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Wall Street Journal Addresses the Accountant Shortage, Suggests a Recession Could Fix It

a dry plain symbolizing a talent drought

I made my entrée into accounting way back in 2007, at the time my job involved a three-hour roundtrip journey across four Bay Area counties and back and I was looking for something a bit closer to home. Shortly after starting in CPA review, I started seeing more and more “For Sale” signs on the yards of the houses my bus would pass on the way to work and not that much longer after that, Lehman Brothers failed and, well, you know what happened after that.

Why am I bringing up ancient history? Besides needing to hit minimum word count on this, I bring it up because even all these years later, I have a vague recollection of the phone calls I got in 2008 from aspiring CPAs. People from various backgrounds — many of whom were in their 30s or even 40s — who found themselves suddenly out of a job flocked to accounting because it was one of the few industries consistently hiring through the recession (the other being government). Most of them were people who took an accounting class or two in college, decided it wasn’t for them, and did something else with their life. And here they were, the bank breathing down their neck, job prospects nil, throwing away 15 years of work experience because their chosen career was no longer an option. They say accounting is recession-proof, I had an inside view during the worst recession of our lifetime and must agree.

I have no doubt then that accounting firm leaders are eagerly awaiting the next economic dip to solve their critical talent problems. If you wreck it, they will come. As bad as the economy is these days, it’s not “force people into accounting because they have no other options” bad yet.

Wall Street Journal ran a piece on the accountant shortage yesterday and from it we learn that it’s taking much longer to fill accounting positions than it did last year:

A deepening shortage of accountants is driving a growing number of companies to raise salaries or seek temporary help to strengthen their finance teams amid a slowing economy.

Many employers over the past decade have struggled to find qualified workers, a challenge accelerated by a decline in the number of job seekers amid the Covid-19 pandemic. The U.S. labor force has been shrinking since early 2020, as more baby boomers retire.

Companies’ accounting and finance departments in particular, which are crucial for managing financial operations, internal controls and financial reporting, are suffering from the lack of personnel. Fewer people are pursuing degrees in accounting and starting new jobs in this area, resulting in more open positions for related roles and searches that take longer to complete. And digitization and automation aren’t expected to fill the gap.

Look, there’s a chart!

WSJ graphic

The number of postings for U.S. accounting and audit roles totaled roughly 177,880 jobs this year through Nov. 30, up from 141,340 during the prior-year period and the highest since at least 2008, according to Revelio Labs Inc., a provider of workplace data. People started 113,400 of these positions this year through Nov. 30, down 15.9% from the prior-year period, Revelio said. Audit and accounting jobs on average require 56 days to fill, up from 46 during the prior-year period.

The article goes on to profile a Nevada winemaker struggling to find accounting talent. The salary equation is delicately danced around:

The company is offering higher salaries to candidates for certain positions and turning to temporary workers such as interns, Ms. Johnston said, but declined to provide specifics on pay. “We sweetened the pot a little bit from where the company was originally,” she said.

The problem is that the pot has been sour for too long. “The accounting industry for some reason has just not moved with the rest of the country in terms of offering competitive salaries, and this has been going on for over a decade,” Surgent VP Liz Kolar told Bloomberg Tax earlier this year. Had salaries kept up over the last decade, perhaps things wouldn’t be so dire now. Despite much hand-wringing by thought leaders over why no one wants to be an accountant, the one thing consistently repeated by accountants themselves is: salary. They don’t get paid enough. Period, end of discussion, no further conversation needed. But WSJ has minimum word counts to hit as well so we shall soldier on.

Another company profiled in the WSJ piece says it is using accelerated promotions to create the talent it needs:

GEE used to elevate staff accountants to senior accountants in one to three years and to managers in three to six years, Mr. Thorpe said. Now, those promotions take less time, with Mr. Thorpe pointing to an employee who made it to manager of financial reporting in less than two years.

I’m curious to hear the peanut gallery’s thoughts on that one.

It seems no matter what these companies do, the talent just isn’t there. Small firms are suffering, and we’ve reached the point in the shortage where small potential clients simply can’t find anyone to do the work, no matter the cost. Wait until the large firms have to start turning down work, that will be fun.

That’s OK though. A potential recession could drive more students back into the profession, said Brandi Britton, executive director for finance and accounting at Robert Half to WSJ.

In a downturn, students tend to gravitate toward degrees in accounting and finance because they are considered more stable career paths than, for example, marketing and communications.

