Every grad needs money once the cap and gown come off, but how much can you actually expect to make with your new degree? You can’t rely on big brand-name sites to tell you the average salary after college because most of them have inaccurate data (covered below).
We’ll walk you through the accurate numbers out there to show you just how much you’ll be likely to make, including the costs of living, and what that means for graduates in different kinds of programs.
It’s not easy to make a lot of money right away, though. Student debt, a high cost of living, and a saturated job market are stacked against many grads who just can’t find a job after college.
We’ve got you covered there, too. Let’s dive in!
The average salary after college
The average income after college has grown with inflation, but the buying power hasn’t changed much for decades. According to the Economic Policy Institute, the average entry-level wage for college graduates has hovered within a dollar of $20 per hour since 1979.
Here’s how the hourly wage looked every year for new grads, adjusted for inflation to 2013 dollars.
|Year||Hourly wage (2013 dollars)|
Adjusted for inflation to “2013 dollars,” you can see that recent grads have a slightly higher wage per hour in 2013 compared to 1979, although that doesn’t account for the insane costs of tuition and home ownership that mark the last decade, which contribute to the unusually high average debt after college for today’s students.
The average starting salary after college
The National Association of Colleges and Employers does conduct a survey on the average starting salary by discipline, but the numbers are incredibly inflated due to incredibly small sample sizes of grads per program.
Take a look at this survey from NACE’s Winter 2020 survey. They’ve published this information as truth even though many disciplines are represented by just 3-5 respondents! Even on the high end of responses, only 21 grads from economics programs responded to the 2020 winter survey.
The survey just isn’t a reliable source of salary data.
That’s not a misreading of the data, either. The survey’s introduction states that it only received 134 responses in total, a “14.3% response rate.”
I’ve seen Indeed quote these numbers too, but they’re still not accurate representations of starting salaries. Multiple websites are peddling these inaccuracies across the web, and it’s pretty shameful.
If you see some web page claiming that the average humanities graduate makes $53,000 right out of college, then don’t feel bad—that number is nonsense.
Starting salary after college based on program
You can find much more accurate studies on the average income after college elsewhere. There is one from the Association of American Colleges and Universities (AACU) that provides a realistic glimpse at graduate’s salaries.
It provides average salaries immediately after graduation as well as at the peaks of the respondents’ careers. Take a look at the bar graph below.
These are the specific salary averages from the AACU’s study.
|Area of study||Average salary immediately after graduation||Average salary at peak career|
|Liberal arts||$26,271 USD||$66,185 USD|
|Professional programs||$31,183 USD||$64,149 USD|
|STEM||$25,986 USD||$86,550 USD|
As you can see, graduates from professional programs pull ahead of liberal arts and STEM grads with their initial salaries, but then end up with the lowest average of all three groups (though not by much). STEM graduates pull ahead to earn the highest average salaries at the peaks of their careers, at $86,550.
Liberal arts graduates turn out just fine, too. The average salary of $66,185 is more than enough to live a comfortable life with savings, but starting wages are quite low. That’s why recent grads often need to consider living at home after college to make ends meet.
Remember that these are averages. I personally know liberal arts and humanities graduates who have already reached $65,000 in earnings by the age of 30. With smart career moves and an effort to learn, it’s quite possible to reach that figure sooner than your 40s.
Why are starting salaries after college so low?
First, the average pay after college can be misleading because most graduates don’t find appropriate jobs right away. 53% of recent grads are unemployed or underemployed after college, and the ones from the liberal arts and humanities are among the most underemployed immediately after college.
Plenty of grads also get an internship after college, which could skew salary information as well based on these statistics:
- Only about 57% of internships are paid, meaning that approximately 43% are unpaid.
- The average paid intern earns $14 per hour.
Look at the bar chart below, which ranks and measures the underemployment of graduates by degree program with data from Federal Reserve Bank of New York.
According to the Federal Reserve Bank of New York, the most underemployed graduates come from these disciplines:
- Fine Arts
- Political Science
- Nutrition Sciences
- Earth Sciences
That list contains a lot of liberal arts and humanities programs, and the underemployment rates can reach astounding heights—as much as 40%-60%. It means that huge swathes of the graduate population can usually find some jobs, but they have trouble finding the best jobs after college.
It’s an alarming amount of underemployment, and so much of it is rooted in the lack of experience and hard skills that graduates have to deal with right out of college—I went through the same problem, which is why I created this site, including my 7-step roadmap to get a job.
What’s a good salary after college?
Your salary after college is always relative to a number of factors:
- Your level of education
- Your cost of living (often related to your city)
- Your level of experience
- Your industry
- How the market values your skills
Let’s look at this study from Edsource in California. Its data shows that the average lifetime earnings for bachelor’s degree holders sit at $2,200,000 USD. Graduate degree holders earn an average of $3,300,000 over their careers.
Based on 40 hours of work across 50 weeks per year (leaving 2 weeks off for vacation) over a 50-year career, we can get a general sense of the average hourly wage for different levels of education.
- Graduate degree: $33 per hour
- Bachelor’s degree: $22 per hour
- High school graduate: $11 per hour
- Highschool dropout: $6 per hour
These are approximate numbers based on a single study form California, so we don’t want to take that too far. Those numbers are also based on the level of education, but not by degree program. Salaries after college can vary quite a bit based on that factor alone, to say nothing of the cost of living (which we’ll cover below).
Take those averages with a grain of salt!
The safest approach to assess a “good” salary after college seems to be using the salary figures from the AACU’s study on graduate earnings. Here are the figures for the average salaries during peak careers, for a refresher:
- Liberal arts and humanities: $66,185 USD
- Professional programs: $64,149 USD
- STEM: $86,550 USD
Shoot for those figures associated with your degree type and you’ll be in good financial shape after college.
Also remember that it takes time to build the skills and experience to reach those salary ranges! Don’t beat yourself up if you aren’t there in 5 years.
The cost of living after college
According to the Bureau of Labor Statistics, these are the average costs of living for Americans under 25—and 67% of the respondents were enrolled in college in some form, making this data pretty accurate for graduates. The data may differ from your personal situation, but this is a good place to start with understanding what it means to get a “good” salary after college.
These are the specific numbers from that survey for Americans under 25.
|Expense (under 25)||Cost (annual)|
You can also find the average cost of living for major cities in the United States from the Economic Policy Institute’s family budget calculator. Compare it with your salary or hourly wage to get a sense of how you’re doing (and to assess job offers!).
That’s just about everything you should know about the average salary after college. Use this data to assess job opportunities more effectively and set yourself up for success.
Happy hunting out there!