The 2024 Accounting Today Salary Survey: Partners pinching pennies

Compensation for early-career accountants is a key factor in making the profession more attractive for young people. Starting salaries have lagged behind that of neighboring professions and industries; students can graduate into higher-paying jobs in finance or technology with the same level of education or less than is required for accountants.

And with the ongoing labor shortage — fewer people studying accounting, fewer completing 150 credit hours, fewer achieving CPA licensure, and even fewer staying in the profession until they make partner — accounting firms have no time to waste in raising starting salaries.

Accounting Today and its parent company Arizent conducted our inaugural salary survey in May 2024, collecting over 560 responses from accountants from firms of all sizes regarding their salaries, benefits and career trajectories. The survey found that the median base salary for a staff accountant nationwide is $65,000. For comparison, in Pennsylvania, entry-level CPAs earn $68,000, versus entry-level finance consultants at $71,000, management consultants at $87,000 and supply chain managers at $91,000, according to a recent talent retention report by the Pennsylvania Institute of CPAs. Meanwhile, graduates who majored in engineering, computer science and math are all expected to earn starting salaries above $70,000, according to nationwide projections from the National Association of Colleges and Employees ($76,736, $74,778 and $71,076 respectively).

What is keeping firms from raising starting salaries? The answer involves a complex set of factors, but the first reason is straightforward, if a bit antiquated: This is the way it’s always been done.

“There’s a mindset that this is an apprentice business. There’s a huge investment that firms make in people in the early years and as they get skilled they earn more,” said Jennifer Wilson, partner and co-founder at ConvergenceCoaching. “But that model is a mindset that’s no longer valid because most young people out of school expect that they’re going to have big investment by their employers, regardless of their chosen profession, and they’re not willing to pay dues by making less and learning more. They’re figuring, ‘I’m going to get that anywhere.'”

(See the data from Accounting Today’s 2024 Salary Survey here.)

The U.S. Bureau of Labor Statistics projects that Generation Z (those younger than age 28), will make up about 30% of the U.S. workforce by 2030. This cohort is already defining how their work expectations differ from the generations that preceded them, including having little desire to spend their entire lives at one company, or even in one industry, which is antithetical to the traditional career path for an accountant, where it was considered normal to progress from intern to partner all at the same firm. In that model, low starting salaries were accepted because young accountants expected to make it up once they made partner.

Younger generations aren’t sure they want to stay at the same firm that long, however, and with 47% of respondents to Accounting Today’s survey saying that it takes between 10 and 20 years to make partner at their firm, they may be less willing to forego current compensation for money that may never materialize in a role they may not even be interested in taking on.

“That idea of delayed gratification is an old-fashioned idea, and it still lives inside our profession,” Wilson said.

The second contributor to low salaries is the interests of aging partners nearing retirement, Wilson said: “The average partner comp has continued to increase over time when starting salaries have not, and that is a lack of redistribution of that wealth. I would say it’s because partners feel like, ‘I paid my dues and I deserve this.'”

Survey data reflected a median base partner salary of $125,000 for firms with fewer than 10 employees, and $205,000 for those at firms with more than 10 employees. These numbers likely skew low, as 53% of respondents reported working at firms with less than $5 million in net revenue. For this reason, partner data for midsized and big firms could not be broken out in detail with a high enough level of statistical significance. However, the data indicates the top 5% of partners at firms with fewer than 10 employees earned salaries of $250,000, and the top 5% at firms with more than 10 employees earned $700,000. (Partners at the Big Four and other billion-dollar firms can make far more than that, of course, but relatively few participated, and were treated as outliers.)

As one survey respondent, a chief operating officer at a midsized firm, put it: “Look out for yourself. Partners are greedy. Public accounting is a giant pyramid scheme.”

But accountants are not compensation experts, and they do not invest in HR expertise as they should, Wilson said. The common objection to increasing starting salaries is the assumption that if you raise starting salaries, then you have to raise everybody’s salary, and that would cost a fortune. The solution is to make the largest adjustment in the lowest salary band (staff), and then make smaller adjustments in the subsequent bands (senior, manager, etc.) to lessen the steep climb to partner salaries.

The data also reveals that an individual’s number of years of experience does not have an appreciable impact on aggregate salary ranges for each job level. The median salary for staff with less than 10 years experience was $65,000, and $71,000 for staff with more than 10 years. Similarly, seniors with less than 10 years showed a median salary of $87,000, and only $88,000 for seniors with more than 10 years.

“Tenure means nothing anymore,” said Sandra Wiley, shareholder and president at Boomer Consulting. “The number of years you’ve been sitting in the seat at whatever firm you’re at has a lot less to do with your salary than what you bring to the table, how fast you learn it, and how fast you apply it.”