There is this belief that a recession will fix things right up a la 2008. The realtors and office managers and bank tellers will come running to accounting, tears streaming down their faces, and accounting will open its arms wide and embrace them with a warm and loving “we’re here for you, there’s work to be done.” But what if reinforcements aren’t coming? What if simply being recession-proof isn’t enough in a post-Covid world where people across all sectors decided there’s more to life than grinding away for a bum paycheck? What if — and call me crazy if I’m out of line here — the baby boomer vacuum we’ve known was coming for decades just can’t be plugged even if we had an abundance of accountants to fill it (which we don’t, obviously)? The work has become increasingly complex since the boomers we need to replace joined the profession all those years ago, a warm body and an amenability to eating shit in your early 20s isn’t enough for the next generation of accounting talent. The profession demands an army of well-spoken, highly tech literate, out-of-the-box thinking young people eager to put these skills to work, has not sufficiently increased pay to justify these demands, and wonders why the individuals it craves are not attracted to accounting. Gee, it’s a real puzzle.

So what happens when a real, brutal recession happens and no one shows up? Is there even a Plan C or is this it? “We’ll be here waiting when you get desperate”? That’s the message we’re going with huh.

Struggling to Find Accountants, Businesses Boost Salary Offers, Hire Temporary Workers [Wall Street Journal]

10 thoughts on “Wall Street Journal Addresses the Accountant Shortage, Suggests a Recession Could Fix It

  1. Money alone will not fix the problem. We have to change the culture. Accountants need to be respected. Ai and automation are not a replacement for knowledgeable accountants. Accountants are not fast food workers; it takes time to do our jobs well. We have to stop the burnout.

    1. I agree. My two cents is tech dumb boomers need to justify their paychecks and consultants need to make cash. So consultants are telling boomers you can automate everything in accounting. Tech dumb boomers say – yes, not having a clue what consultants are actually pushing with the tech. Tech dumb boomers tell cfo – look at all this o&m I’m going to save. Tech dumb boomers now have to cut staff regardless if tech works because it was in the business case to bring in consultants. Consultants leave, whatever poor soul is still there is left to make whatever was put into place work. Because department heads can’t communicate, each department implements different tech. This compounds the stress even further on the poor soul still left. Not only are you figuring out what to do when the system doesn’t work with a complicated transaction, you are also navigating multiple systems, ten different screens up to answer why forecast was different than actual; on top of it you have one staff accountant who is overwhelmed because of the cuts. Fp&a is in another group and had a dumb forecast to begin with, but they disappear when time to explain what went wrong leaving the accountant to clean up the work. All this equates to = burnout, attrition. Messed up system. I blame it on the boomers, who probably have their jobs because of their technical accounting skills (which the big four diluted the significance of that skill set with all these guides they put out).

    1. Some small and medium-sized accounting firms are hiring accountants oversees and onshore, but finding well spoken and experienced international talent isn’t that cheap either. Believe me! I live in Central America and ain’t taking a $40k a year contract.

  2. This was a great read, excited to see what happens with the future of accounting. We definitely deserve higher pay and respect for the grueling hours in busy seasons.

  3. *** Hello Fellow Accounts. I am very delighted that Adriene wrote this awesome article that was so needed long time ago. I have BBA since 2007 and non CPA (don’t like fighting the IRS) since I’m consider a Proactive tax accountant. I prefer that my clients don’t get in trouble so I explained to them to just pay their fare share in taxes but to always take all loophole’s that are legally available to them. However, I must admit in the recent (Five years) it seem like our field has been underappreciated as the AI-software firms like to push their agenda and only sell their software and give customers the impression that accountants are NOT needed.
    These software’s companies are very wrong; see as humans we like communicating with real people not Bots chats, automated voice messages and etc. We’re emotional beings and that is something it will never change – period!. I don’t blame new students not wanting to get into accounting its complex, hard work and long hours of work with LOW pay. I had Big Five firms offering me the same salary that I made way back in 2010 (Quite offensive ). Please correct me here but last time I checked between inflation 2022 and outrageous cost of living you’re telling that I should work for less? Really…I have now more years of experience plus advance skills and you want to underpay me – NO thanks!!. We deserve to be respected and valued all around the world. Crunching numbers is not easy task and big responsibility therefore we SHOULD be compensated very high and once again respected as true professional. Lets all Stand Up and demand an excellent pay and great benefits – we deserve and earned it. Happy Holidays …………….
    Liz Soria 😉

  4. Ma – sounds like whining to me. Any associate i ask a question to has no clue. Seniors are slightly better but anything beyond the surface is sketchy. Too often “professional” staff don’t understand the client business or industry. Surely that is the fault of the partners and firms, right? Have yet to see one of the digitally dazed professionals actually focus on something- always with headphones on, bouncing between their laptop, phone and Instagram account. I would prefer to be “tech dumb”(and not even a boomer!), as an eloquent reader here has written, as opposed to a digitally drugged idiot with an inflated sense of self worth. Just my 2 cents.

