Money Matters in Early Career Hiring

Money Matters in Early Career Hiring

While there is plenty of talk about new grads wanting a hybrid work environment and more life balance, salary is still the most important factor when considering a job. According to a national survey from WalletHub, 46% of the students said the goal is to make as much money as possible in their professions, instead of pursuing what they are passionate about. The emphasis on pay versus passion is likely due to concerns about paying back student loans – 35% of those surveyed cited the ability to pay back student loans as the top post-graduation fear – along with the high cost of living.

Another report by Handshake, found that more than half of this year’s graduates have student loan debt, and of those, more than two-thirds (69%) say their debt will influence the jobs they consider upon graduation. In addition, money concerns are the reason why 33% of 2024 grads plan to take on a second job – freelance, gig, or part-time work – to supplement their full-time position.

It’s true that the Class of 2024 is carrying a record-high student loan debt – more than 43 million Americans hold federal student loans, with a total balance of more than $1.7 trillion! And, the average student loan is $38,000, with many balances much higher. When coupled with the high cost of rent and other expenses, these grads are feeling more pressure to pursue financial security. As one student stated in the Handshake survey:

“I will highly consider jobs that will fund a graduate degree because I do not want more debt. I will also feel more inclined to work for a company that offers assistance with student loans or has higher pay to help me pay off my loans.”

Show Me the Money

Despite these financial concerns, most recent grads are hesitant to negotiate their salary – only 24% say they plan to do so. The most common reason for not negotiating is fear of losing a job offer, followed by concerns of making a bad impression. Another 43% simply don’t know how to negotiate. Which is why, according to Monster, so many graduating students want to see the salary upfront, either listed in the job description or discussed in the first interview. In fact, they may not pursue a job if salary is not openly discussed.

There is good news for the Class of 2024: According to a Bankrate analysis of NACE data, starting salaries for all majors are expected to be higher than last year. The average projected starting salary in the U.S. for recent grads with a bachelor’s degree is $68,516. While the cost of higher education has “gotten out of hand,” statistics show that those with a bachelor’s degree average 50% more earnings than those with just a high school diploma.

In fact, Gen Z college graduates can expect “higher-than-ever salaries” when they enter the job market according to Nerdwallet, even when adjusted for inflation. Yet, many recent grads are not earning what they expected. A survey released by Real Estate Witch, a housing market research and review site, found that graduates expected to make around $85,000 at their first job and the minimum salary they would accept is around $73,000, well above current average starting salaries. These expectations are likely based on the rising cost of housing, especially for renters, and the big bite inflation is taking out of earnings.

Student Loan Assistance is a Growing Benefit

For companies who can’t offer salaries that meet these “expectations” or compete with larger corporations, providing a student loan repayment program can be an attractive benefit. According to Handshake, the number of job descriptions on their site mentioning student loan repayment assistance has more than doubled since 2019 to 3%, and that number is expected to continue to rise as companies look for a way to distinguish themselves and attract top talent.

Additionally, the U.S. tax code now allows for organizations to make the same contribution to student loan debt repayment as they can for tuition assistance, giving employers the opportunity to relieve some financial pressure for recent grads. Other creative benefits include offering housing subsidies, caregiver assistance, fitness club memberships, continued training, and of course, the ever-popular remote or hybrid work option, which can reduce the cost of work.

A Package Deal

Of course, a job is more than a paycheck for most people, and recent grads are no exception. Like generations before them, Gen Z has a unique perspective on work and life, and they have a list of things they find important when job hunting. For instance, they are more attuned to digital communication tools and expect to use them in the workplace. They place a high degree of importance on mental well-being and work-life balance, and because they are the most ethnically and racially diverse generation in history, they insist on DEI initiatives. Continuous learning and upskilling also rank high for this group.

Companies that want to attract and retain top talent from this pool of grads will need to create the “right package,” that addresses the Gen Z wish list. However, money still matters, and it should be at or near the top of the list.