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:
As millennials grew into the largest generation in the workforce over the past few years, we’ve been treated to a deluge of breathless media coverage about how uniquely difficult they were to deal with and how they were ruining everything. From chain restaurants to jewelry, along with job loyalty and the 9-to-5 workday, the list of American institutions millennials are charged with killing is nearly endless. Meanwhile, business leaders have wrestled with the seemingly vast complexities their entry to the workforce has created. Most of the work-related challenges have proven to be more myth than truth, as our research at CEB (now Gartner) has found, along with other investigations by the Economist and the Pew Research Center, but the conventional wisdom endures that millennials are entitled, need constant hand-holding, and are therefore unusually hard to manage.
It appears the newest generation entering the workforce, Generation Z, is being similarly prejudged, according a recent survey of managers profiled by SHRM’s Dana Wilkie. In it, 36 percent of managers said they believed that Generation Z would be more difficult to manage than previous generations, while 29 percent believe it will be more difficult to train employees from Generation Z, 26 percent say it will be more difficult to communicate with the newest generation, and even 20 percent of millennial managers believe Generation Z represents a threat to company culture.
“There is a tendency and expectation of instantaneous gratification,” said Jeff Corbin, CEO of APPrise Mobile, the employee communications company which conducted the study. “They want the answers now. They are all about tweets and short responses. As a result, many Gen Zers are going to be too quick to respond rather than deliberate and thoughtful. … [T]he concept of professionalism, formality and quality in communications may be a foreign one to many in Gen Z, which could be problematic to older generations.”
In its 2017 Young Workers Index, PwC surveyed the economies of the 35 OECD member countries, creating an indexed ranking of the countries’ expected productivity from younger workers. Switzerland, Iceland, and Germany, were the top three, while the US finished 12th and the UK landed in 18th: both moved up two spots from last year’s rankings.
Germany’s result is probably the most impressive given that it also has the fourth-highest GDP in the world. The US has the world’s largest GDP while the UK is fifth in the measure of economic productivity. France, which stands sixth in GDP, was ranked 29th in the Young Workers Index while Canada, with the world’s 10th-largest GDP, was ranked sixth.
The study also looked into the effects automation will have on job prospects for workers in this age cohort. It found that 39 percent of jobs for US workers aged 15-24 are at risk of being lost to automation, compared to 24 percent in Japan, 28 percent in the UK, and 38 percent in Germany.
One of the metrics tracked in the Young Workers Index, the NEET (not in education, employment or training) rate, is identified as a key metric for overcoming the risks of automation and driving growth. The study claims that if all 35 of the OECD countries lowered their NEET to that of Germany (9.3 percent), it would lead to $1.2 trillion in GDP growth. For the United States, it predicts a $428 billion, or 2.2 percent, rise in GDP by lowering NEET from 15.8 percent down to Germany’s level.