A Tough Year to Launch a Career

JOB MARKET

HUNTING season opens on U.S. campuses this month as thousands of corporate recruiters begin their annual quest to sign up the best managerial and technical talent from the graduating class. At some schools, according to college placement officers, recruiting should rise slightly from 1971's recession-pinched level. But graduates will still find this a difficult year in which to launch a career.

Of 185 major corporations surveyed by Northwestern University, more than half said that they intend to offer jobs to more bachelor's degree holders than they did last year. On that basis, Northwestern's Frank S. Endicott, who has reported on corporate recruiting plans since 1945, predicts an 11% increase in the number of graduates to be hired. But 44% of the companies polled plan to take fewer advanced-degree recipients, and overall hiring will reach only about 60% of the recruiting levels of 1968 and 1969.

Easier Pickings. At many colleges, the picture is even bleaker. Michigan State University, which has as many as 2,300 recruiters swarming through the campus in a good year, has seen only 1,600 in 1971-72. At Dartmouth, only 54 companies have signed up for visits, down from 91 last year. Placement officers at U.C.L.A. report a 20% drop in recruiting from 1971.

Corporations are under less pressure to comb campuses this year. Thousands of unemployed, older college-trained workers are still in the job market. Viet Nam era veterans are also in abundance; their unemployment rate is 8.2%, as opposed to 6.1% for the work force as a whole (up slightly from November). Employees who might have changed jobs in better times are hanging on to them now, creating fewer openings for new graduates. Litton Industries, for example, has cut its intake of graduates to half of 1968's level. "Getting the best people is easier for us now," says Bob Gray, director of corporate industrial relations. "Any time we want to crank up a project, we can do it with experienced people readily available."

Some executives are worried that the present sluggishness in campus hiring may mean trouble for their companies in the future. "We will find out ten years from now that there is no one to fill the managerial ranks," predicts Monroe Sadler, Du Font's development chief. Dennis Ryan, placement director of Carnegie-Mellon University in Pittsburgh, adds: "The recruitment people know that this will create an air bubble in the pipeline five or ten years from now. But the personnel manager cannot get that message upstairs."

As might be expected, hiring plans vary widely for different types of students. The job market is especially bad for engineering graduates, particularly those with degrees in aerospace or electronics. Fledgling teachers face an even longer search for jobs. According to the National Education Association, more than 312,000 students are expected to finish teacher-preparation courses this semester, but only a projected 8,000 new teaching positions will be created in the nation's schools. Balancing that, newly minted accountants remain in high demand, followed closely by students who will receive master's degrees in business administration. Prospects are brightest of all for female graduates who plan to sign on with large corporations. Endicott figures that Women's Lib-conscious companies will be hiring 15% more Ms.'s this year.

Students are responding to the harsh new world of job scarcity in several ways. Most placement officers predict that a larger proportion of bachelor's degree recipients this June will elect to go on to graduate school. The recruiting drought has also produced a new institution in post-graduation planning: the breather year, during which graduates take an extended break before finding a job or continuing their education. Some temporary dropouts travel abroad, others take undemanding jobs as cab drivers, ski patrollers or bartenders to help unwind from the pressures of college life. At Dartmouth, 18% of graduating seniors say that they will take a pause of at least a year before resuming their careers.

For the graduates who do plan to seek employment, it could be a long hard winter of hustling. There are some signs that students are beginning to acknowledge that difficulty. Two weeks before a General Electric recruiter was scheduled to visit Purdue University, students began lining up at 5:30 a.m. to register for interviews.

INVESTMENT

The Thundering Herd

To its competitors in the brokerage business, Merrill Lynch, Pierce. Fenner & Smith must often seem as overwhelming as the herd of stampeding bulls in its now famous television commercial. It dominates the securities field with its widespread distribution system, geared to serve the needs of small investors. It has moved so vigorously into Government-bond trading, commodities, real estate, mutual funds and even economic consulting that such non-stock-market ventures account for more than half of its revenues. Now Merrill Lynch has thundered into the lead on the financial world's most exclusive turf: investment banking.

During 1971, Merrill Lynch managed or co-managed the marketing of $9.9 billion worth of new stocks and bonds, nosing out by $400 million U.S. investment banking's longtime leader and old-school-tie symbol, First Boston Corp. Investment bankers, who for a fat fee buy new securities from corporations and market them to the public, are noted for operating on the basis of close personal relationships; without the right connections, a newcomer found it all but impossible to squeeze in. But the old ways on Wall Street are changing. Nothing better exemplifies the shift than the way Merrill Lynch, an upstart in investment banking despite its power in the retail brokerage field, gained hegemony in the rich, clubby preserve presided over by such pukka establishments as Lehman Brothers; Morgan Stanley; Kuhn, Loeb; and Goldman, Sachs.

When Merrill Lynch decided to go into investment banking in earnest about four years ago, it moved with the management skill that has long characterized its operations. It enlarged its underwriting division with bright young men, most of whom had proved themselves in other departments. Regional underwriting offices were established outside Manhattan in Atlanta and San Francisco. They enabled the firm to hustle for new prospects while the old-line houses, in the main, waited for clients to come to them.

In addition, Merrill Lynch could offer a stock-marketing network unmatched by anybody in the business: 5,500 registered representatives (securities salesmen) in 199 domestic and 56 foreign branch offices. "We began to show the value of distribution." says Chairman Donald T. Regan, 53, an ex-Marine who prizes tradition only when it works.

The firm's big chance to crack investment banking's inner circle came during the tight money period that began in mid-1969. As stocks tumbled, interest rates on bonds climbed as high as 9%, attracting the attention of small investors. At the same time, institutions such as mutual funds and pension funds, traditional customers of the old-line houses, were strapped for cash. Merrill Lynch, with its vast retail network, moved in a big way to handle the domestic bond offerings of U.S. corporations in desperate need of money. "Our salesmen couldn't talk stocks in 1970, so they talked bonds," says Regan.

Added Clout. Almost all of Merrill Lynch's investment banking business comes from new, medium-sized companies, which prefer service to fraternalism. Indeed, in its sales pitch, the firm emphasizes that under its management, new issues will be distributed to tens of thousands of investors; old-line houses tend to sell new securities in large blocks to a limited number of institutions. Thus these large investors could gain a dominant interest in smaller firms, a situation many corporate managers want to avoid.

Merrill Lynch's new prominence in investment banking lends substantial clout to a firm that already had resources far beyond those of its closest competitors, Bache & Co. and Du Pont, Glore Forgan & Co. In 1970, for example, when many brokerage houses were barely treading water, Merrill Lynch posted earnings of $40.7 million; what it lost on its sluggish stock business it more than made up in other operations like the trading of commodities and Government bonds. When the final figures are in, its performance for last year will be even more spectacular. In the first nine months, its earnings climbed to about $50 million on revenues of $51.1 million.

Regan is now looking for new worlds to conquer. Says he: "We are studying ways that Merrill Lynch might employ life insurance. And obviously estate planning is another possibility. Then there is real estate development." Whatever new directions the company may take, it is now clear that Merrill Lynch, long regarded as the supermarket of the investment business, is close to becoming Wall Street's first one-stop shopping center.

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