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The competition for talent has been fierce over the past year, leading to numerous jobs going unfilled despite significant increases in pay over last year. Mercer's 2022 US New Graduate Pay and Gen Z Compensation report shows that organizations are attempting to narrow these employment gaps with greener talent. Of the survey respondents, 87% hired new graduates, 81% hired summer interns, and 24% hired cooperative education program students.
A substantial number of companies are hiring in these categories, and many indicated that they had hired more than in the previous year. Compared to the last 12 months, 23% of the companies hired more new graduates, 30% hired more summer interns, and 21% hired more co-op students.
Further highlighting the tight labor market, 44% of companies provided sign-on bonuses to new graduate hires in the past 12 months. Most companies indicated that they offered the sign-on bonus to compete with the multiple offers received by new hires (64%) or to pay for an in-demand skill (52%).
The report also shows continuing shifts in benefits and perks offered by companies to attract Gen Z employees, a workforce that may be less motivated by dollars. As more companies compete to hire less experienced employees, employers are re-evaluating their employee value propositions (EVPs) to attract and retain talent with higher pay, more flexible hours, enhanced benefits, and better engagement.
Gen Z is composed of individuals born during or after 1997, and are 25 years old or younger as of 2022.
Gen Z likely completed school remotely and may not be excited to be tied to a desk for work. Mercer's 2022 US New Graduate Pay and Gen Z Compensation report shows organizations believe the personal perks most important to Gen Z employees are flexible remote work/work from home (49.2%) and flexible hours (14%).
As companies continue to sort out if and when employees need to report to an office, 82% of companies reported providing flexible remote/work from home options, and 62% have flexible hours. When reporting to an office, 74% have a relaxed dress code and 58% have a tolerance of fashion hair, colors, tattoos, and/or piercings.
The US New Graduate Pay and Gen Z Compensation report also finds that the perks considered most important to Gen Z are different from those of previous generations. The most important perks are cultural, personal (like personal appearance and maternity/paternity leave), and social (such as community service and paid volunteer leave).
Challenging and rewarding work gained even greater importance for new graduates, followed by recognition programs and then pay. Simply paying more may not be enough to persuade this generation to work for your company.
The Gen Z generation is highly motivated by cultural and social perks, which may provide company communities to foster cultural connections. The most common social perk offered by companies were organized community service efforts (56%), paid leave for volunteering (53%), philanthropic giving programs (51%), participation in corporate challenges (49%), and regularly sponsored networking opportunities (30%).
Up slightly from last year, more than three quarters of participating organizations have a separate pay structure for their co-op students (78%) and summer intern programs (75%). Only 18% of organizations have a unique pay structure for new graduates.
The US New Graduate Pay and Gen Z Compensation report shows that recent graduates with certain bachelor's degrees are in greater demand and by more organizations than their peers. While all of the top-recruited degree salaries have increased over the last few years, the prevalence order has reshuffled as engineering has remained high and Bachelor of Business Administration returned in prevalence:
A co-op job "is like a paid internship, where students earn a salary as they work with professionals in their fields of study. Their co-op employers then hire some." According to SHRM, an "intern's work complements rather than displaces the work of paid employees while providing significant educational benefits."
Co-op program participants typically do not receive tuition reimbursement or premiums for working multiple terms in a single academic year. However, 8% of co-op companies offered tuition reimbursement and 25% of companies provided benefits like gym access, insurance, retirement investing, and life insurance options.
Companies usually do not hire freshman-year students as part of their co-op programs. For the remaining years of study, the highest percentage of organizations hire third-year students working toward a Bachelor of Engineering.
The percentages of companies across all industries who hired coops by degree and year of study are:
Summer interns are typically compensated monetarily, irrespective of the industry sector, and typical pay rates vary by degree program and region. The latest data show that students with a STEM discipline are the most frequently hired interns, especially those in the third or fourth program years.
Third-year students in Bachelors of Science were hired by 73% of companies. Engineering program students were are hired by 62% of companies as interns in the third year and approximately 70%% in the fourth year. Meanwhile, 67% of companies hire third-year students seeking a Bachelor of Business Administration for summer internships, and 59% employ third-year students pursuing a Bachelor of Arts for internships.
Looking ahead to 2023, consider how new graduates and Gen Z talent are motivated by different things than generations before. Use Mercer's US New Graduate Pay and Gen Z Compensation report to re-evaluate your employee value propositions (EVPs) to attract and retain the best employees.
For additional information on graduate and student hiring and pay trends, visit US New Graduate Pay & Student Hiring Rates Survey | Mercer (imercer.com).