Young adults may be in for yet another disappointment.
In addition to the ever-increasing cost of college and the student loan debt they may be met with once they graduate, college students may find they’re making less money than they expected when they enter the workforce.
That’s based on a recent survey by Clever, a real estate company based in St. Louis, that asked 1,000 undergraduates about their salary expectations and career goals after college – and down the line, too.
“Generation Z” undergrads surveyed said they expect to make $57,964 one year out of college, but the national median salary is currently $47,000 for graduates who have a bachelor’s degree and less than five years of job experience, Clever reports.
“The average undergraduate also overestimates how much they’ll be making by mid-career (10 years out of college) by about $15,000,” the report states.
The survey also found that women expected lower salaries than men with the same degree and major.
Overall, college students with a four-year or graduate degree will earn about 23 percent less than they expected to in their first year out of college, according to Clever.
Expectation vs. reality
While the expectation versus reality pay gap was significant overall, students did have success estimating their potential income in some cases.
For example, students majoring in engineering, for example, expected to make an average of $64,615 in their “early” career, and the actual “early” career median salary in engineering is $64,200. Results were similar for fields like accounting and humanities/liberal arts.
Business majors, on the other hand, face a greater reality check. In the survey, business students expected to make an early salary of $61,085 but data shows the median early income for business is around $46,500.
It’s probably a good thing, then, that a recent University of Michigan study found young adults spending less compared to previous generations, Clever points out.
“Younger consumers view the buying conditions for big-ticket items like homes and cars less favorably than older generations, leading to less spending overall,” the report states.
“The study points to weakened job prospects, delayed marriage and student debt as the primary causes, but we also need to consider that college graduates are discouraged by their middling salaries upon their entry to the workforce.”