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February 10, 2009

Comments

Sigma,

What happens if you get an accounting degree but don't pass the CPA exam? Is it harder to get a degree in accounting or harder to pass the CPA?

I got a BA. in Communication Studies, and jumped around to a lot of sales jobs and got laid off and fired once. I am now doing an MBA with an accounting emphasis to get into that track.

Do a Monster search for MBA, and note that they are all looking for a finance or accounting backgroud, and with accounting you can do finance but not the other way around. Some just want a general MBA, like for a general mgmt. position. So I figure I am same with the accounting emphasis since I can leave that off if I want. BTW, I am going to the U of Wisconsin - (not Madison campus) some other one. I made 26,000 the past couple years. I am 27 in a few weeks. Sad I know.

Let me submit, engineering is a better 4 year degree than accounting. If you have the mathematical aptitude and the interest, engineers start at 55k fresh out of college and there is a strong demand for them.

This is some pretty good advice, HS. Too many students major in basically useless majors like "film studies" or "global studies" at their local state university (or at an expensive but non-prestigous private school, which is really stupid), only to find that they are unable to land a decent paying job once they graduate. I have met various college-educated waiters and bartenders who were paying off mountains of student loan debt and they all had one thing in common: a useless major a State U or non-prestigous pivate school.

Accounting will provide you with a decent career track, but like you said it is dreadfully boring. I used to work in accounting, so I know.

Similarly actuaries seem to have even better prospects than accounting, the pay is better and you get to major in whatever you want in college all you have to do is pass the exams (which granted are a bit tedious).

At my college, people that end up in accounting don't end up earning any more than any other specialization, plus they get shafted in terms the number of hours they have to work. I'm sure that Half Sigma would be singing a different tune if he had actually gone through the accounting churn cycle.

I wonder if all those investment banking jobs for Ivy Leaguers dried up yet. It seems like all those companies went bankrupt or were bailed out.

Scott:

There are WAY more jobs available in accounting than in engineering (I am talking orders of magnitude more). If you don't believe it, do a search on Monster or any other employment site.

Also, if you go to a crappy/lowly ranked engineering program it can be hard to find a job (I have a couple of friends who did EE at a State U with a small engineering program, and they had MASSIVE trouble finding a job).

That said, engineering is a decent major if you go to a school with a good engineering program and you are proactive about looking for a job.

Undiscovered Jew:

The CPA exam isn't too easy, but if you graduated with a decent GPA and you can take each of the four parts seperately, it should be no problem.

Bryan Bell:

Even though there is no "required" major for becoming an actuary, there are required classes you have to take (I can't remember what the classes are off the top of my head though).

Most people who become actuaries major in actuarial science, statistics or math. The exams are too hard for a non-math/non-science majors to pass (unless you are really smart).

How much do accountants make? I read a list of salaries for various careers and it said that the average (not entry-level) salary for an accountant was only $14.21 an hour. It was the lowest one on the "4-year degree" list and I can't understand why anyone would put so much effort into studying if they're only going to be making $28000 a year even well into their career.


I'm currently studying computer science, but I agree with you that it isn't an ideal field and it's only after failing at several other things that I'm going down this path. One thing you didnt add to your list of reasons why CS sucks is the incredibly high unemployment rate ... I've heard that 50% of CS graduates are not yet working in a computer-related occupation within 5 years of graduating. However, one thing I think you overestimated a bit is the impact of outsourcing: sure, you can outsource tech support and to some extent programming, but there's always going to have to be people physically on hand to build and repair things.

The only currently explanding field of work is healthcare, because of all the baby boomers getting old. But that too will probably fade out in a decade or so.

Don't be so sure that accounting jobs can't be outsourced. I work in communications and spend a lot of time in Asia, including India. A couple of years ago I talked to a guy from an outsource provider who said they were hiring every accountant in India they could find. He said accounting and finance would be the next big wave of offshored services because so much of the work was low value-add and could be done from anywhere.

