Gen Z graduates are using TikTok to compare U.S vs U.K. starting salaries

One new tech worker posted to say that her total compensation of almost £50,000 ($59,400) seemed generous until learning her equivalents in the States were taking home six-figure sums. Some in healthcare reported salaries that were half what they could earn on the other side of the Atlantic.

They are correct. British graduates make less.

In 2021/22, the average graduate starting salary in the UK was £30,921, according to a survey of the Institute of Student Employers (ISE). It ranged from £26,333 for workers in retail and fast-moving consumer goods, to £42,810 for legal graduates.

In the US, the mean starting salary for a graduate was $58,862, equivalent to £49,526 at current exchange rates,  according to the National Association of Colleges and Employers. Among the best-paid are those majoring in computer science, who start at an average of $75,900, while the lowest-earning are humanities majors, making $50,681.

Such disparities have started causing problems for UK employers.

For example, as American law firms expanded in London, they’ve been paying newly qualified lawyers up to £160,000, according to City AM. British firms paying less have needed to respond, bumping wages for the most junior attorneys to £125,000, plus bonuses, but still clearly lagging behind.

“Non-US law firms are struggling to compete, or having to compete in new ways,” said Stephen Isherwood, joint chief executive officer of the ISE.

A similar bidding war is taking place in banking. “Salaries are absolutely rising,” said James Uffindell, the founder and CEO of Bright Network, a graduate recruitment company in London. “There is strong competition, and firms are willing to pony up to get the best.”

There are also factors within the UK that could be pushing salary levels down for entry-level workers, said Isherwood.

Employers have been increasingly focused on school leavers — those who end their education before university. The hiring of school leavers is growing faster than for graduates, according to figures compiled by the ISE. In the 2021/22 period, vacancies for this cohort rose by 19% from a year earlier, with firms predicting this would climb to 28% this year.

Graduate vacancies are growing too, but at a slower pace, with an increase of 17% in 2021/22, the data show.

The survey also found that mixed hiring is becoming more widespread: 68% of respondents hire graduates alongside non-graduates for entry level jobs, a 5% increase compared with 2021. “There must be some displacement but putting a number on it is impossible,” Isherwood said.

It is not just the States where graduates are getting a better deal — consider Australia, too, said Cary Curtis, founder and CEO of recruiter Give a Grad a Go in London. “We were surprised by how high the salaries were in Melbourne when we first started working over there,” he said. Minimum graduate salaries are around A$55,000 (£30,598), whereas equivalent positions in London would offer about £25,000, he said. “It’s hard to find someone to work in Melbourne for less than that.”

Curtis said his firm refuses to recruit graduates for jobs paying less than the so-called Real Living Wage, which is £10.90 an hour for the UK, and £11.95 in London. But given double-digit inflation, it “has become noticeably very difficult for people entering the world of work to get by,” he said.

“Grads can look beyond the UK — we have placed a few abroad.” They can also relocate “to tax-free places in the Middle East,” Curtis said.

Of course, similar industries can offer different pay scales depending on the country. For example, privatized healthcare in the US is among the best-paying professions, but not usually in the UK, according to LinkedIn.

“Grads do need to use their common sense, go to places that do have growth and where you can apply skills,” said Dan Hawes, co-founder of the Graduate Recruitment Bureau, a consulting company.