Six-Figure Salaries After Graduation
Salary expectations are high for some college graduates who are searching for their first job opportunity, and a starting six-figure income. In response to a tight labor market, some employers are offering new graduates this level of compensation for high-demand jobs. However, not every position starts with a six-figure salary, and there can be a disconnect for many job seekers who expect this salary after graduation.
Introduction of six-figure salary trends for graduates
According to the U.S. Bureau of Labor Statistics, during a 12-month period ending in March of 2022, a 4.5% increase in compensation occurred for civilian workers. Making the average compensation for those positions at $40.90 per hour or $78,528 per year. As of June 2022, the average six-figure salary among workers in the United States was $100,623, according to ZipRecruiter.
Clever’s Generation Z Salary Expectations Survey of March 2022, had over 88% believe they would earn $103,880 after graduating, versus the real average salary of $55,260. Clever’s survey from 2019, had closer expectations for starting salaries with students expecting to earn $57,964 versus the average salary of $47,000.
Jobs that require a bachelor’s and typically pay over $100,000, according to U.S. News and World Report, include:
- Actuary – $111,030
- Business Operations Manager – $103,650
- Marketing Manager – $142,170
- Pilot – $130,440
- Sales Manager – $132,290
Clever respondents had skewed expectations, with students majoring in liberal arts, especially journalism, having the largest gap. Journalism students said they were expecting to make $107,040 after graduation, which is 139% more than the average salary of $44,800.
Expectations of Generation Z for seeking six-figure salaries
Clever’s survey found that of the 1,000 undergraduate students pursuing a bachelor’s degree, who already arranged their future job, only 51% found the starting salary satisfactory.
Also, 31% of the respondents had doubts they would make enough income in order to live comfortably after graduation. Among their main concerns were:
- Not affording basic expenses – 30%
- Unable to do “fun” activities – 29%
- Having to get a second job – 29%
- Paying back student loan debt – 29%
- Getting into credit card debt – 29%
When asked if they would accept a lower salary, 13% said they would not lower their expectations, due to fear of burnout from needing to take a second job, and the earning potential that would be lost over time.
However, of those surveyed by Clever, those who were willing to compromise would consider a job opportunity that had good benefits (39%), location (31%) and remote working options (30%).
According to the Deloitte Global 2022 Gen Z and Millennial survey, 47% of Gen Z said they felt stress and anxiety on a regular basis due long-term financial concerns, and 42% said their stress was from worrying about daily finances.
In a May 2022 report, Federal student loan debt reached 1.762 trillion in the United States. The amount of student debt for attaining a bachelor’s degree at a public university is currently averaging $30,030, as reported by Education Data.
How Generation Z is influencing six-figure salaries for everyone
With the cost of living increasing, Generation Z is concerned about their financial future and looking carefully at the compensation being offered before working at any company.
As employers begin to offer higher compensation packages, to attract new talent to their company, they should also be aware of the potential of pay compression. According to salary.com, this is when a newly hired employee receives a salary that is almost equal to a long-term employee’s current salary. Potentially it’s also possible to create a salary inversion, according to SHRM, where new employees get paid more than the existing employees, usually due to a competitive job market.
Potential problems resulting from pay compression:
- Low morale for long-term employees
- Experience not being recognized
- Turnover tends to increase
- Trust in the employer is eroded
- Potential lawsuits for discrimination
Because the current job market determines the expected compensation for particular job skills, the potential of pay compression is possible. In order to maintain retention with existing employees, the following remedies can be helpful in achieving compensation equity.
Solutions that can help address pay compression:
- Review the compensation plans – to see where pay compression is possibly occurring
- Make the salary information transparent – explain how compensation is determined
- Offer to match the new hire salary – if this is not currently feasible, set a timeline
- Propose other types of compensation – stock options, new title or promotion
- Develop a future compensation plan – more frequent reviews and salary discussions
How employers are responding to six-figure salaries
In a June 2022 BBC article, titled, “Gen Z: The Workers Who Want it All,” explains in addition to excellent compensation, this generation strives for their work life to reflect their values and have a healthy balance including:
- Company values that embrace best practices – for diversity and inclusion
- Benefits that include comprehensive mental health – to cope with stress and burnout
- Flexible work environment that includes remote work – to have a better work/life balance
The overall value an employer can offer with their compensation package, including a competitive salary will encourage retention and make all employees happier.