Gen Z Is Overestimating the Average Starting Salary by $50K, Survey Finds
New college grads are in for some reverse sticker shock. A recent survey by Clever Real Estate found that while the average starting salary for college graduates is $55,260, current college students expect to make $103,880 at their first job.
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“I believe the gap [between salary expectations and reality] is due to Gen Z students realizing how much it costs to live a comfortable life in the United States,” said Danetha Doe, economist and spokesperson for Clever Real Estate. “For example, rent has increased 149% since 1985, while income only grew 35%. Current graduates are simply asking for their compensation to reflect the cost of living in the United States.”
Here’s a closer look at salary expectations versus reality for this generation.
Salary Expectations Are Rising
In 2019, the college students surveyed by Clever expected to make $57,964 — about $10,000 more than the average starting salary at the time, which was $47,000. Just three years later, college students are expecting to make nearly $46,000 more.
“One big reason is the rate of inflation,” Doe said. “Inflation in 2019 hovered around 2%, whereas inflation in 2022 is hovering around 8%. Everyday expenses are much higher in 2022 than in 2019. Therefore, salary expectations are increasing to match the rise in the cost of living. Another reason could be the psychological impact of the pandemic. For some folks, the pandemic revealed the desire to work less and enjoy life more. In some cases, this means an individual will need a higher salary. Current graduates are unapologetic about asking for a salary that allows them to prioritize their well-being.”
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The Gap in Expectation Versus Reality Is Significantly Higher for Certain Majors
The students surveyed cited the ability to earn higher wages in their careers as the No. 1 reason they are attending college — yet some are still choosing majors with notoriously low salaries. This can lead to significant gaps between salary expectations and reality.
The career path with the biggest gap between the two is journalism — students entering this field expect a starting salary of $107,040, when in actuality, the average starting salary is $44,800. Humanities and liberal arts students also have too-high salary expectations. The expected starting salary for these majors is $105,790, but the actual starting salary for graduates with these majors is $46,500.
Many Recent College Grads Are Dissatisfied With Their Starting Salaries
Given their high salary expectations, it’s not surprising that recent college grads who have accepted job offers are often unhappy with their starting salaries. Among students who have jobs lined up after graduation, about half (49%) are not satisfied with their starting salaries, and about 1 in 3 students (31%) doubt they’ll make enough money to live comfortably after graduation.
Recent grads are contending with a number of money fears, including the inability to afford basic expenses (30%), inability to do “fun” things (29%), having to work a second job (29%), inability to pay off student loans (29%) and taking on credit card debt (29%). And these fears may not be unwarranted. The cost to live comfortably in major cities is often much higher than the average starting salary of $55,260. A single adult would need to earn at least $74,282 in after-tax income to live comfortably in San Francisco, while a single adult would need to make $66,214 to live in New York City, Clever reported.
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This article originally appeared on GOBankingRates.com: Gen Z Is Overestimating the Average Starting Salary by $50K, Survey Finds
