In this blog, we’ve discussed at length the challenges facing the accounting profession today, most notably the pandemic and the shortage of qualified accountants coming out of America’s colleges and universities. In the face of the Great Resignation, how are CPA firms fighting back?
Countering the Great Resignation
Businesses and accounting firms are now offering bonuses and increasing salaries to recruit and retain CPAs, in reaction to staff shortages and record turnover, according to a recent Bloomberg Tax article. For some roles in recent months, employers are boosting their salary offers by as much as 25%.
If you’re an accountant today, you’re in hot demand! The largest CPA firms are jacking up their salaries, as evidenced by KPMG LLP announcing midyear raises in January. In addition, accounting firms are now offering flexible work, expanded paid leave, and other benefits to recruit new hires and keep existing employees from leaving.
Over a Decade of Frozen Wages
“The pandemic and the great resignation have really shone a spotlight on a problem that has been brewing for years,” said Liz Kolar, executive vice president of Surgent Accounting & Financial Education. “The accounting industry for some reason has just not moved with the rest of the country in terms of offering competitive salaries, and this has been going on for over a decade.”
Accountants could count on steady and financially rewarding work before the 2008 financial crisis, when wages were frozen or cut back. While other business sectors have raised salaries since then, CPA firms haven’t, resulting in a growing pay gap.
Salaries are rising in reaction to a shortage of new accountants. The number of accounting graduates reached its peak in 2012, while the total number of employed accountants has dropped since 2019. Pandemic staffing challenges have only been compounded by the shrinking talent pool and record high turnover.
Wages are increasing 10% to 25% for certain roles, with significant retention bonuses for staff who stay through the spring tax season. Mid-level accountants and executives with strategic roles are benefiting the most. Because workers who handle financial closings and consolidations aren’t easily replaced, companies are willing to pay more to fill those roles quickly.
To put things in perspective, here are some revealing CPA salary numbers in black and white:
- In 2022, according to Robert Half salary guides, first-year auditors had an average starting pay of $55,000—unchanged from 2011, despite 10 years of slow but steady inflation growth.
- While starting salaries have been frozen, the average pay for accountants and auditors has grown steadily in recent years.
- In 2014, accountants and auditors earned $69,145 on average, compared with $81,255 five years later—a more than 17% jump, according to U.S. Census data.
- In comparison to other financial services workers, budget analysts took home $88,267 and financial analysts made $115,352 on average in 2019.
The Big Four-Step Up
- In January, KPMG announced that it was raising wages midyear to retain headcount.
- Deloitte LLP and PwC LLP also inaugurated midyear pay raises in the past few months.
- Ernst & Young LLP handed out midyear bonuses this year and will trigger its next round of pay raises in August—two months earlier than normal. The firm has invested $2 billion in base compensation increases and bonuses over the last two years.
- Deloitte directed $1 billion into compensation over the last year. In addition, EY and Deloitte both expanded mental health benefits and enlarged a well-being subsidy.
- While all four firms offer some variation of remote and flexible work, last fall, PwC offered a full-virtual option to attract new hires and retain current staff.
All things considered, it’s a good time to be a CPA!