So how much do you audit kids get paid, anyway?
Francine is continuing her probing look into how the profession operates by taking a look at starting pay.
Before we dive headlong into that issue, some personal observations. If you study long and hard, you certainly want to be fairly compensated.
Having said that, is studying business really hard? Not really. Lots of the clever people I know burdened themselves with extra course loads or extracurriculars to add some real challenge to their university program. I mean, we're not studying quantum mechanics, or trying to score high marks in chemistry or biology. We're learning about inventory cycles, double entry bookkeeping and how to both fix and break these sorts of things - yay audit.
But, there's a high demand for people with a schooling in basic business acumen, which inflates salaries - both of the Commerce grads, and of their instructors.
High pay for instructors in Management Faculties translates into higher tuition. If your friends are paying yearly tuition of, say, five grand for an Arts degree, watch the Business degree cost double. Or a gut-wrenchingly higher amount, if you're doing a glorified Bachelor of Commerce - i.e., an MBA.
Unless you saved up lots of money in high school, or have parents who saved up lots of money for you, you're probably going to have a big fat pile of debt to pay off when you graduate. This isn't news to anyone paying attention to the economics of the current educational climate in most of North America. But I've restated it as an explanation as to why those salaries are justifiable. Sure, you're not doing hard back-breaking work, but you've got some heavy bills to pay off.
The preceding argument isn't especially unique - students in other fields study long and hard and can incur debts as well. You could argue that although they enjoy lower tuition fees, they also expect lower starting salaries, so everyone is equally disadvantaged.
In fact, the kids in accounting and similar fields have a big advantage - although their starting pay is in many cases only marginally better than that of the hardcore science and liberal arts crowd - within 2 years they start getting bumped up to the point that unless they've started a young family, they should be sitting pretty.
That last observation drags me back to Francine's original issue - what's up with the starting pay of audit firm staff? Is there collusion at work? It's certainly a spicy accusation, but as cynical as you have to be to believe that it's true, I feel that I'm even more cynical - which makes me not believe it. You see, if you want to effectively conspire, you need some malice, and even more competence. The malice-angle is obvious - you want to shaft someone by ganging up on them. The optimist in me doesn't believe that we're surrounded by that much malice. And if you're cynic, you're scoff at my starry-eyed youthful optimism.
That's where my even-greater cynicism comes into trump your hypothetical jaded view of the world: I say that you need a lot of competence to stick to a cartel agreement. You can't allow information to leak, and you need to discipline anyone who tries to break the cartel's rules. Look how well that works for OPEC and oil prices. Or consider the countless mob movies where someone's out to do a deal behind the boss' back. I think there are sufficient examples in both fiction and reality to back up my view.
Certainly, like in the scenario of Steinbeck's classic book The Pearl, it may be possible to find places where that phenomenon known as "market failure" occurs. And I suppose she's looking for examples of having occurred. I can't say I've come across such examples in my own experience of the job market I'm personally in, but perhaps she'll find more leads in a place like Green Dot Life, which is chock full of interesting conversations between one firm's staff - and presumably other visitors hanging out and getting a feel for the 'secret' side of Big Four culture.
On the level of Ontario, I will offer a couple of observations, though, as parting thoughts on this topic:
- Demand for staff is still high, because of the industry's traditionally high turnover model.
- The number of applicants is also high - but there's nevertheless competition for the 'top stars'.
- Once you're in, if you're truly competent you're set. First year pay is known to all in school to be relatively low, but you get between an educational boost worth at least 10 to 30% of your salary in terms of tutoring and other support.
- Once you pass your exams, watch the funds devoted to your education be converted directly into salary increases.
- After the first few years, you're become a CA or a CPA and in addition to the in-house raises, you're also going to hear from head hunters offering jobs in industry, which translate into another salary boost if you choose to 'jump ship'.
Clearly the trick is to make yourself stand out in the pool of applicants and get in a firm and survive the first couple of years, where you're doing some of the more tedious work, desperately trying to pass exams, and not getting paid as much the clerks and analysts you're auditing.
Of course, once you've managed to survive the first hurdles, you'll find your pay beating those of the clerks who've been slaving away at the same job for years - while you've only been in the 'real' work force for two or three.
As much as it's easy to complain about the trials of first year, I find many people will not speak up about it because of that sobering fact about the expected outcome down the road. I'd say it's more out of silent gratitude rather not wanting to rock the boat, but everyone has their own reasons. Or at least one of a set of perhaps a half dozen popular choices, anyway.
Update: if you're looking for more on actual pay figures, check out Neil's post on hedge funds poaching of accountants and the accompanying pay hikes that sweeten the deal.