According to The Bureau of Labor Statistics (BLS), the average hourly rate for accountants in a full-time job is $37. However, this figure, last updated in 2022, may not accurately reflect the current landscape.
The truth is, that accountants' salaries are on the rise due to challenges in the accounting labor market. The American Institute of CPAs (AICPA) reports that less than 1% of accounting and finance firms can find enough staff, leading to fierce competition. In this dynamic field, understanding the ins and outs can aid in making informed decisions when hiring an accountant.
Here is an in-depth revision of the latest 2024 accountants' salary projections, comparisons, and alternatives for both US hires and international outsourcing services.
2024 Public Accounting Starting Salary Numbers
Last month, Robert Half released its 2024 Salary Guide, offering insights into finance and accounting salaries. The guide categorizes salaries based on the title holder's usefulness, ranging from the 25th percentile for those new to the role to the 75th percentile for those with rare qualifications. The guide also provides starting salaries for various public accounting positions in 2024, showcasing the evolution from the 2023 figures.
Here are the starting salaries for public accounting positions in 2024:
Why are Accounting salaries expected to rise
The dynamics are shifting slightly in favor of employers as the Great Resignation begins to subside. Over three-fourths of U.S. companies plan to increase salaries in 2024, with a projected rise of 3.8%, slightly lower than the 4% increase observed in 2023.
This is more of the market average calculated by the end of 2023 for te entire market of US workers which sat down at 1.2%.
While 22% of companies intend to cut their salary increase budgets due to a cooling labor market, others anticipate higher budgets, citing factors like increased competition for labor, changes in compensation philosophy, and improved economic conditions.
Let's address some of these reasons why salaries in accounting are expected to rise in 2024:
Increased competition for labor or labor supply shortage:
The shortage of skilled labor in the accounting and finance sector is a key driver behind the expected salary increase. According to the American Institute of CPAs (AICPA), the scarcity of qualified staff is affecting over 99% of accounting and finance firms. This shortage intensifies competition among employers, compelling them to offer higher salaries to attract and retain top talent. As the job market becomes increasingly candidate-driven, professionals in accounting have more bargaining power, leading to upward pressure on salaries.
Change in compensation philosophy or competitive positioning:
Employers are adapting to the changing landscape by reevaluating their compensation strategies. Beyond traditional monetary compensation, companies are placing greater emphasis on non-monetary benefits to differentiate themselves and appeal to a diverse workforce. This shift includes considerations for diversity, equity, and inclusion initiatives, increased workplace flexibility, health and wellness benefits, customized rewards and compensation packages, and expanded training opportunities. This approach not only helps attract experienced professionals but also aligns with the preferences of a new generation of workers who prioritize work-life balance and a supportive work environment.
Increased demand for specialist roles:
The demand for specialized roles within the accounting field, such as treasury, tax, and internal audit, is contributing to the projected increase in salaries. Professionals with expertise in these areas are becoming increasingly valuable, and companies are willing to offer competitive compensation packages to secure their services.
This trend reflects a growing recognition of the importance of specialized skills in navigating complex financial environments and ensuring regulatory compliance.
Inflationary pressure:
Approximately 70% of organizations attribute the projected rise in compensation budgets to inflationary pressure. As the cost of living increases, companies are adjusting their salary structures to ensure that employees' purchasing power remains relatively stable. Inflationary pressures can affect various aspects of business operations, and addressing salary adjustments is a proactive measure for organizations to maintain employee satisfaction and retain skilled staff.
Comparing 2024 vs 2023 accounting salaries
But how much have the accounting and finance salaries really risen in the past year? Let’s compare the 2024 public accounting salary given by GoingConcern.com numbers to the same positions from Robert Half’s 2023 Salary Guide:
Accounting salaries in the 25th Percentile:
Accounting salaries in the 50th Percentile:
Accounting salaries in the 75th Percentile:
Salaries Based on Experience
You may have noticed our reference to the accounting market, and it's clear that salary averages vary significantly within each role. The organizational structure of the US accounting market is a major factor contributing to this variation. Whether you pursue an accounting career with or without a CPA major, there are numerous variables to consider.
Salaries also exhibit considerable diversity based on years of experience. What complicates interpretation from various salary platforms is the wide range within the CPA category. For instance, a CPA role might have a salary range of $92K to $156K, while a Finance Analyst role is listed at $69K to $109K. This suggests that the CPA category encompasses a broader spectrum compared to other specialized roles, as many of these roles fall under the same CPA classification.
To make things as clear as possible: The CPA category appears more expansive, encompassing a variety of specialized roles, which contributes to the significant salary range observed.
