Conventional wisdom has held that legions of college students have long opted to pursue business majors as a means to advance themselves economically -- and that wintry job markets motivate even more students to choose finance over philosophy.
But as the current economic downturn drags on and hiring continues to lag, interest in business among undergraduates appears to be static, even flagging in some circles, according to federal and college data and a nationwide survey of incoming freshmen.
The drop has been particularly stark at Pennsylvania State University, which, since 2008, has seen a 30 percent decline in undergraduates accepting offers from its Smeal College of Business, said Anne Rohrbach, executive director of undergraduate admissions. “Fewer students see that a business degree guarantees career and financial returns,” she said via e-mail. She attributed this decrease, in part, to Smeal limiting its enrollment and admitting students with a stronger record of academic achievement, which can depress yield rates. But the number of applications to Penn State's program during this period has dropped by nearly the same percentage as acceptances, she said.
Rohrbach also thinks the larger economic picture has played a role. “With the headline news of the recession, students are not as certain about a future in business," she said. The ranks of the undeclared, always well-populated, have grown, she said, as a result of the uncertain job market.
Penn State is not alone. The share of business majors in the University of Central Florida's undergraduate student body is down by nearly 15 percent this semester relative to 2008. At Purdue University, nearly 13 percent fewer students enrolled at the Krannert School of Management this semester compared to two years ago, and in 2009 the number of applicants dropped 26 percent from the year previous before edging back up this year. The tumult in the business world has made students and their parents more wary about job prospects after graduation, said Mitch Warren, senior associate director of admissions at Purdue. "There are cyclical trends in many areas; business is no different," said Warren, who added that these cycles of popularity need to be seen as part of a longer-term pattern of natural ups and downs. "Things that are doing quite well now in five or six years might not be."
Still, such shifts are by no means universal; elsewhere, enrollments have been stable or even climbed modestly, as at the University of Oregon and Indiana University.
But beneath such anecdotes lies a more notable and widespread change, according to researchers from the Higher Education Research Institute at the University of California at Los Angeles. Researchers gathered data from nearly 220,000 first-year students at almost 300 colleges, and asked what major and career path they planned to pursue. Results in 2009 revealed that 14.4 percent of first-year students planned to major in business -- a more than 3 percentage-point drop since 2006 -- and a low not seen since the Ford Administration. "They will likely be graduating with higher debts and have shifted majors and career aspirations away from business fields," researchers wrote in their summary of findings  from the American Freshman survey.
Percentage of Freshmen Interested in Business as a...
John Pryor, director of the Cooperative Institutional Research Program at UCLA, which administers the survey, suggested that not just debt, but also the perceived lack of career stability in business may be fueling this shift. "Even though students have higher debt, some are seeing that business is not as likely to help them pay that debt back," Pryor wrote in an e-mail. "We also saw business employees losing jobs and having lower incomes, so perhaps students see business as not providing as sure a track towards economic freedom as in the past."
At the same time, it is unclear whether business degrees are any less desirable than they were before. "In terms of the job outlook, while our surveys show that overall demand has risen/fallen with the economy, business majors are consistently cited as among the majors employers expect to target," Mimi Collins, director of communications for the National Association of Colleges and Employers, wrote in an e-mail.
The Association to Advance Collegiate Schools of Business strongly cautioned against reading too much into the future plans of first-year students, and said that interest in the major remained strong. "We graduate far more students than indicated interest coming in," said Jerry Trapnell, executive vice president and chief accreditation officer of the AACSB. He added that he had seen no real dip among the 400 business schools in the U.S. that have been accredited by his association (he estimated that there are approximately 1,800 such programs, in total, operating nationwide).
"We haven’t seen a decline in undergraduates. I’ve talked to a lot of deans," Trapnell said. "I can count on one hand the number saying that the number of students has dropped. Most say it’s up, or level, or strong."
Nor has the shift in interest away from business at the front of the pipeline translated into a marked change at the other end. While students may not think they want to major in business when they start college, many still choose that path by the end of their undergraduate careers. About 21 percent of bachelor's degrees awarded in 2008 were in business, a rate that has remained essentially unchanged since 2001, according to the National Center for Education Statistics's higher education general information survey . It is worth noting, however, that graduates in 2008 would have declared their intent to major in business by 2006, if not sooner -- well before the financial sector's collapse. In addition, it will be several years before the rate of bachelor's degrees awarded in the field will register the impact -- if any -- of the drop in first-year interest.
Many disciplines experience ebbs and flows in popularity. The future health of the humanities  lately has generated concern. Tightening budgets and the shaky economy add another layer of complexity, and business programs are not immune. "Yes, business schools are affected by the economy somewhat, but we have not seen a precipitous drop in enrollment at this stage -- that we can foresee or tell," said Trapnell. He also said that the share of business majors tends to run counter to the cycles of recession and booms.
The longer-term pattern described in federal statistics and in UCLA's survey suggests that interest in business peaked a long time ago -- in the late 1980s. It was in 1987 that the share of incoming freshmen who planned to major in business reached its highest point, at more than 25 percent -- a far cry from the 14.4 percent planning to do so in 2009. About 24 percent of freshmen in 1987 said they planned to launch a career in business, which was double the percentage of those expressing similar plans in 2009, according to UCLA’s survey. In fact, 2009 marked the lowest share of freshmen to articulate that planned career path since 1976, when UCLA began asking first-year students about their career aspirations.
At the back end of the pipeline, the percentage of bachelor's degrees awarded also hit its high-water mark in the late 1980s, shooting from 15.5 percent in 1976 to 24 percent a decade later. In the early 1990s, the share of bachelor's degrees awarded in business crept down slightly, to about 21 percent, where it has remained ever since, through booms and busts -- albeit with another drop later that decade, since recovered.
It is unclear what made the late 1980s the heyday for interest in business. Some have suggested that this was the decade when the status of CEOs shifted in the popular imagination from corporate steward to rock star. After all, 1987 was the year that Michael Douglas, portraying corporate raider Gordon Gekko in the first Wall Street film, declared that "greed, for lack of a better word, is good."
E.J. Reedy, manager of research and policy for the Ewing Marion Kauffman Foundation, has analyzed the UCLA data and said finds the upsurge of interest in the 1980s puzzling. He also suggested that recent shifts away from a formal business major may reflect a difference in emphasis and avenue more than anything else, because college-age students continue to express a strong desire to start their own ventures. A recent survey  of 1,000 18-to-24-year-olds revealed that four out of 10 respondents wanted to start, or already have started, businesses of their own -- and that the most common reason for wanting to do so was to build something for the future. "I think today’s youth have a lot of interest in making an impact on the world," said Reedy. "It can happen through business and through the nonprofit sector. There are a lot of different avenues."
Or perhaps Gordon Gekko has been replaced in the popular imagination by Bill Gates or Mark Zuckerberg -- information-age iconoclasts who studied computer science, not business (and dropped out of college, by the way), to become corporate titans. The trajectories mapped out by these CEOs are anomalies -- most entrepreneurs don't launch their businesses until 10 or 15 years after they graduate, and they tend to be more successful if they are more educated, said Reedy.
But the path to riches trodden by Gates and Zuckerberg has not gone unnoticed by students. According to the American Academy of Arts and Sciences, it is not business, but the sciences  -- a broad category encompassing behavioral, health, life, medical, and physical sciences -- that now command the greatest share of bachelor's degrees.