In the coming weeks and months, you’re going to see lots of headlines warning that the workers’ market we are blessed to experience today is shifting back to one that favors employers as the economy starts circling the toilet. You already have seen these headlines, I’m sure. Here’s one: some HR clown who works for LinkedIn warned the younger generation their days of remote work could be numbered. “Younger workers may need to return to the workplace — whether voluntarily or otherwise — to nurture those all-important relationships with both teammates and superiors,” he said. Voluntarily or otherwise? What in the Disney villain is this shit? Get bent, Steve.
Perhaps in other industries the tide may be turning and potential recruits will soon have to beg to be let in through the ATS gate of HR departments everywhere but we aren’t here to talk about other industries, we’re here to talk about accounting.
The talent crunch in accounting is nothing new. There’s been a “Great Resignation” in public accounting for as far back as any CPA alive today can remember, that’s just what people do. New accounting graduate numbers continue to trend down which is of greater concern than early-career accountants jumping ship from Big 4 firms at the two year mark. As we reported in April:
The 2021 AICPA Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report released a couple weeks ago tells us that the number of accounting graduates trended downward in the 2019–2020 academic year (most recent data available), with decreases of 2.8% and 8.4% at the bachelor’s and master’s levels, respectively; accounting grad numbers have been trending downward since 2015-16 with the 2019-20 number showing the most significant drop-off of recent years (3,391). Can we blame the pandemic for some of that? Maybe. We’d be wise to wait for the 2023 AICPA Trends report to see if the trend continues before getting too worked up about it.
Now the problem of waning interest in accounting as a major may or may not end up being a huge issue considering 42.7% of firm new hires are non-accounting grads, up from 31% the two years prior (data from the 2021 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report released this year). Perhaps technology will help pick up the slack to make up for a lack of bodies but technology can’t sign off on audit reports or exercise professional skepticism. The profession needs flesh-and-blood humans for that. And there just aren’t enough to meet demand.
We have been writing about the talent crunch or crisis or shortage — whatever you want to call it — for years. YEARS. Here’s Caleb Newquist in 2015 writing about how desperate accounting firms are for talent (I’ve lightly edited this blurb for context):
The most important issue is the fact that most accounting firms are desperate for talent right now and none of them know how to get it. To make matters worse for these firms, the Big 4 will continue to aggressively pursue the best candidates and those candidates will continue to accept their offers, regardless of whether it’s the right fit for them.
So, yes, there will be more accountants hitting the streets than ever. The problem for most firms is, that’s still not enough.
Back when he wrote that, the talent crunch was mostly a sub-Big 4 problem as a more robust pipeline and a healthy campus recruiting assembly line meant plenty of candidates for these firms. Now? Accounting enrollments are down, those that do graduate with an accounting degree are less and less interested in pursuing the CPA credential, and people are dipping out of the Big 4 well before the usual two years. The “crisis” is well underway at firms of all sizes.
Here’s AICPA President, CEO, and World’s Greatest Boss Barry Melancon wringing his hands over the building accountant shortage in Journal of Accountancy seven years ago:
“It is critical that we’re producing enough CPAs to replace the retiring Baby Boomers and that the profession is continuing to meet the ever-changing needs of the U.S. capital markets,” Melancon said. “We’ve been looking into this issue in great detail and are considering a number of professionwide initiatives to complement our existing programs and ensure that qualified accounting graduates are earning their CPA license.”
So what kind of progress have they made in the last seven years? The “talent crunch” has been rebranded as “the accounting pipeline problem” and fixing it is one of the AICPA’s top priorities for 2022. So none, basically. Cool.
OK so what does all this mean for you the accounting professional? Leverage. We know firms are desperate and we know that at least some firms are throwing out highly competitive offers complete with 100% remote work to lure talent away from their lower-paying firms.
Keep that in mind if you come across any articles like this one that appeared on NPR a few days ago:
While some companies have been plotting and scheming to get their employees’ butts back into company-owned chairs, others have spotted an opportunity. These companies recognize remote work has tremendous appeal: a big, delicious cookie they can use to lure and retain workers. It’s so scrumptious that offering it to workers can be as good as cold, hard cash. And the best part for business executives: this cookie is cheap!
In a new study, economists Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent H. Meyer, and Emil Mihaylov surveyed more than 500 American companies, asking them how they are using remote work. They find that many companies are capitalizing on remote work by using it as a substitute for giving workers raises, so much so that it’s helping to moderate inflation.
Remote work is not a privilege, it is reality. And it is certainly not a substitute for raises that at minimum keep up with inflation (which btw is 9.1% as of June). Firms that push too hard on return to office WILL lose the talent war and good luck finding anyone at all if they make the utterly boneheaded decision to pay people less based on where said people get their mail delivered.
Get that money while you can, kids. And buy some new sweatpants, those ones you’ve been wearing since 2020 are looking hella busted.