Stopped Clock: Do you know how much people make for building and repairing PC's? It's crap. It certainly isn't worth a 4-year CS degree.

Accounting is a good, practical major. It doesn't matter where you went to school as long as you get a CPA. The nice thing about the CPA is that your employer (if you work in public) will not only cover the costs, but pay you a bonus. Sounds better to me than paying $50,000 a year for grad school while not being able to work.

If you want to be a corporate drone, then Big Four is a good place to start just to get it on your resume. Most people leave after two years due to burnout from stupidly long hours and limited types of work.

A better option would be going with a smaller public accounting firm. The quality of life is much better, you'll have more variety in your work, and the pay will be similar, if not more.

Either way, public accounting is a good place to start for the first job.

The Wall Street bonanza of the past thirty years is over due to the imploding FIRE economy.

Half Sigma-

first of all, you are correct that someone smart enough to get in to one of the top three schools in america can major in anything he or she wants - plenty of jobs will accept you simply because you proved smart enough to go to those schools


for people that can't get in to those three schools,
you are mostly right about accounting -

I would also highlight petroleum engineering as a good safe field to go in to -

also consider pharmacy school.

I would avoid engineering other than petroleum engineering due to outsourcing -

for those who are not smart enough to get in to one of the top three schools but still pretty smart i suggest medical school - if you are willing to go in to a high demand specialty and willing to move anywhere in america where that specialty is in demand you are pretty much guaranteed 300k a year

however be aware of the fact that if you absolutely insist on living in a cool city like manhattan or san francisco you can be a doctor and make very little money

"At my college, people that end up in accounting don't end up earning any more than any other specialization"

Ethnic Studies or Psych majors make what accountants are making?

Many of the rebuttals here include assumptions that don't apply to Half's point. Yes, engineers make more, but many people who couldn't make it through an engineering program can make it through an accounting program.

That said, I'd probably have to agree with Stopped CLock's last remark. If you want a reasonably good paying, flexible, recession proof, portable job, forget accounting and major in nursing.

None of this addresses the real problem posed by Jennifer: how do you explain these realities to your kid that wants to major in art history or film?

long post, here goes:

To RP: True, that's not a good comparison because most computer repair people don't have bachelor's degrees. As for the salary, I think it pretty much depends. Most people run their own businesses and so would be considered self-employed, so they wouldnt have health insurance or anything, but there is no ceiling on income. I know a person who runs a whole store by himself, it's open 60 hours a week, and I don't know how much he makes but I think he lives quite well. Of course he's one of the lucky ones. I think most people work for larger companies such as Best Buy's Geek Squad which hires at around $8.50.

Here are some more income comparisons, all converted into dollars per hour:

Computer Support Specialist: $15.72
Graphic Designer: $17.11
Computer Systems Analyst: $27.26
Systems Administrator: $22.58
Computer/Information Sys Mgr: $32.02
Computer Programmer: $26.69
Database Administrator: $25.25

Accountant: $20.12 (this is a different source than the brochure I pulled the 14-odd figure from. Now that I think about it, I wonder if the $14 figure may have been the entry level salary after all. So $20 an hour = about $40,000 a year = not nearly as bad as I thought.)

The above figures are all averages, not medians. Source: US Dept of Labor printout from 2004. I suspect five years isnt enough for much change to take place.

For what it's worth, I'm not terribly worried about getting into a high income occupation. I would be happy with a $10 an hour job as long as it was stable. So I suspect that rather than pursue a sysadmin or computer programming job I'll try to get into a brick-and-mortar retail store like Best Buy (they're the only one left, now that I think of it) and do web design on the side until I can get myself a full time position.

Jennifer:
"I love her and I really believe in her abilities, but at what point do you say to a kid, get real and major in something where you can actually get a job?"

Ideally you should say it before she throws away four years of her life and tens of thousands of dollars of your money on a worthless major. Teenagers don't understand how the world works. As her mother, it's your responsibility to help her make the right choice. You can't force her to make a wise choice, but neither should you subsidize a foolish choice.

