I hope everyone is enjoying the arrival of fall and getting through the last big deadline without too much craziness. We’re pretty busy and gearing up for the busiest time of year for us – 4th quarter. It’s also that time of year when I break out of my busy recruiting day to step back and take a high level look at the job market for Colorado tax professionals. This is by far the most popular newsletter we send out each year – a review of salaries and compensation for tax professionals, as well as a synopsis of what’s going on in the job market. While I love sharing my knowledge of the tax employment market; putting together a salary survey that is relevant and current, is quite challenging. The past few months have been particularly interesting as we see salaries increasing pretty significantly for people in the 1- 4 year range.
Employment Market for Income Tax Professionals
As we all know, hiring and staffing for tax is highly seasonal. It certainly is for public accounting firms. And to a lesser degree; it is in industry (corporate tax positions). This time of year most public accounting firms are busy getting through the fall deadlines, but are well aware of the fact that they need to be keeping their eyes open if they have additional hiring to do. The big push for hiring in public accounting will happen just after the October deadline and run up until the yearend holidays. Corporate tax departments are more consistent in their hiring throughout the year, but usually find their needs increasing as we head into the summer months which tend to be busy with compliance work. There is also a bit of a surge in industry hiring that happens before the end of the year.
As has been the case for a number of years now, there remains a strong demand for Associate/Staff through Manager level candidates (no surprise). Just the past few months, though, we’ve seen a spike in the demand and compensation for 1 – 4 year people – mostly in public accounting. We’ve also seen more cases where public accounting firms are competing with corporate tax departments for the same people. I suspect that is due, in large part, to the growth many public accounting firms are experiencing. It’s my belief that the population growth and increased economic activity we’ve seen in Denver and all of Colorado has most benefited small to medium size public accounting firms. We’ve seen a number of firms merge and other firms open an office in Denver as the market grows and becomes more attractive. Sadly, on the industry side, we’re seeing a decrease in the number of tax departments and positions as companies get acquired or move their tax departments out of state – First Data being the most recent company to announce the Denver tax department is moving to New Jersey. The fallout of the Level 3 and CH2M acquisitions is still playing out. **These 3 companies alone represent over 60 tax jobs in Colorado.** We’ve seen a small increase in headcount with some of the legacy corporate tax groups in Denver, oil & gas companies included.
What I continue to see is that most corporate tax departments are still trying to find and attract a particular pedigree of tax professional that has Big 4 experience, a CPA, an advanced degree (Master’s in Tax or Accounting), steady career progression and that is still early in their career (read younger). Demand for tax talent being what it is, some companies are starting to look outside of these parameters, especially those tax departments that have the size or resources to offer training.
We have continued to see a steady increase in hiring year over year since 2010. This corresponds very closely with the average growth that many public accounting firms have seen. As a result, organizations are faced with not only retaining the employees they have, but filling new positions to accommodate for this growth. This is good news for people looking to make a job change – especially at the 1 – 4 year level where growth is the strongest. While unemployment has slowly decreased in the Colorado job market, workers with a 4 year degree and at least 1 year of experience are in especially short supply. That means that employers have to offer competitive salaries and other benefits to compete for the small supply of eligible candidates. More and more companies are offering creative compensation plans, promotions, professional development opportunities, flexible work arrangements, fun office perks and better work-life balance in order to attract and retain the best employees. **Work-life balance and flexible work arrangements are still the most sought after benefits according to the hundreds of tax candidates I talk to each year.** The increase in cost of living is also playing into the rising salaries we are seeing. It’s difficult to know what percentage of the salary increases we’re seeing is due to supply & demand and what’s due to the rising COL.
One other thing to note is that most college graduates that start with the same firm or same department are usually getting the same pay, as long as they have similar credentials. That parity continues as long as they stay with the same company and progress at the same pace. The evidence seems to show, however, that people make the most money when they make periodic career changes between employers. I find that kind of ironic because most employers would agree that it’s in their best interest to keep their employees. So why not pay them accordingly?
Show Us the Money
Compensation for tax professionals varies for obvious reasons like years of experience, education level and expertise in a particular area. Other factors that are less obvious are location, size of the company or firm, industry and company financial performance, compensation trends within the company or industry and even perceived desirability of employment opportunities with the company. Even in Colorado, Minnesota and Washington state, where Oxford Tax Recruiting does the majority of our business, I’ve seen salaries for the same position vary greatly between downtown areas, suburban business parks and outlying or rural locations. Throw in personality or soft skill factors like confidence and communication effectiveness, and the pay range between employees with a similar position gets pretty broad. That being said, I have put together numbers based on recent hiring activity from over 45 different companies and public accounting firms in Colorado. These numbers are not reflective of bonuses and other incentives, and presume that the candidate will have at least a Bachelor’s degree in accounting or related field. The salary curve is most pronounced early in an employee’s career and then tapers off. While many companies are offering 3-5% annual increases within a title and 5-15% increases when advancing in title, tax professionals can usually expect to see increases of 5-10% when changing employers or getting a promotion. As I said earlier, though, we have started to see some candidates getting increases of 15 to almost 25% when changing employers in public accounting.
Although we have seen a definite increase in salaries this past year, many would argue that compensation is still lagging behind the increased cost of living, driven primarily by higher rents. Public accounting firms seem to be more competitive than they used to be, but they still have a difficult time offering the work-life balance that many candidates seek. Even amidst a sluggish industry, oil and gas continues to be an industry that pushes the compensation envelope. However, there are only a handful of larger oil & gas companies headquartered in Colorado and thus only a handful of these tax departments. A growing trend I’m seeing is more public accounting firms offering early promotions in an attempt to retain tax staff. The net effect is to get employees a higher salary, sooner. This seems to be happening primarily at the Associate to Senior and Senior to Manager levels. I’m also seeing a larger than normal supply of candidates at the Senior Manager and Director level. This might be due in part to the recent loss of industry tax positions in Colorado.
One other thing to keep in mind is that while title in some way reflects years of experience, it is a little more nebulous relationship in industry and smaller public accounting firms. I work with candidates that have a Senior Tax Analyst title that have over 20 years of experience and are making $80-100K. I see this occur most often in larger organizations where tax people don’t have the opportunity to advance, or choose not to do so. Some companies we work with simply do not use conventional titles. Tax Accountants at places like these might be doing the work of a “Senior Tax Analyst” or “Tax Manager” somewhere else. Although title isn’t usually a primary consideration when making a job change, it tends to be of more importance to people early in their career.
This salary information is meant as a guide. If you’re unsure about what you should be getting paid, I am always happy to share specific thoughts given a specific situation. I am also happy to provide information on compensation for indirect and operating tax positions. As always, I will continue to keep you informed of other changes in the Colorado tax employment market as they arise.
Please let me know how I can help you find the right tax job; even if that means I’m not involved in the process, but simply a resource for information. One final quick note – since my job requires me to be well networked, I will gladly accept any invitation to connect on LinkedIn.
To your success,
Managing Director, Oxford Tax Recruiting