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Grads overestimate salaries

November 4, 2011
By Vincent Orsini

If you think your university degree will put you on the fast track to fortune, you may want to lower your expectations.

According to a recent study conducted at Carleton, Guelph and Dalhousie Universities, millennial students—born 1980 or later—are are drastically overestimating how easy it will be to climb the ladder to success.

The study reports students expect first-year salaries of $48,860 for men and $42,060 for women. This is fairly accurate, with current university graduates pulling in $43,119 for men and $35,926 for women.

However, the study also found that after the short span of five years, men expect an average of $84,868 and women $67,766. This would mean salary increases of 14.8 per cent and 12.8 per cent respectively. Realistically, the typical annual salary increase per year is closer to three per cent.

Linda Schweitzer, co-author of the study, explained these trends. “Millennial students are more grounded with respect to their initial salaries because [...] they have friends and fellow students who are entering the workforce. So they probably have good information on what they will earn when they start their career.”

Schweitzer also explained why students have unrealistic salary increase expectations.  “I think it’s a combination of being eager and impatient to get ahead, a short term view of the world, and not having enough up-to-date information on how people move up in the workforce.”

“Students are looking at their parents and their friends’ parents who are making quite a bit of money and thinking,  ‘Wow, this is what people are making.’ In reality, this isn’t the case. If it were it would put them in the 90th percentile of all earners in Canada.’”

According to co-author Sean Lyons, educators and the media are to blame.

“I think educators are to blame for creating unrealistic expectations about the earning a huge salary with a university degree,” he said. “I also think the media and entertainment industries play a part. There has been a trend of normalizing extravagant lifestyles on television. From a young age, we are exposed to a ‘false normal’ that would be far too expensive for ‘real normal’ people to live up to.”

Schweitzer added students’ backgrounds affect their expectations. “Many university students have a high socioeconomic status,” she said. “This means they tend to live a good life and want to continue living this life. Nobody tells them they will have to work really hard before they are appreciated. It’s linked to that expectation of quick reward characteristic of the internet generation. If they want something, they can get it, now.”

Perhaps these high expectations also explain the studies’ finding that millennial students change jobs three times more often than the previous generation before the age of thirty.

Eddy Ng, another of the study’s co-authors, certainly thinks this is the case. “Students have a disconnect between actual experience and the higher expectations they have for the workplace,” he said. “They’ll continue looking for an environment or employer that meets their expectations.”

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