IMO, parents shouldn't pay for their children to go to college except under special circumstances (e.g., they get into an elite university that practices price discrimination, and you have enough money that they demand full price). My parents didn't pay my tuition, and I had enough to pay off my loans within two years of graduation.

"The CPA exam isn't too easy, but if you graduated with a decent GPA and you can take each of the four parts seperately, it should be no problem.

Posted by: Good Advice | February 10, 2009 at 08:12 PM"

Thank you.

I've been working with my Dad for a few years since getting out of high school and am looking at going into accounting at some public universities.

"Similarly actuaries seem to have even better prospects than accounting, the pay is better and you get to major in whatever you want in college all you have to do is pass the exams (which granted are a bit tedious)."

As I understand it, if you can do the math needed to pass the actuarial exams you probably could handle engineering.

I agree with the main point, however. Accounting is a good major that's within the capabilities of most reasonably intelligent people.

It's also true that some colleges consider accounting too vocational to be allowed to sully their course offerings. The reasonably selective Northeastern liberal arts college I attended had a no-accounting policy for years. Faced with constant requests from students, the administration finally deigned to offer a single accounting course. They wouldn't allow one of the accounting faculty members to teach it, even though a couple of them were CPA's, and instead paid a teacher from a nearby, less-selective university to teach the course each semester. I took it in my senior year and found it pretty interesting and useful.

I never needed anything higher than 8th grade math in the classes for my accounting classes at a prestigious but not ivy league university so math skills shouldn't be a problem for anyone.

The CPA exam is basically the same stuff you learn in college so it is not too taxing. I took two of the sections on four days study and passed.

Unfortunately I got turned down by all of the B4. Never figured out why...it was hard to swallow since they hired pretty much everyone else out of my program but it ended up working out alright since I make almost as much as entry B4 working in state government, and I only have to work 40 hrs per week.

I could possibly have seen myself in the other majors commenters have mentioned but science and engineering majors generally have to be decided on pretty early since they require lots of intro level courses and I didn't know what I wanted to do as a freshman.

How does the economics major stack up? It seems to me like knowledge everyone ought to know but at the same time it's pretty cerebral and not a lot of it is applicable to most entry-level jobs.

I'm loving the post, of course, Half Sigma has a great site here (even if the only time I'd referenced it in the past was to make a rant about other people ooops!)

I'm probably biased because I am an accounting major. So I guess I'm early in the process -- I'm doing recruiting and interning from this spring to next spring, and my school streamlines the process so perhaps things would be easier for us than elsewhere.

But here's the kind of deal...Accounting is something that everyone needs, yes. Accounting is everywhere, yes. An accounting degree is one of the best you can get in relationship to the time and effort you've put in (obviously, you can do finance and ibanking or law/med or engineering, but you have different work requirements and school requirements there). But one thing is critical: for accounting it's that CPA certification.

Without a CPA, your opportunities are limited and you may find yourself in the area where you could be outsourced. But with that CPA, that gives you the degree branding that allows people to know that you can bring real value to them. So, it might seem that accounting is just calculation and stuff that can be outsourced, but that is such a minor part. The way the CPA certification keeps its good reputation is not by being outsourceable -- CPAs must innovate and be people-oriented people. It's not just sitting at a desk and crunching the numbers. It's about relationships, of course, and that's something you just don't outsource as well.

I mean, accounting is not going to be the best straight out of college. But I mean, if you want to do engineering, go ahead. If you CAN do ibanking (and are willing to deal with the stress of that), go ahead. But accounting 40~k out of school (which quickly goes up depending on location -- to 50~k starting if you're in New York or some place like that), and with opportunities to advance through the ranks, it's not the poorhouse.

Now, I would say that in business, another thing that also will be a big thing is management information systems...and someone's put the information about CIS/MIS wage rates -- and for business majors, it's going to be on an even higher end, because you do need someone who can cross the boundaries between accounting/financial and IT. So there's your MIS. So, I'd think that Accounting with MIS on the side would be even more marketable, without getting extreme in work.