So let’s try to make it more clear for everyone:
Salaries Based on Location
The most recent BLS data, from 2022, had the District of Columbia, New York, New Jersey, Virginia, and California as the top five highest-paying states for CPAs in the U.S. However, more recent information from online platforms, has given a more prevalent place to states like Washington, with Colorado or Delaware. For example, in Ziprecruiter.com Delaware beats the national average by 7.5%, and Washington trends with another $10,443 (15.3%) above the $68,326 average.
Several factors contribute to higher CPA average salaries in certain states. The presence of large populations and robust economies in these states results in a heightened demand for accounting services across various industries, including finance, technology, healthcare, and real estate.
Additionally, industries such as finance, entertainment, and technology, concentrated in these regions, create opportunities for CPAs with specialized skills to command higher salaries.
But the most important factor is the Cost of living: The cost of living is generally higher in these states, so CPA average salary by state tends to be higher to reflect the higher cost of living. While this is fair and necessary, it creates a more difficult landscape for office-based firms and a great opportunity for remote workers.
2023 Peaked Turnover Charts For Accounting Positions
The 2024 Workforce Planning Guide by Addison Group reveals a significant turnover in the finance and accounting sector, driven by a turbulent economy and attractive compensation packages. The tight job market has put pressure on employers to reevaluate their compensation packages, consider work/life balance, and explore benefits like paternity leave and flexible vacation options.
In the finance and accounting sector, the report says:
In a field known for ‘churn and burn,’ last year was one of the record books with higher job turnover than in any other three-year period. Those now settled into new jobs are not in a hurry to leave. A turbulent economy plus healthy compensation packages over the past few years have decreased the pool of candidates and increased the talent competition.
As employers continue to face a tight job market, they will need to take a closer look at their compensation packages and be prepared for counter offers. Beyond accounting salary levels, evaluate what creative work/life balance and benefits may entice candidates from paid paternity leave to on-site daycare or more flexible vacation packages.
Despite a growing demand for financial professionals, the talent shortage in the field is still running strong, exacerbated by the retirement of 75% of CPAs in 2020. Even though Gen Z candidates seemed to be increasingly interested in finance and accounting careers, recruitment strategies must extend beyond competitive compensation to upskilling existing teams and reduce turnover, targeting underqualified candidates with growth potential, and rewarding certifications like CPAs, CFAs, and CFPs.
The interesting part of this particular report is that, in comparison with RH, suggests the possibility of increasing outsourcing to address talent gaps in the industry. So let's talk about some of the strategies companies and firms are relying on to solve their talent needs.
Firms Are Turning To Contract Professionals To Bridge Skill Gaps
With public accounting facing challenges due to a shortage of accountants and rising salaries, firms are increasingly relying on contract professionals to address skill gaps and reduce core team workloads. According to RH, 64% of managers plan to increase their use of contract workers for the most popular outsourced positions:
On the other hand, only 36% of job seekers are open to contract roles, even if they often lead to permanent positions. Entry-level candidates are scarce, and competition for experienced talent is heightened, with many professionals transitioning to corporate roles for more manageable workloads.
Hiring Alternatives: Seeking Accounting Talent Beyond Borders
Hiring offshore accountants has become increasingly popular for firms seeking to reduce costs and tap into a larger pool of skilled professionals. Usually hired as contractors, these workers seamlessly meet the current needs of accounting firms by alleviating workload pressures, reducing overheads, and offering flexibility.
While the practice of filling both entry-level and senior positions with international talent is not new to the accounting sector, a noteworthy development is the emergence of a new player in the field. While the Philippines and India have traditionally been leading countries for offshore finance and accounting services, South America has recently entered the competition. Nations such as Argentina, Brazil, and Colombia are now emerging as strong contenders in this global market.
The Future of Work for Accounting Firms
In the United States, there's a noticeable shortage of skilled accounting professionals. As per the Bureau of Labor Statistics, employment of accountants and auditors is projected to grow 7 percent from 2020 to 2030, faster than the average for all occupations. Combined with an aging workforce and fewer graduates choosing the accounting profession, the demand for skilled accountants outpaces the supply. Hiring offshore can fill these gaps, providing access to a larger pool of qualified professionals.
As US firms tap into the global talent pool, they face competition not only from each other but also from companies across various industries that require similar skill sets. This competition has prompted firms to adopt innovative strategies to attract and retain the best accounting talent from remote locations.
References:
BLS (2022) - Occupational Outlook Handbook
Ziprecruiter (2023). Average Accountant Salary by State
Glassdoor.com (2023)
Research.com (2024). CPA Average Salaries & Wages by State
UniverstityHQ (2023). Accounting Salaries by State
CPA Practice Advisor (2024). 2024 Projected Public Accounting Starting Salaries
Robert Half (2023). Finance and Accounting 2023 Salary Guide.
ZipRecruiter (2023). Big Four Accounting Salary.
