Tuesday, July 15, 2008

What Salary Should I Expect?

Just as a good academic advisor makes sure their advisees are prepared for the classes in which they enroll, they make sure students are prepared for their job interviews and career. Our department is particularly effective at helping students construct their resume and prepare for the job interview. However, our students often report that they feel unprepared when it comes time to negotiate salaries. They simply do not know what salary they should ask for.

The Student Success Center in our ag college tries to be collect data to be of assistance, but may do more harm than good. The Center uses internet surveys of recent graduates asking one simple question: how much do you make? They do not ask whether the graduate had the freedom to take the best offer, or whether they were constrained in their choice of jobs. Some students need to stay close to their family, and some choose to follow their spouse to areas with little job opportunities. The average salary that emerges from these data is not the salary good ag econ students should try to negotiate.

More useful data can be found in a small survey I conduct of recent graduates from our departments who I know well. The sample contains only 19 individuals, but I know the students' capabilities well, I know if they were limited to a particular area, I know their exact job, and I know their salary, including information on retirement and health benefits.

From these data, I make the following recommendation to students. These salaries represent rural areas and Midwestern cities, not coastal urban areas.

  • If the student is a high achiever (high grades, many awards, leadership positions, etc.) who is not limited to a certain region - Attempt to negotiate a salary of $42,000 or above, including full health insurance and retirement benefits. Our best students make $52,000-$62,000 (with these benefits). Monsanto recruiters told me that their base offer is $42,000 with benefits.

  • If the student is an average achiever and is not limited to a certain region - Do not accept a salary under $30,000 (with benefits) without looking elsewhere, unless it is a job you particular like.

  • If the student performed poorly in school and/or is limited to a particular region - Do not expect your college education to give you a huge bump in salary over those without a college degree. These students often make less than $30,000 and as little as $24,000, perhaps even without benefits.

One more piece of information can be found in the below graph. This graph shows the average salary for economics majors and other majors across the nation. With less than 5 years experience, the average salary for economics majors is about $45,000. For management, accounting, and finance majors the salaries are also above $40,000, and agricultural economics can be thought of as a good economics degree with a particular focus on business management.

Thus, my suggestion that good ag econ students who are not limited to a region should seek a salary of $42,000 or above seems consistent with other data. If you relay this information to your students, don't forget to show them the really cool part of the graph...the part that shows economics majors make much more than their business counterparts later in their career!