Accounting requires a hell of a lot of studying and memorizing (I took a class 3 years ago). It's really a job for which unremitting practice is the key to success.

HalfSigma... finance to get into quant work... interesting

All the guys I knew who went that route were PhD physicists with a background in string theory... if you were willing to work 80 hours a week and live in Manhattan, you could make $250k starting salary...

I to break it to you, but 95% of accounting majors don't understand accounting. It might be different in NYC but here in Hawaii it's full of Asians who can't speak english (and these are people who work at a big four firms.)

If you are smart enough to major in accounting, you're smart enough to figure out some other way to make 55K a year. It's not the major, it's the WORK ETHIC and intelligence of the people who major in it.

My advice to Jennifer's mom is pretty harsh: the kid's just gonna have to get over herself. I had many offers (NMS finalist) for full-ride academic scholarships at good state schools but instead just HAD to go to a snotty private school where my parents had to pay and I even took on some student loans...awful, awful choice. I didn't even know what I wanted to study when I got there, had very little in the way of study habits, and left after an awful two years. The social milieu was not for me, either. I eventually got over myself, but at the time I felt I would die or have a "nervous breakdown," as Jennifer's mom feels her kid will, if I didn't go to THAT college. Maybe the kid should take a year off to get some perspective...or better yet, do a short hitch in the Air Force (the Army was a piece of cake -- I am female too, mind you -- and the Air Force is like a country club). A little time in the real world does wonders, trust me. Plus if the kid's really that smart she'll probably get chosen for an Intelligence job and get handed a valuable government security clearance.

BTW, as HS has written before, CS may be a bad career, but if you have CS skills *and* a government security clearance, it looks like you could take your pick of MANY cushy government jobs. They are all over the security clearance jobsites I look at, such as clearancejobs.com.

Bryan Bell--

My mother nagged me for years about being an actuary, a field for which I had some minimal quals (undergrad math major with some statistics), but absolutely no interest, and probably a high likelihood of failure had I pursued it. I have no regrets about that. She also thought being an engineer was a license to print money.

Her info about the job market was based on almost total ignorance and anecdotes from her friends (who were no doubt equally ignorant).

As I stated here before, I think my college education was totally useless. I would have been far more content had I gone into a blue-collar trade and done something far more productive.

Engineering is a better option that accounting if you are more interested in engineering than accounting.

Consider that the 90th percentile of accountant salaries is 100k but the 90th percentile of computer engineers is 140k (electrical engineers are slightly lower at 120k).

And I don't think that outsourcing of engineering jobs is going to be that big of a deal. China is really the only country that can seriously threaten the US in technical areas (I don't think that India has enough engineers to compete with the US), and they already send their top students to study engineering. And besides a lot of engineering jobs are for the government and can't be outsourced.

--

Actuaries also have really good job prospects, compared to engineering or accounting.

*The 18-year-old may also protest, “but accounting is boring."*

As a major, it comes across as rather boring. In contrast, urban studies and political science seemed rather interesting in terms of classes, but for all intents and purposes, the majors are dead ends unless one is aiming for a quiet existence as a civil servant or wants law or grad school. Mind you, since I gave up on women, I have less qualms about working for $35K* for the government since I wouldn't have to spend the money to attract women or on future children. In fact, if housing prices fall further, I could consider buying a home out in the extreme 'burbs and commuting in via the railroad...

*I get a pension and more vacation days than private sector employees, right?

Start out as an auditing accountant, then move into accounting on the corporate side, then move into general corporate management, where the real money is.

I agree with John. The first-gen Asian proliferation in accounting is very annoying. This is a problem in Europe too, where Chinese students are imported to do accounting courses, and are astonishingly overrepresented. Some may have the g for it (although many don't), but their lack of basic english makes it very tough for both themselves and co-workers.

