Internship is the New Entry-Level Job

New college graduates are finding that many entry-level jobs have disappeared or require a higher level of skill than used to be commonly needed. The high unemployment rate for people age 20–24—11.3 percent in July—reflects this environment. According to The Wall Street Journal, automation is a key factor contributing to this trend.

Automation has eliminated many entry-level jobs in several industries, such as finance and insurance. Credit analysts, loan officers, and especially insurance underwriters have seen demand tapering off. For example, employment of insurance underwriters has shrunk by 13% from 2003 to 2013. One finance industry insider estimates that it now takes 30 percent less staff time to complete valuation calculations, thanks to software that analyzes financial statements.

To be sure, automation has expanded entry-level jobs in other industries. For example, it is estimated that entry-level jobs for computer systems analysts have increased by 20 percent over the past decade. Automation also has created new occupations, such as social-media manager. This kind of work did not even exist 10 years ago, but now employs thousands of workers, especially young ones.

The onslaught of automation has happened for reasons beyond increases in computing power. The Great Recession has caused firms to seek ways to squeeze greater productivity from workers, especially new hires.

This trend has changed the nature of the work that recent graduates do in industries other than technology. Instead of crunching spreadsheets and preparing reports, entry-level workers may be expected to meet with clients, identify problems with entrenched procedures, or serve on teams for new product development. New hires therefore have greater need for skill at interpersonal relations, communication, and critical thinking.

Traditionally, college grads in entry-level jobs paid their dues in positions requiring technical skills commonly taught in the classroom. Only after some years at this level were these workers expected to have mastered the soft skills needed for more complex assignments. But now the model for career growth seems to be changing, and ironically this is happening just in time for the millennial generation, who are notorious for their impatience with the traditional model.

Young workers may be eager to take advantage of these new opportunities, but to succeed in this environment, they will need to have acquired skills that usually are not taught in the classroom. This is why internship is such an important adjunct to a college education these days. In effect, internship is the new entry-level job. And this implies that interns need to avoid placements in which they are locked away in a windowless room doing technical tasks. Their internships need to include experiences that will build their soft skills.

For more tips on getting a lot out of an internship, I recommend the guide developed by the University of Michigan, adapted from Randall S. Hansen, Ph.D.: Making the Most of Your Internship (PDF).

How Bad-Mouthing Can Get You a Job

There are many ways to write a cover letter, but one caught my attention recently. A young man I know, son of a friend, got a job offer by using a cover-letter strategy that seems counterintuitive: He bad-mouthed an employer’s product.

First, let me give you a little background to set the scene, while protecting my young friend’s identity. I’ll call him Jack.

Jack has a bachelor’s in computer science, and at age 23 he has just earned a master’s degree in a field that makes a lot of use of computers. While doing the coursework (online) for his master’s, he held a full-time job in this field. He has worked part-time in this same field since high school. This means Jack already had a pretty strong resume to bring to the job search.

He also used a good strategy for uncovering jobs: Rather than look only for posted jobs, he wrote directly to the kinds of companies that employ people with his background. One obvious target was the company that publishes the specialized software that he uses every day on his job. By doing some online snooping, he was able to identify the head of HR and find that person’s e-mail address.

I generally advise against contacting HR and instead suggest writing directly to the head of the department where you want to work. But Jack got good results with his method.

And perhaps the key to his success was that he concluded his cover letter by writing, “I HATE your software. Let me help you make it better.”

The head of HR phoned Jack and talked about what Jack disliked (and liked) about the software. This gave Jack a great opportunity to demonstrate his command of the software package and his understanding of the features that contribute to a good user experience. The initial phone conversation led to a few Skype interviews, and eventually the company offered him a job doing software testing.

In the end, Jack decided not to take this job. One important reason for his decision was that the employer is in a very distant state, and Jack (who has lived at home until now) is presently interviewing for a job closer to home. He also was not certain he would like to do software testing.

But the lesson from his job-search experience is still valid, and it applies to interviews as well as to cover letters: Sometimes the best way to interest employers is not to tell them what they want to hear.

A New Skill is Identified: Shopping

Recently I read about a new business, called Instacart, that does your grocery shopping for you. This is different from well-established grocery services, such as Peapod and FreshDirect, because the company owns no food warehouses or trucks, and you don’t have to place your orders many hours in advance. Instead, mere minutes after you place your order on the Web, Instacart enlists someone in your community—an independent contractor, not an employee—to go to one or more existing food stores, buy what you ordered, and deliver it to you in the contractor’s own car.

The shoppers earn between $15 and $30 per hour, depending on how fast they deliver the goods. This is considerably better pay than most jobs at a supermarket, but (like so many work arrangements that the new economy is creating) the work offers no fringe benefits. It is also not likely to provide full-time work, although for some people that’s an advantage.

Instacart makes its profits by charging a flat delivery fee ($3.99 for most orders), plus a markup on the store’s prices. One estimate is that the markup averages about 20 percent.

In some ways, this work arrangement resembles the ride-sharing services Uber and Lyft, in that it uses the Web to match consumers of a service with fairly ordinary people who have that service to offer. One important difference is that the service that Instacart offers—shopping—is not regulated, as taxicab transportation is. Instacart also is unlikely to displace many existing workers, because there are very few professional grocery shoppers, certainly compared to cab drivers.

The work does not require any formal credentials, but it does require a skill that you will probably not find in any existing skill taxonomies: shopping skill. My shopping skill was tested recently when my mother was incapacitated by a hip fracture and I had to buy her groceries. Unlike an Instacart shopper, I was tasked with the additional goal of finding the best prices. As a child of the Depression, my mother knows the going prices of nearly every item she customarily buys at several markets in her Manhattan neighborhood, including the open-air green market in Union Square. Instacart clients don’t require this kind of accountability.

However, Instacart clients do expect speed. This means that the shoppers must know what stores stock a wide range of grocery items and have them in high quality, plus where the items are located in the store. Every year about this time, when summer berries and fruit come ripe, I wander helplessly through the aisles of my local supermarket, trying to find the Sure-Jell pectin for making jams. Is it in the aisle with cooking supplies? Gelatin? Seasonal items? I’m never sure, and even the clerks (if you can find one) sometimes send me to the wrong aisle.

It will be interesting to see whether this kind of work continues to expand beyond ride-sharing and grocery-shopping. Tyler Cowen, an economist at George Mason University, sees the bright side of this trend: “When you ask what kind of niches we’ll see for people who used to be in traditional middle-class jobs, this is the kind of labor that could fit into that. I wouldn’t want to suggest people will become grocery-delivery millionaires, but if you don’t have a college education but you’re smart and responsible, could you make a living doing this and maybe piecing it together with some of these other kinds of jobs? Absolutely.”

I’m not so sanguine about this trend. It reminds me of the old joke that there will always be work because people can do each other’s laundry. That’s true, but as our economy relies more and more on imported manufactured goods, we need to find work that leads to exports.