Salaries, Signing Bonuses on the Rise for Class of 2025

As organizations prepare to welcome the Class of 2025 to their workplaces, cost-of-living challenges and skills-based hiring are top of mind for students and employers. That is according to the latest National Association of Colleges and Employers (NACE) Job Outlook Survey.

Most notably, the survey found that employers are anticipating hiring 7.3% more graduates from the upcoming student class than they did the previous year.

“This is positive news since it follows a full year of decreases in the hiring of new college graduates,” said Shawn VanDerziel, NACE president and chief executive officer.

In addition to the bump in hiring, the report revealed more than 40% of surveyed employers will increase starting salaries to new graduates and more than 50% expect to offer them signing bonuses.

According to Sue Holloway, a compensation content director at WorldatWork, the signing bonuses also align with WorldatWork’s Bonus Programs and Practices research, which found that 81% of organizations offered sign-on bonuses in 2023.

“These bonuses have become an important tool for employers to encourage candidates to accept offers in today’s competitive job market,” Holloway said.

Behind the Hiring Spree

The NACE survey found more than a quarter (27%) of respondents expect to increase overall hiring, and more than half (57.1%) plan to hire the same number of new grads as they hired last year.

According to VanDerziel, organizations increasing their hiring cite their commitment to succession planning, the need to maintain a full talent pipeline and organizational growth as the primary drivers for hiring more graduates.

While hiring is expected to grow, most employers anticipate salary offers for bachelor’s and master’s degree grads to remain unchanged from last year, suggesting some cooling in the labor market, Holloway said.

“However, a significant percentage of organizations do plan to increase salaries, and it’s essential for HR and compensation professionals to gather specific compensation market data and intelligence to inform their hiring salaries,” she said.

Skills-Based Hiring Growing

Additionally, the survey found 64.8% of employers will use skills-based hiring practices, which focus on a candidate’s specific skills and competencies for the job, for entry-level hires. In contrast, traditional hiring practices, such as screening candidates by their grade point average, tend to concentrate on the candidate’s educational attainment, experience and background, VanDerziel said.

There are different ways employers can put skills-based hiring into practice, he explained. For example, almost three-quarters of surveyed employers stated they have developed competency-based job descriptions, and more than half use skills-based interview rubrics.

Since employers are incorporating skills-based hiring into their recruitment of entry-level college graduates, VanDerziel said, “[Students] need to be prepared to both articulate and demonstrate their competency proficiency in hiring materials, during interviews and in other assessments.”

Addressing Challenges

Compensation professionals also need to factor in the cost of living — preferably by job location — when setting salaries for new graduates, VanDerziel said.

“More than 84% of graduates [in the survey] identified cost of living as the top factor in determining their willingness to relocate for a job,” he said. “Because of cost-of-living disparities between locations, starting salaries are not ‘apples to apples’; therefore, it impacts their economic well-being.”

VanDerziel advised employers to pay closer attention to the cost of living for new graduates and ensure it aligns with their quest for economic security, which responding graduates defined as job stability, annual salary increases, and a good benefits package that offers a company-matched 401(k) and employer-paid health insurance.

The survey also found 83% of graduating students are looking for employers to be transparent about salary ranges and benefits.

“Doing so creates a win-win situation for the company and the candidate,” VanDerziel said. “This also speaks to the student’s need for financial security — they want to know that they are going to be taken care of.”

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