Secondly - the big four are vastly overrated. In terms of audit, you get much more hands on experience and RESPONSIBILITY in a smaller firm. But then again, the B4 benefit from a version of the Harvard/Yale prestige effect - other employers might think 'he's didn't work for a big 4 firm.. there must be a reason - they didn't want him'.

My father is a CPA and from what I can tell, most of what you would say is true. I would quibble about the math part -- at least when and where he studied, there was a pretty steep stat requirement (II or III anyway) as a filter course for mouth-breathers, and he may have had to take Calc II as well...not sure. Nothing too serious but not arithmetic and probably beyond me. Any good school probably will inflict some similar hazing -- similar to linear algebra for engineering students at my university.

Also, being a junior public accountant is somewhat similar to law in the demands on time: this is not to be underestimated. Fortunately, he was able to slide out to management accounting relatively quickly, which both pays more and demands less, as well as being at least theoretically more interesting. Now he's a general manager at a manufacturing company, which is both extremely interesting and extremely hard work. Your mileage may vary but he claims that he found even the drudge work of corporate tax work in public accounting to be relatively interesting work, and he loved doing audits.

Engineering *easily* destroys accounting in earning potential. Average, median, & high end. High end undergrad engineers are making 75K+/year upon graduation (I am). Needless to say, this is probably the best gig available upon graduation.

Really, the *only* place where accounting majors might beat engineers is at the 98th+ percentile (of both professions). Even then I doubt this, one is looking at engineering entrepreneurs at this point and high level engineers who are now in management.

http://www.careerservices.calpoly.edu/students/career_planning/gsr.htm

Lil Wayne makes more money than all you.

Rock Star is by far the best degree a young person can work towards.

The gap between actuary and accountant is vast, at least in Britain. Would-be actuaries tend to have an honours degree in mathematics; would-be accountants have to be good at adding up.

Engineering is a hell of a lot more fun than accounting.

In my last job, I got to design stuff, build stuff, test stuff (and break it!), and sell stuff. I loved going to work. Pay wasn't too bad either.

Then I got hired by Big Oil. It's not quite as fun, but its still pretty frickin' cool. Way better than being a spreadsheet jockey. And I make 6 figures.

Can I be outsourced? Can I be replaced with a youngster? Who knows. I haven't seen anyone outsourced or downsized yet, and I've been in the workforce for almost 15 years now.

I don't know about majoring in accounting, but a minor in accounting is a no-brainer. And a dual major of accounting/ whatever you're really interested in makes a lot of sense too.

How many credit hours does it take to get a major in Accounting? 30 out of 120? Seems like you could fit that in with something else pretty easily.

You know why the Big4 are always hiring?

Because it's sucks working there, and if you stick around long enough they'll try to replace you with a new hire, unless you start to massively suck up.

Are you suggesting people to major in something they hate just for a job?

Siggy, you can´t simply tell people across the board to study accounting and their problems will be solved. Unfortunately, not everyone likes accounting. If you do it and don´t like it, you´ll have a job but will be miserable having to crunch numbers. Some people simply hate it.

I agree that nobody should major in useless subjects, but you can´t choose one you hate only by job opportunities either. The choice of profession is far more complex than that. The best choice is one conciliates opportunities with the students interests and abilities. That is why I think nobody should make an early professional choice. It is a difficult decision and that is why I think that you not necessarily choose you profession when you´re 17.

When you find the best agreement possible between your interests and the job market is the moment that you can go to university and go with all the drive. At this point, study hard, have focus and graduate with honors.

The principle is that a person has more than one interest. One of the many subjects a person is interested probably intercepts with marketability and that is the right professional choice. When you don´t find the intercept, you either are miserable on yout job or are doing something unmarketable.

One thing, however, I agree. There is excessive professional choice based on glamour: TV producer, Hollywood, painter, professor, lawyer etc. Not knowing how the world works, student think that they will graduate and sleep with hot babes and drive Ferraris. But what makes the world work are the silent, unglamorous and concrete workers, like accountants, drivers, computer and electronics people, plumbers, electricians et cetera. You can´t last in these activities by overhyping yourself or bullshitting. The job is done or is not done, period. It is a pity that americans don´t realize it.

