That is why it's such a problem graduating into a down economy. If you can't get a job in your field, when the economy turns around, say it's in a few years, you will actually be at a disadvantage compared to fresh graduates. Fresh grads get a lot of slack, especially at big firms, they get put onto "graduate training schemes" and "fast-track programmes" and so on. In many companies there are only two entry routes, graduate or experienced. The experienced hires do the work, and the managers are from the graduate scheme. If you miss the window of the first and aren't yet the latter, you're a bit stuck. It's not the end of your career, but it's a disadvantage that will take years to work out.

It depends. I've found that there are certain "career resets" you can push to get a fresh start on your career. Grad school. Law/business school. Founding a startup. Nobody cares if you waited tables or bagged groceries for 2-3 years if you manage to get into Harvard Law afterwards.

In my case, I graduated and took a job at what I thought was a startup but turned out to be a slow-growing small business. As Marc Andreesen says, "these are great places to go if you don't want your career to go anywhere either." So I quit and founded a startup. It failed, but I learned enough hot skills to prove to my interviewers that I hadn't spent the last year and a half dicking around. Then I got into Google, and once you have Google on your resume, nobody cares that you spent two years working on JSF webapps for a company nobody's ever heard of.

I totally agree, but those are the "nuclear option" if you will. $100,000 in debt, and spending as much again on an MBA is not to be undertaken lightly.

I appreciate my great good fortune to be graduating into the early years of the dotcom boom... But when the NASDAQ imploded I had 3 solid years experience framed on my CV in terms of "I have done X using technologies A, B and C accomplishing result Y". That's what matters a few years out of college and without it it would be very difficult to "catch up" or even to get a foot in the door.

Luckily in the software industry that's an easy problem to solve. Get a job that pays the bills. Create a website/webapp in your free time and call it a business of which you are now the CEO. Learn and apply all the relevant tools and techniques.

Assuming it never generates enough revenue to get past the "hobby" stage, a few years from now you it will still have value in your resume. Someone who worked on their own project for years is always an attractive candidate for a programming job (at least to us).

I wouldn't call it "easy". To actually learn anything from it you would have to be 99% of the way towards really launching a business.

Why is this a problem? These people should just allocate their time to the new opportunities created by the downturn. I have several friends who are unemployed recent grads and they seem to be just sitting on their asses, sending out resumes, waiting for the economy to turn around. Why they aren't starting their own projects or seeking consulting work (I believe consulting / temping is somewhat counter-cyclical?) I can't quite figure out.

Seeking employment at a large company is only one investment strategy and perhaps not the best one right now given the fierce competition caused by the downturn.

Consulting/temping is very much pro-cyclical. The consultants and temps are the first to go when the economy goes down, and the last to be hired back.

Playing devil's advocate here (your suggestion is exactly what I'd do, and it's worked fairly well for me), but...

One reason they don't may be that it's almost never rational to start a new project over sending out a resume. The resume offers the possibility of immediate monetary payoff for relatively little work, and while the chances are low (particularly in this economy), they're certainly higher than the chances that your new project will succeed. The latter has no immediate monetary payoff, requires lots of work, and has risks that are so varied that you don't even have a framework for evaluating them.

It's only when you put a lot of these risks together in sort of a "career portfolio" that it makes sense to take them. Any individual project will probably fail, but together they give you the skills and experience that will a.) get you hired and b.) let you succeed more often with these independent projects.

Alas, in my experience most people don't take such a long-term view of their careers...

That consulting is pro-cyclical surprises me - I always figured that large corporations had some people who weren't terribly efficient and that in a downturn they would be cut and their workloads would be outsourced to a 3rd party, whom the employer wouldn't need to offer perks and raises and who would have to pay full FICA him/herself.

It's a huge pain to fire an employee - there're dozens of potential "wrongful termination" lawsuit hitches, and if you run into any of them, you've just cost the company more in legal bills than you'll ever save in that employee's salary. For that reason, companies usually will keep full-timers even if they aren't quite as efficient as consultants or new hires, because the costs of getting it wrong and inviting a lawsuit don't outweigh the marginal benefits. Unless the employee is grossly incompetent, in which case you both save more in lost productivity, and there's a lower chance of a successful lawsuit...

How many people hire consultants with no experiences? What would they consult on?

Anyway, personal projects are better than nothing but they aren't a substitute for commercial experience, which is about a lot more than just coding. It comes down to not knowing what you don't know. Employed programmers deal all the time with people saying "can we do X" where X is something you'd never considered and might require some research to figure out, and the actual code is simple when you come to write it. People working alone can't help but approach from the angle of "I can do Y, so that's what I'll do".