EY’s $1B pledge targets 10% raise in starting CPA-track pay

Dive Brief:

As the accounting industry is grappling with a shrinking pool of young candidates choosing the profession, Ernst & Young LLP is stepping up to sweeten the pot: the Big Four firm announced last week that it would spend $1 billion over the next three years to “revolutionize the experience of early career accounting professionals” by increasing “early career” compensation as well as funding AI-enabled audit and tax platforms and a new program dubbed 360 Careers, which will provide outreach and support for college students.
“Accounting is the language of business, and it’s time to put accounting graduates on par with other business-degree holders,” Dante D’Egidio, EY Americas Vice Chair – Assurance, said in a statement in the release. “By increasing the starting salaries of CPA-track professionals to market-leading compensation levels, we are continuing to recognize the trust placed in the profession, reward the valuable skills accountants bring and ensure a strong pipeline of CPAs for generations.”
The company intends to increase starting compensation by at least 10% this fall and plans additional increases over the next two years, D’Egidio said in an emailed response to questions. He declined to provide information on average starting salaries, noting compensation isn’t a one-size-fits-all matter, with work experience, educational background and the role and geographic location of the employee affecting pay.

Dive Insight:

It’s notable that a major firm such as EY is acknowledging that starting accounting salaries are not competitive, Jack Castonguary, an assistant accounting professor at Hofstra University in New York, said. Firms have been cautious about making such changes to compensation because they must either cut partner profits or raise fees to fund higher employee compensation, he said. “No one has been willing to be the first mover,” until now, he said.

EY’s announcement comes as the accounting industry has banded together in an effort to address, on a number of fronts, the shortage of accountants that companies are grappling with nationwide.

Lower starting salaries for new accounting graduates compared with many other business majors launching their careers — along with the 150 college credit hours generally required to obtain a CPA license — have often been cited as two of the sector’s biggest competitive disadvantages when it comes to attracting top talent.

Indeed, CFO Dive previously reported that more than eight out of ten (84%) professionals and (85%) students surveyed identified raising starting salaries as one of the most effective strategies for tackling the accounting industry’s talent shortage, according to a draft report released last month by an independent task force convened by the American Institute of CPAs to develop a plan to fix the current accounting talent gap.

Mean starting salaries for accounting and related services majors in 2022 stood at $60,698, the lowest of seven business-related majors cited in the report, while computer and information sciences majors topped out the rankings with mean starting salaries of $86,964.

Accounting graduates who join EY audit and tax practices will benefit from the higher starting compensation later this year, D'Egidio said. In addition, the investment will enable all accounting majors who join EY US full-time in 2025 to join 360 Careers, allowing them to spend their first two to three years participating in structured, skills-based experiences across EY US, building their networks, broadening their skills and becoming well-rounded business leaders, the company said.