My wife got a science degree from a Big Ten university. After bouncing around from job to job for a few years, she switched to accounting, passed her CPA the first time and then got an MBA with a finance major. It was an excellent career move. She now works from home and pretty much sets her own hours. By contrast, a friend of hers got a degree in English and history from a mid-level private university, which must have cost her parents a fortune. She now works as a hospital clerk. She told me once, "I got a sh*t degree and now I got a sh*t job." She's thinking about switching to accounting.

" It is a difficult decision and that is why I think that you not necessarily choose you profession when you´re 17."

And that's one of the reason why I recommend accounting as a default major, because it's the most flexible degree you can get. You have a backup career in accounting, but you can qualify for any other job that any business or liberal arts major would qualify for.

"you can qualify for any other job that any business or liberal arts major would qualify for."

You're a wise man HS; where were you when this kind of advice might have done me some good?

A health-care-related career is a sure bet. Depending on how smart you are and how hard you want to work, you can make:

Something close to $1 million/year (plastic surgeon, you need 11 or so years of study + great grades, etc)
Several hundred thousand dollars/year (typical doctor)
$150-200K/year (dentist)
$100K/year (pharmacist, could be done in as little as 5 years)
$80K/year (physician's assistant, I think that would take 3 or 4 years, I think audiologists are in the same ballpark)
$50-60K/year (nurse, 3 years, nuclear medical technician has similar requirements but isn't such a shitty job)

And below that you have your choice of various not-so-great but easy to get jobs, most of which have the word "technician" or "assistant" in the job title, but we're already below Jessica's league so I'll stop here.

Accounting is not a very good major - we need fewer paper shufflers (as the current crisis has demonstrated) and more productive and fulfilling career paths.

if you are smart enough to get an accounting degree and land a job, then you are probably smart enough to major in whatever you want, wherever you want, and still land an ok middle-management job. Sure you won't make quite as much as an accountant, but the work would be much more rewarding, and probably has a more potential for advancement.

The most important credentials are intelligence, people skills, and connections. Majors like engineering or accounting can be a shortcut to a well-payin job, but the price is a lifetime of mind-numbing work.

Don't forget that auditing is only one of three major tracks within the field of accounting (although realistically its the one you'll take if you go to work for the big 4--keep in mind, though, that the Big 4 'only' employ 600,000 of the nation's ~1.5 million accounting professionals). Tax accounting as a CFP is an 'easy' way out of the big 4 trap (I say "easy" in that, with the required intelligence, diligence, and executive function, it is there for the taking, but it's too demanding for a large chunk of accounting majors). And managerial, while it's the most narrow of the three paths, is also the most rewarding: You're actually increasing efficiencies. That is, you're creating wealth--something professionals from various other industries like law have trouble boasting about. It is intrinsically fulfilling, not just because of the monetary compensation.

" that the Big 4 'only' employ 600,000 of the nation's ~1.5 million accounting professionals"

The Big 4 combined employ ~600000 people worldwide, not even close to that amount nationally. This is including admin staff not just accounting professionals.

See:
http://en.wikipedia.org/wiki/Big_Four_auditors

First, I want to thank the author for this great article. I'm a student myself at an average state University. I am majoring in accounting and believe me I have done some extensive research on this subject. The main thing I like about accounting is that it offers 360 degrees opportunity after graduation. I can do management, finance, accounting, or almost any other business related job upon graduation. Accounting degree qualifies me for that. Not every other major gives you such opportunities. On top of that, accounting teaches you how to read numbers. In today's information age, being financially literate is crucial for one's success. Studying accounting is like putting on x-ray glasses and start seeing things most people never see. Accounting is especially helpful to those who aspire to have their own business some day. And last, but not least, accounting is one of those professions that will never die out. Unless peole stop using money, or businesses disappear from the earth's face, accountants will always have jobs. And by the way, accounting is one of those special fields that has six figure income potential !!!!!!

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