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College Students Overestimate Starting Salary by Nearly $30,000 in 2023

Published May 4, 2023

  • Written by Franklin Schneider

Written by Franklin Schneider

Today’s college students clearly haven’t done their homework. Although 80% say they’re aware of the typical salary range for professionals in their field, 78% overestimate what they’ll make at their first entry-level job.

Generation Z undergrads expect to make nearly $85,000 within a year after graduation and downright refuse to work for less than $72,000, according to a new study from Real Estate Witch. 

Yet the average starting salary for recent college grads is just $55,911 — setting up an entire generation of job seekers for disappointment.

Students’ expectations may seem laughable to seasoned workers, but they’re actually more realistic than last year. In 2022, college grads expected to earn a whopping $103,880 at their first job — nearly double the actual average starting salary. 

This year’s expected salary is roughly $19,000 less than last year’s as uncertain economic times prompt students to lower their expectations. But for most students entering the workforce, $85,000 is still far from reasonable.

College students are poised for disappointment

Gen Z’s optimism isn’t entirely misplaced. Wages are set to rise 4.6% in 2023 as employers seek to attract top talent, but when many companies are hunkering down for a potential recession, zoomers’ expectations have far outpaced reality.

Unrealistic expectations project well into the future. A decade from now, college students expect to make nearly $205,000. The actual mid-career salary is less than half that at $98,647 on average, according to Payscale. 

Zoomers will likely have less money than expected as they hit middle age, and like millennials before them, they may have to delay major life milestones such as marriage, children, and buying a home.

Some majors are more unrealistic than others

Students in certain majors may be more susceptible to outsized expectations. 

Business students have the most unrealistic expectations. They anticipate making more than $98,000 a year out of college, compared to the average starting salary of about $50,000. By mid-career, they expect a salary of $223,679, which is more than double the actual average of $86,600.

Computer science majors have the most realistic expectations, with an expected starting salary only 12% higher than the actual average.

Inflation is driving up prices — and expectations

Some out-of-touch expectations can be chalked up to youthful optimism and inexperience, but they might actually be a rational response to economic conditions.

“At this point in our economic cycle, workers are looking at firms making good profits while they are losing ground to inflation, so expectations are high,” said Thomas Kochan, a professor of industrial relations, employment, and work at the Massachusetts Institute of Technology Sloan School of Management. “This likely carries over to new job entrants as well.

“Employers, on the other hand, look forward and see softening demand and a possible recession, and they want to hold the line on pay increases. This mismatch in expectations is typical for this stage of inflation, profit, and product market cycles.”

Students are equally out of touch with job search realities

Despite widespread concerns about the economy, 75% of students think it’s still a good time to find a job. Gen Z is fortunate to graduate into a strong labor market, but that may lead to more unrealistic expectations.

Nearly 2 in 3 college students don’t believe they’ll ever have to work an entry-level job because employers will see their potential and offer them senior-level positions right away. 

If that doesn’t happen, more than 3 in 4 students believe they’ll be promoted within their first year on the job — about two years sooner than the average employee is promoted.

Finally, 92% of students think they’ll find a job within their major, but research shows that only 46% manage to find work in their chosen field.

A rude welcome to adulthood

When graduates don’t receive the starting salaries they expect, it can lead to disappointment. Even before they graduate, many students already feel remorse because of the cost of attending college. 

About 80% of currently enrolled undergraduates felt obligated to attend college — but 40% regret their decision. Cost is a major factor, with nearly 9 in 10 students graduating with student debt.

College debt is especially concerning when students realize their starting salaries will likely be lower than expected. Once they crunch the numbers, 33% think low pay will prevent them from paying off student loans, and 34% think they won’t be able to afford basic expenses. 

What’s more, 37% anticipate needing a second job, 27% think they’ll need credit cards to make ends meet, and 19% think they’ll have to move back in with their parents. 

Some degree of disillusionment is normal among young college graduates as youthful optimism collides with the economic realities of adulthood. Yet the degree of disconnect between expected and actual starting salaries suggests there may be turbulence ahead for Gen Z as they enter the workforce.

Filed Under: Research

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