Starting Pay For Recent College Grads Could Be The Highest In The Past Decade, But There's A Catch
After taking out a teetering mountain of student loans, you'd think that the starting pay for recent college grads would be high enough to justify four years (give or take a victory lap) of all-nighters and group projects. Unfortunately, that hasn't been the case for many graduates. In 2012, the average initial salary of recent grads was less than $45,000, and in 2015, research from a consulting firm found that only a quarter of the classes of 2013 and 2014 earned $40,000 or more in a year. But before you consign your diploma to the pile of less-than-important papers stuffed into your desk, there's some good news. According to a study released last week by advisory firm Korn Ferry, the average paycheck for 2017 graduates is higher than last year's. In fact, recent grads might be earning more than they have in years.
Conducted by Korn Ferry's Hay Group division, the study compared the salaries of 145,000 entry-level positions in the United States. Researchers then used this data to project the salaries this year's crop of graduates can expect to make in their first job out of school. According to their results, the class of 2017 should make an average of $49,785 at first — a three percent increase since last year, when the average starting salary was $48,270. That might not seem like much, but the study notes that after adjusting for inflation, this is a 14 percent increase from what college grads were making in 2007.
Rising salaries are welcome news, to say the least, but there are a few caveats. For one thing, the study didn't represent all career fields, instead focusing on 25 specific jobs in different industries. For another, there are wide gaps in starting pay depending on the profession itself — not all bachelor's degrees are guaranteed to net a high-paying job. According to the Hay Group's research, software developers made the most money right off the bat ($65,232), followed by other positions in STEM fields. (Other studies have turned up similar findings.) Claims examiners and customer service representatives were among the lowest-paying, with salaries below $40,000.
Salaries even varied from city to city. When researchers compared salaries by location, San Francisco had the highest starting pay ($62,829), although it's worth noting that the city also has one of the highest costs of living in the United States.
Clearly, a college grad's starting pay is influenced by a number of factors, but that's not the only reason to take the study with a grain of salt. As TIME points out, it appears to have analyzed data from just the past 10 years, so it's a bit misleading to claim that salaries are at an "all-time high." Last year, the National Association of Colleges and Employers compared salary data since 1960, and after adjusting for inflation, it found that college graduates made an average of nearly $60,000 in the late '60s. That's a substantial amount more than the earnings for 2017 grads anticipated by the Hay Group study.
On the other hand, starting pay does appear to be on a steady rise. In 2016, Michigan State University's annual report on the subject found that paychecks for those with degrees has increased. In 2011, CNN Money reported that the salary for that year's graduates rose for the first time since the 2008 recession, and it's increased, albeit slowly, in the years afterward. It's also worth pointing out the ever-widening income gap between high school and college graduates.
Basically, the numbers show that having a degree does make a difference. You might not end up in the profession you dreamed about as a starry-eyed freshman — I certainly didn't — but nobody can predict the future. It looks like your college diploma doesn't belong in a desk pile after all.