’t make a lot of sense to pay much attention to isolated reports such as the April numbers from the Commerce Department.
Second, the performance of an economy that’s rebooting is rarely smooth. Supply bottlenecks can quickly turn into shortages and high prices for critical products, like the current vexing shortages of computer microprocessors and memory chips. Those shortages have idled production lines at Ford and General Motors and driven up the prices for used cars and car rentals across the nation.
As an economy restarts, bumpy roads, rough rides, and sometimes even false starts can occur. For example, Dr. Krugman cites the “Morning in America” recovery in 1983-1984, named after President Reagan’s (now infamous) re-election campaign commercial. That recovery kicked off one of the most vigorous expansions of the post-World War II era. But what preceded that expansion was a puny recovery that soon stalled out. It turned into the Reagan Administration’s bungled and protracted double-dip recession, leaving the Federal Reserve with few options besides cutting interest rates in 1982.
Nevertheless, these days Dr. Krugman argues even more forcefully that the Biden Boom is on the way. On May 8 he told Business Insider:
If we’re going to be growing at 8 percent, it doesn’t take very long for us to have an economy that is running extremely hot. Probably by the end of this year, we’ll have a very hot economy…I think we’re likely to have an economy that’s looking hotter than is sustainable by early next year…
So there’s basically not much of a downside to having a very rapid economic recovery. If you’re an ordinary American, you can say, “Look, the odds are that by this time next year, jobs will be plentiful, things will be looking pretty good.”
To sum up, MBAs continuing to interview during this challenging year’s extended, late-season recruiting schedules are in luck. According to the winner of the 2008 Nobel Prize in Economic Sciences, a rapid recovery with plentiful jobs is finally on your horizon.
Things will be looking pretty good, indeed.