As the American economy falls into recession, it has become a prime topic of news programs and presidential debates.
However, the health of the economy is not an issue that normally causes much concern among college students.Unfortunately, the recession is causing economic problems to trickle down from the business world onto our campus.
On Friday, the Labor Department reported that employers slashed payrolls by 62,000 employees in February, compounding job losses from January. The losses of last month were the worst in five years. Additionally, almost half a million unemployed people quit searching for work last month after it became apparent there were no available jobs.
As college students, it is already hard enough to find good employment prospects; without the experience and recommendations from previous employers it can be hard to get a company to take a chance on hiring us. In a weak job market the quest to find good work is made even tougher.
Due to the law of supply and demand, as more people are unemployed, the salaries of those people who can get jobs drop as well.
To be blunt, when we graduate, it may well be difficult to find work, and wages will probably be lower than what we were expecting to receive.
For example, in the finance industry where I will be seeking a job after graduation, the prospects are bad and getting worse. Banking giant Citigroup is firing roughly 20,000 people this year, and its competitors are taking similar actions.
Sadly, the government’s efforts to fix the problems in the economy have in fact worsened the situation. They have caused spiraling inflation in the prices of food and gas, even while wage growth is slowing and layoffs are increasing.
It takes more money to buy necessities, yet people have less income to pay the bills.
The economic crisis has infected too much of our economy to be solved without a sharp recession or even a depression. The next few years will be very rough.
Federal Reserve Chairman Ben Bernanke admitted in recent testimony that, “There probably will be some bank failures.”
Foreigners are aware of the risks of investing in America. As they have pulled money out of American investments, our stock market has swooned and our currency has fallen to a record-low value plunging in value by more than a third under President Bush’s leadership.
Hard times are in store for America in the near future, so what can we do to prepare?
One thing we can do is vote for better leadership. President Bush headed up three failed oil companies before entering politics so it wasn’t exactly a shock that he has led our economy into trouble. However, what we really need to do is to learn to be smart with money before we face trouble in our own lives. Credit cards have great allure, as they seem to allow us to get something for nothing. The truth though, is that there is no free lunch.
The credit card companies can afford to give us free Frisbees and pizza because of the enormous profits they can generate off of us. Once you miss a payment, they charge outrageous fees and jack your interest rates up to unfathomable heights.
Avoiding the debt trap is especially important as jobs dry up. I urge you to stick to using student loans with low interest rates rather than resorting to maxing out credit cards. The only thing worse than having to work overtime to pay your bills would be needing to declare bankruptcy when you can’t get any work at all.
Ian Bezek is a sophomore economics major. His column appears Mondays in the Collegian. Letters and feedback can be sent to email@example.com.