WASHINGTON (Reuters) - Wall Street may be losing its luster for new U.S. college graduates who are increasingly looking to the government for jobs that enrich their social conscience, if not their wallet.
In the boom years, New York's financial center lured many of the brightest young stars with the promise of high salaries and bonuses. But the financial crisis has tainted the image of big banks, and with fewer financial jobs available, Uncle Sam may be reaping the benefit.
"Some grads might have seen two of their older siblings go through the dot-com crash and the emptiness of that, and now the Wall Street crash, just chasing after the big bucks," said John Challenger, chief executive of job placement company Challenger, Gray & Christmas.
Some of the appeal of Washington simply reflects the grim reality of graduating in the midst of the worst recession in decades. The U.S. unemployment rate jumped to 9.4 percent in May, which means new graduates are competing with a large pool of older unemployed workers for a limited supply of jobs.
A report from the National Association of Colleges and Employers projected a 21.6 percent decrease in new hires among college graduates. Almost every sector was hit, with banking taking the biggest blow, dropping 70.9 percent.
"Students don't see the private sector as being as viable this year," said Edwin Koc, director of strategic and foundation research for the Pennsylvania-based NACE.
Of the roughly 1.6 million students who recently graduated from college, only 19.7 percent had secured jobs upon graduation in May, according to NACE's 2009 student survey.
But Labor Department data shows employment in the Washington area has increased since early 2008, even as other regions have lost jobs.
"D.C. is the only place where we can point to that is actually adding jobs right now, and we also know that the government is hiring thousands of people to oversee both the (economic) stimulus package and all the associated projects," said Marisa Di Natale, Senior Economist for Moody's Economy.com.
Challenger said the excitement surrounding the election of President Barack Obama, who enjoyed huge support on college campuses, was also attracting young graduates to government and government-service contractors.
Britini Wilcher is one of them. Wilcher, a recent graduate from Spelman College in Atlanta, spent two summers as an intern for Merrill Lynch, which was hard hit by the financial crisis and taken over by Bank of America Corp last year.
When it came time to look for full-time employment, Wilcher wanted to do something with a bigger social impact.
The California native will be working in Washington for a government consulting firm where she will specialize in economic development.
"It's becoming trendy to take your community into your hands and give back, which is a good thing," Wilcher said. "People are empowered by the current political climate."
The shift in attitudes is also apparent in graduate school enrollment. At Morehouse College, more graduates are opting to study public policy, said Douglas Cooper, director of career services at the college's division of business and economics.
That is a big change for Morehouse, which has a long history of sending its students on to Wall Street, thanks in part to a relationship solidified by former college president and current Bank of America Chairman Walter Massey.
"Clearly, students who have historically planned on making a beeline to Wall Street have rethought that or are rethinking that," Cooper said.
The share of Morehouse business students going into finance has decreased to 37.5 percent this year from 44 percent a year earlier, while the number of students going on to graduate school has almost doubled.
Most students who continue to graduate school this year are planning to go into government-related fields, Cooper said.
Some think the shift will have longer-term consequences in employment trends as the baby boomer generation approaches retirement, opening up career paths in government and service.
"You may see a whole generation of some of the very best students that decide to do public service rather than business," Challenger said.
Reporting by Wendell Marsh; Editing by Cynthia Osterman