Class of 2018 Has High Expectations for Pay and Career Progression

Class of 2018 Has High Expectations for Pay and Career Progression

Every spring, the talent acquisition software company iCIMS surveys college graduates in the US to gauge their expectations and ambitions as they prepare to enter the workforce. This year’s survey, which SHRM’s Roy Maurer flagged earlier this week, finds that this year’s graduating class is expecting higher starting salaries than their peers in recent years: On average, they expect to earn $54,010 in their first job, slightly more than the class of 2017 and almost $8,000 more than the class of 2016. Last year’s graduates were a bit unrealistic in their pay expectations, despite a tight labor market, with recruiters reporting starting salaries well below grads’ aspirations.

This year, Maurer notes, employers’ pursestrings are looking a little looser:

“This year’s graduates are confident in their ability to find the job they want after graduation, and a well-paying one at that,” said Susan Vitale, chief marketing officer at iCIMS. … The data revealed that recruiters estimate they will pay entry-level employees $56,532 on average this year—a substantial jump of more than $10,000 since last year, when the estimate was $45,361 on average. “For employers, even with an abundance of educated candidates, nearly 80 percent of recruiters are finding filling entry-level positions more challenging than they did three years ago,” Vitale said. “In response, recruiters have upped their game by offering better salaries and benefits, increasing training and development, and enhancing their employee referral programs.”

Maurer also highlights another survey from Yello, which found that a majority of graduates were putting priority on career advancement in their first job searches. Nearly half of respondents to the Yello survey said they were planning to stay with their first employer for more than three years, in another point of evidence against the myth of the millennial job hopper (though these graduates might properly be classified as members of Generation Z). These findings, Yello CEO and co-founder Jason Weingarten told Maurer, suggest that recruiters should be focusing their value propositions for graduates on opportunities for long-term growth and development. Some employers are already responding to the demand these surveys show for higher salaries and clear career paths, such as Morgan Stanley, which recently raised starting pay and accelerated the promotion path for its junior investment bankers.

As in recent years, women graduating college reported significantly lower salary expectations than their male peers: $49,002 vs. $65,558. This reflects women having more realistic expectations, Vitale told Maurer, as well as the fact that women tend to enter lower-paying fields. Previous research has indicated that the gender pay gap among recent college graduates has widened over the past two decades, indicating that women are being sorted into less lucrative careers from the outset.

Overall, however, the iCIMS survey reflects the healthy US economy and the tightness in the labor market. Another annual survey released this week by CareerBuilder finds that 80 percent of employers plan to hire graduates from the class of 2018 and that nearly half of employers plan to raise the starting salaries they are offering these candidates.

College graduates have been doing consistently well over the past few years, since the class of 2016 entered the labor market with historically strong job prospects and high starting pay. The college wage premium is also at a record high, according to another study last year, meaning that bachelor’s degree holders enjoy a huge advantage over young people with high school diplomas alone. It’s not all roses, however: The rising wage premium reflects declining demand for uneducated workers as much as growing demand for college degree holders. Underemployment is relatively high among recent graduates, and many college graduates struggle with high levels of debt—to the point that student loan repayment assistance is becoming an increasingly attractive employee benefit—and even with starting salaries on the rise, 64 percent of college seniors told iCIMS they would likely work side gigs to supplement their main income