  5. I work at a mid size (usually roughly #13-14 biggest firms) and we are turning down work now. We simply do not have enough staff to take on most new work. We have already fired clients that weren’t paying us enough. It is very, very bad and we are a pretty good firm in terms of WLB. Its going to get worse.

    It isn’t just salary. That is a big part though. Be real, people will put up with crap WLB if they make enough, but making 120K as a manager and working absurd OT is just garbage. I think the article nails it and most comments here do too. This isn’t that complicated. I half my body half way out the door too as I think i am going to just try some other finance roles and probably make close to the same, but work way less. The hours are just stupid.

  6. I’ve been in public accounting for over 20 years. Each of the last four years have only gotten more complex. With boomers retiring at more than 3x the rate of new graduates, the knowledge vacuum has only made things worse for senior managers and up. There is no way to train enough people over the next few years to do what is required today. The 2018 tax reform accelerated retirements and covid/remote work had an even greater impact. Tax preparers now have to be SALT experts and knowledgeable in foreign matters. What is needed is massive simplification on the federal and state level. Neither is likely to occur. Compensation cannot keep up with hours or expertise without significant increases in billing rates. The reactionary response by partners is to outsource/offshore, fire smaller clients and hope that the quality doesn’t suffer. Partner compensation continues to increase significantly. Their greed will crush the industry as people with 5 to 10 years of experience continue to go corporate. The “quiet quitting” of the last couple years will become very real.

  7. This is an excellent article that highlights some of the issues in the profession that have led to today’s shortage of accountants. Over the course of my accounting career of 41 years, the accounting profession failed in how it treated its people, who are the most valuable asset for public accounting firms.

    Many years ago, the principal of the accounting firm of which I was a part told me that the profession was “recession-proof.” It is this perception that has deceived the accounting firms. Unfortunately, in the 2000’s other factors that the profession failed to assess have caused a much smaller supply of available professionals to meet the needs of the clients of CPA firms.

    Public accounting firms, like most businesses, have seen radical changes over the last 20 years or so. They are not immune to the impacts of technology nor the changing attitudes of the workers they seek to attract. They have been impacted by the great recession and the aging of the Baby Boomers. The problem is that the firms chose inaction.

    Accounting firms operated on a “burn and churn” model for many years. They worked junior members of the staff, those with 5 or less years of experience, extremely hard, assuming that these employees only wanted to get some valuable experience first and then move on. The assumption was that most junior members of the firm would not stay long-term, so why invest in them significantly? Get the most out of them that you can and then hire some more from next year’s accounting graduates. The supply of graduates was more than sufficient and therefore could be paid less than graduates from other professional fields. Supply and demand favored the firms. That model seemed to exist for most of the 20th century, until the supply of graduates decreased. Students became more aware of the demands of the profession and perceived a lack of support and investment in their careers. Additionally, the so-called STEM professions were being promoted by everyone from academia to government to private industry. The best students reasoned that lower pay, decreased influence, decreased self-actualization, and less favorable career paths in the accounting profession were not for them.

    The same factors that impacted the accounting firms were also true for accountants in corporate America. Rather than supporting their internal financial staffs and elevating the influence of its corporate financial function, many corporations chose to increase the workload, demand more overtime, shorten deadlines, and decrease and outsource staffs.

    At a time of changing technology when the operational functions of our corporations needed the expertise of the accounting function most, corporations chose to devalue the function. They chose to centralize or worse yet “off-shore” so-called repetitive functions such as accounts receivable, accounts payable, and payroll. These functions were viewed as transaction intensive and became a source for cost savings. Yet, it is these functions that are a part of the teamwork in the corporation that is the most involved with three of the main stakeholders of the company: the customers (accounts receivable/credit), the suppliers (accounts payable), and the employees/team members (payroll). Those are three of the five stakeholders of any business. Service and responsiveness deteriorated and the reliability of the financial analyses, forecasting, and planning that is undergirded by the three “blocking and tackling” functions became more challenging. And unfortunately, when the products and services produced by the corporate accounting function impact those three stakeholders, the products and services will soon impact the other two stakeholders: the owners/stockholders and the government.

    What should accounting firms and corporations do? Completely overhaul the value system of its people. Understand their needs and their desire to contribute, compete, and succeed. Understand the place of honor and integrity that the financial function brings to our free enterprise system, our accounting firms, and our corporations. In most companies, the CEO/COO and the CFO present a partnership front to the stakeholders of the business. Invest in that relationship and invest equally in the functions that support those two partners. Unfortunately, companies have invested disproportionately in favor of the functions supporting the CEO/COO. Valuing the contributions of all functions equally will enhance collaboration, cooperation, and teamwork, and ultimately, the success of the organization. All of these actions will lead to an investment in people, thus answering the basic needs that financial people have as all people.

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