It’s Not All Good News for This Year’s Graduates

It’s Not All Good News for This Year’s Graduates

Most of this year’s annual graduation season surveys in the US have indicated that the class of 2018 will enjoy a bright start to their careers, with a tight labor market and lots of demand for college-educated talent enabling them to demand the highest starting salaries in years. A new analysis from Korn Ferry, using a large data set of 310,000 entry-level positions from nearly 1,000 organizations, finds that new entrants to the professional job market this year might not be making big gains after all, notwithstanding their excellent prospects for finding a job:

Based on the analysis, 2018 college grads in the United States will make on average $50,390 annually. That is 2.8 percent more than the 2017 average ($49,000). “With the 2018 U.S. inflation rate hovering just over 2 percent, real wages for this year’s grads are virtually flat,” said Korn Ferry Senior Client Partner Maryam Morse. “However, with competition for top graduate talent so fierce, it’s critical that companies pay competitively, create an engaging culture and provide clear paths for advancement.”

In other words, this analysis points to the fundamental quandary of the US labor market right now: employers have every reason to pay more for talent, but wages aren’t growing as quickly as the law of supply and demand should compel them to.

Korn Ferry’s analysis also highlights the variation in starting salaries among major US cities: A graduate looking for work in Atlanta can expect to earn an average of just under $50,000, compared to over $60,000 in New York and nearly $64,000 in San Francisco (not adjusted for cost of living). The study also calculated average entry-level pay in various professions: A new customer service representative earns on average $35,000, an accountant $48,000, a registered nurse just under $55,000, and a software developer $67,000.

Another new report, from the left-leaning Economic Policy Institute, considers this graduating class’s prospects by analyzing data on recent college graduates aged 21 to 24. While EPI does not dispute the strong labor market position of these graduates compared to recent years, it also argues that the class of 2018 can and should be doing better than the class of 2007:

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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.

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Wages Still Declining for Recent College Grads in China

Wages Still Declining for Recent College Grads in China

Millions of college students are graduating from China’s universities this year into a slowing economy where job prospects and starting salaries are on the decline, Bloomberg reported recently:

Monthly salaries plummeted 16 percent to 4,014 yuan ($590) this year for a second-straight annual decline, data from recruitment site Zhaopin.com show. The Ministry of Education estimates that 7.95 million will graduate this year, almost the population of Switzerland. China is losing competitiveness in lower-end industries from textiles to furniture as wages and other costs surge. Policy makers’ efforts to offset that by shifting the economy toward higher-technology industries and services — from aircraft and robots to research and development — may get a boost from an army of highly educated and low-paid graduates.

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Class of ’17 Have Strong Job Outlook, but Set Sights High

Class of ’17 Have Strong Job Outlook, but Set Sights High

This year’s crop of college graduates, some of the first recognized members of Generation Z to enter the workforce, are doing so at an opportune moment. In the US, the college wage premium has never been higher, meaning these grads stand to earn much more than their peers without degrees. The graduate hiring market is also robust, with CareerBuilder reporting last month that 74 percent of employers plan to hire recent college graduates this year, the best outlook since 2007 and seven percentage points above last year’s figure. In terms of pay, CareerBuilder found that half of employers plan to pay graduates higher salaries this year than last, and 39 percent will pay starting salaries of $50,000 or more a year, up from 27 percent last year.

However, the job search site also found that “some employers are concerned that new college grads may not be ready for the workforce”:

Seventeen percent do not feel academic institutions are adequately preparing students for roles needed within their organizations, a decrease from 24 percent last year. When asked where academic institutions fall short, these employers cited the following concerns:

  • Too much emphasis on book learning instead of real-world learning: 44 percent
  • I need workers with a blend of technical skills and those skills gained from liberal arts: 38 percent
  • Entry-level roles within my organization are more complex today: 23 percent
  • Technology is changing too quickly for an academic environment to keep up: 17 percent
  • Not enough focus on internships: 17 percent
  • Not enough students are graduating with the degrees my company needs: 12 percent

Meanwhile, Fast Company’s Lydia Dishman flags another new survey from iCIMS, which finds that graduates have high expectations for their job prospects, but even in today’s employee-driven labor market, these expectations may be a bit unrealistic:

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US College Grads See Better Hiring Prospects, Higher Salaries

US College Grads See Better Hiring Prospects, Higher Salaries

At the same time as a bachelor’s degree has become a must-have for many jobs that didn’t used to require it, the cost of acquiring one coupled with the diminishing salary premium graduates stand to earn has led some observers to dispute the value of a college education in today’s job market. While the US job market is much kinder to candidates today than it was five or seven years ago, the outlook for recent graduates seems a mixed bag, with different studies taking different views of their employment prospects.

The latest news for graduates is good, however, with Michigan State University’s annual report on the graduate job market showing that for graduates of every level, hiring is up and starting salaries are also relatively high. Lauren Camera outlines the findings at US News and World Report:

Among many other things, the findings showed that the hiring of college graduates across degree levels is expected to increase by 23 percent, largely as a result of company growth and employee turnover. For those graduating with bachelor’s degrees, a 19 percent spike in hiring is expected. But the biggest hiring increases will be seen among those who’ve garnered associate degrees – a sector expected to see a 37 percent increase – and those with a master’s degree in business administration, projected for a 40 percent increase.

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