Although the accounting talent shortage seems like something that just popped out of nowhere and couldn’t possibly have been predicted, oh, a decade ago, I feel compelled to remind everyone that we here at Going Concern saw this coming. I don’t say that in a “hurr durr I’ve been talking about this for ten years and no one listened” way, I mean the writing was on the wall way back so the profession really shouldn’t be surprised that we ended up here.

In working on an unrelated article today I was digging through our archive of 15,000+ posts going back to 2009 and came across something I wrote in 2012 about a talent shortage coming down the pipe. It’s oddly prescient now which is incredible considering how blackout drunk I used to get back then. Granted we said a lot of nonsense back in the day so this may just be a stopped clock situation, who knows.

Imagine this: university accounting programs were rejecting people back then, that’s how robust the pipeline was. Mind this was just a few years after the Great Recession when people piled into accounting because it was one of the few industries reliably hiring in 2008-2009. The word “oversaturated” comes to mind. From Is There Really a Shortage of Entry Level Accountants? published here December 3, 2012:

With the bazillions of articles out there about how awesome accounting is, record numbers of people sitting for the CPA exam and 3% or so unemployment in accounting, you’d really think there would be a huge pile-up of marginal entry-level candidates desperate for work and not enough positions to stuff their warm bodies into.

Firms have always competed for top talent or there wouldn’t be recruiting events and seminars for recruiters with such advice as “treat ’em like pampered pets.” You may recall the Crain’s piece last year about the firm throwing around steak dinners and Becker courses to lure new talent, Aronson making it rain with iPads or even the cringe-worthy display of Price Is Right generosity by Plante Moran. This is old news.

So where, exactly, is the disconnect? There should be tons of accounting grads drooling for jobs right now and plenty of jobs to go around, no?

OK ready for the prophetic bit?

The AICPA’s 2011 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report showed record numbers of accounting students and graduates but also hinted that demand for new talent eventually could outpace supply:

All told, 226,108 students were enrolled in undergraduate or graduate accounting programs during the 2009-2010 academic year, 6 percent more than in 2007-2008, the last time the AICPA conducted its survey. A record 68,639 students graduated with accounting degrees in 2010. Nearly 4 in 10 accounting graduates hired last year by CPA firms had master’s degrees, compared with 26 percent in 2008. By contrast, 43 percent of graduates hired had bachelor’s degrees, down from 56 percent in 2008.

Unfortunately, many accounting programs are currently rejecting qualified applicants, which the AICPA guesses is likely on the rise due to poor economic conditions at universities and the shortage of academically qualified professors. In the report above, the AICPA reported thirteen percent of AACSB accredited business programs each rejected 165 qualified students on average, up from 6% in 2009.

Compare these numbers to the 2021 AICPA Trends report: total accounting degree completions from 1994-2020 peaked in 2015-16 (79,854) and for 2019-20 which are the years covered in the 2021 Trends report, we had a combined 72,923 bachelor’s and master’s graduates. This is a decrease of 2.8% and 8.4% at the bachelor’s and master’s levels respectively compared to the Trends report two years prior.

Up against the 2011 report, the 2021 report numbers look great. But as I drunkily predicted would happen in 2012, demand greatly outpaced supply which is how we ended up where we are now. Actually I guess the AICPA predicted that which makes it even more astonishing that here we are all these years later and no one figured out how to fix this.

Two years after we published the above quoted text, the AICPA noticed a gap was building between people who graduate with accounting degrees and those who take the CPA exam. In other words, although accounting enrollments hadn’t hit troubling lows yet — the opposite, actually, accounting enrollments were breaking records in 2014 — all those people weren’t going on to sit for and pass the CPA exam like they were expected to. Something that has persisted to current day and which has no doubt led to many zolpidem prescriptions for the benevolent overlords of CPA licensure over the years.

The 2012 article goes on to reference Robert Half’s 2013 salary guide and here Bob is like the End is Nigh guy waving a sandwich board in the profession’s face:

Public accounting firms are hiring again in response to increased demand from businesses for accounting, audit, and tax services. Firms of all sizes are looking to expand practice areas and pursue new market segments. Demand is especially strong for audit and tax professionals. Specialty areas seeing more hiring activity include IT audit, business valuation, and forensic accounting. Firms generally seek candidates with at least three to five years of experience, but recruiting of entry-level professionals is not uncommon.

Although accounting firms have a growing demand for staff, they’re competing for talent with businesses that have a renewed interest in adding people with some of the same sought-after skills. Accounting firms are improving compensation as a result, but may need to further enhance their efforts, both to attract new talent and retain experienced accountants who may be tempted to consider more lucrative or lifestyle-friendly opportunities in private industry.

Um, yeah, so that salary thing didn’t happen. When I was in CPA review in 2007 the starting salary at Bay Area Big 4 firms was like $50k. FIFTEEN YEARS AGO.  IN A HCOL MARKET. Sorry for yelling. For too long firms have skated on the “prestige” that comes with having their name on your resume in lieu of competitive compensation and now here we are. Shocked — shocked I tell you — that students are choosing fields with just as much if not more prestige and more immediate compensation instead of committing themselves to at least two years in the Big 4 meat grinder for the promise of better money down the road if they can just hack a couple years of hell.