The consequences

The result is poor work-life balance in exchange for low salaries for young accountants. For some, the promise of a greater salary down the road isn’t enough to counterbalance working 80 hours a week during tax season now. “You’re going to wish you were paid hourly during busy season,” one senior tax associate at a large firm said.

“I wish I knew that public accounting firms don’t value their employees the way that they say they do. What is said and what is done does not match,” a tax accountant at a midsized firm said. “Low pay, long hours, grueling work, no internal onboarding or training to support staff. It’s a sink-or-swim mentality.”

Raises typically come through promotions and performance evaluation. Though 74% of respondents say they know what qualifications they need to be promoted, roughly one-third of staff, seniors and managers say they feel the need to jump to another job in order to make a meaningful increase in salary. In the same vein, three-quarters of respondents say they’ve worked at another firm before joining their current firm.

“If making as much money as possible is the goal, be prepared to jump firms every few years,” a tax manager at a small firm said. “Many firms do not reward long-term loyalty with appropriate salary increases after two to three years.”

It’s an employees’ market now, Wiley said. “Senior leadership has figured out, ‘If you don’t give me what I want here, I can go tomorrow and find the job that I want out there.'”

But KPMG’s vice chair of talent and culture, Sandy Torchia, doesn’t see this trend as entirely negative. While there are opportunities for moving around functions, industries and geographies within a Big Four firm, “Not everyone’s going to stay at KPMG for their entire career, but building future leaders, giving them the experiences and credentials to go and be successful at our clients, in our communities, etc., is a really important part of the ecosystem.”

The solution

Higher starting salaries are key to making the accounting profession more attractive to young people, but the solution is multifaceted.

It starts with salary transparency, both for lower-level salaries and partner salaries. KPMG is taking steps to do just that: “When we’re communicating compensation to our employees at the beginning of the fiscal year, we communicate to them pay ranges, and the pay ranges are for their base salary as well as for variable compensation,” Torchia said. “We want to make sure that they understand not only the pay ranges, but where they fall within that pay range, so that they can see what the opportunity is for growth within their current role.”

The next step is actually raising starting salaries: “Given the demographic tendencies of the people entering the workforce now, they’re not in a position where they feel like they can defer those big earnings that far out into their career,” said Lisa Simpson, vice chair of firm services at the American Institute of CPAs. “So are there ways to push it down a little earlier and make the jumps in between each level less dramatic?”

The time it takes to make partner will inevitably need to shorten too. “People are not going to wait that long,” Wiley said. “If we are true to our word that entry-level staff positions can be outsourced or automated, that means we have to start people at a different level to begin with.”

This means firms will have to start teaching and training differently. “It requires more handholding on the front end, but they’re able to get to the higher-level work faster. Therefore, the billing that you can get them to quicker is better,” Wiley said.

‘Culture is greater than salary’

The consequence of pushing off salary increases is the risk of talent exiting the profession entirely, which makes retention all the more important. The pipeline problem isn’t going away. Firms need to be competing not only on compensation but benefits and culture, too.

“Culture is greater than salary,” a manager at a large firm said. “I could jump somewhere for maybe $10,000 to $20,000 more, but I do not think I can replicate the culture of my firm. A lot of people I talk with have moved jobs for more money and almost immediately regretted it due to the work environment. I would rather take a steady, reasonable paycheck, with job security and ethical bosses, than move to a higher paying job where I’m constantly fearing retaliation or being fired.”

While noting it is difficult to make blanket generalizations for the entire profession, “I think all firms have different levers they can push if they really focus on managing that workload,” the AICPA’s Simpson said.

Small firms need to double down on strategy, carefully considering the services they’re offering, whom they’re offering them to, and how they’re delivering them. Simpson specifically said that large firms need to implement offshoring strategies and capitalize on technology. All firms can be streamlining their processes to make sure they’re pushing work through their systems effectively, and they should make sure they’re billing for their value and to keep up with cost structures — accounting is a very loyal profession and firms sometimes struggle to raise rates despite increasing costs, Simpson said.

For instance, the slam of busy season can be mitigated, she explained: “We can control that tax season by managing our client load, by managing our client expectations, and putting in processes and key metrics and keep the workflow moving throughout the year, rather than just in these crunch periods, April 15 and October 15.”

The accounting profession is an excellent vehicle for wealth building, with large salary trajectories in store at the partner, owner and managing partner levels. But the profession needs to raise starting salaries to attract young talent, be transparent about their earning potential in each role, and meet their demands in order to retain that talent.

“Another way to think about this is the word ‘stewardship,'” Wilson said. “‘I should be a steward of my firm and careful to make sure that I am investing in it as much as I am taking out of it.’ I do think sometimes we lose sight of our stewardship.”