Strategic Salary Analysis: Accounting vs Tech

The number of people pursuing accounting as a career appears to be decreasing. In fact, students completing a bachelor’s in accounting decreased by 7.8% from 2021 to 2022, which continues a downward trend since 2016.

Many people look at these trends and guess that, among other reasons, the extensive education requirements, long work hours in public accounting, and alternative opportunities for faster paths to high compensation may be causing students to choose other paths.

Those perspectives are worth addressing, each in their own thoughtful discussion. In this post, I want to address one specific question that I see often: Why should someone spend the time required to become an accountant, when they can more quickly make their way to high earnings in tech?

Should I Go Into Big Tech Instead of Accounting?

In 2023, California and Washington were among states that enacted salary transparency laws, and the public got access to more data on the salaries at big tech companies. Some observed tech salaries were as follows:

• Software engineer: $132,000 to $200,000

• Product manager: $130,000 to $197,000

• Account executive: $111,000 to $147,000

• Product designer: $123,000 to $188,000

Many of these salaries are attainable after a few years in the role, and many of the roles only require a bachelor’s degree. Those same salaries might take accountants five to ten years to reach and typically require a master’s degree and CPA license as well.

That raises a question: Is the return on investment justified for becoming a professional accountant when this alternative opportunity is available? Add in the long hours of busy season, and the juice may not seem worth the squeeze.

I understand the sentiment. If I'm going to work really hard wherever I go, then I want to earn a good income along the way. But are there important considerations being glossed over in this line of thinking?

I believe there are, so let’s review a few of them.

A Salary is not a Strategy

Earnings are a critical aspect of a career, but they are not the only important aspect of a career. That means that it would be a mistake to only look at the salary to reach a conclusion.

If we take an overly simplistic approach in performing a return-on-investment (ROI) analysis, treating a career like a stock or a certificate of deposit with an initial cost and cash flow over time, then we neglect the importance of personal and professional fulfillment and complementary long-term goals. Our careers play important roles in our social relationships, our professional networks, and to some degree our sense of identity.

For many, a career in accounting offers the opportunity to engage in analytical, detail-oriented work that may align more closely with personal interests and personality. Additionally, the ability to pursue a respected profession may be important for some people.

There are lifestyle considerations as well. For people in certain industry or government roles, accounting might provide a more predictable work-life balance.

More importantly, the work that I’ve enjoyed the most in my career has provided me with learning opportunities alongside teams of people that I enjoy working with. Who you're working with matters at least as much as what type of work you're doing, regardless of whether it's tech or accounting.

Balancing your personal interests in goals should factor into your evaluation of a career in addition to the earning potential.

Different Roles Have Different Risk

Tech roles might have shorter paths to high earnings, but they come with their own challenges. Some of these roles have significant job volatility.

Since 2022, many big and not-so-big tech companies have been performing deep cuts and devastating layoffs.

Here is some data from Layoffs.fyi:

• 2022: 1,064 tech companies laid off 165,269 employees

• 2023: 1,191 tech companies laid off 263,180 employees

• 2024 YTD: 237 tech companies laid off 58,499 employees

Accounting is by no means immune to layoffs. Between 2023 and 2024, the Big 4 accounting firms had significant layoffs exceeding more than 9,000 positions across the four firms. Nonetheless, we can see that tech industry cuts dwarf those numbers.

The probability of layoff is important because if we're going to compare compensation as an ROI analysis, then we should discount the rate for accounting roles and tech roles by their respective volatility, using something like the Sharpe Ratio: (Expected Return−Risk-Free Rate) / Standard Deviation

• Expected Return: This represents the anticipated return on the investment in the career.

• Risk-Free Rate: A theoretical rate of return for an investment with zero risk, often approximated using the yield on government bonds or treasury bills.

• Standard Deviation: A statistical measure representing the dispersion of returns, indicating the level of risk or volatility. This is where you would factor in losses in earnings and other costs associated with the probability of layoffs.

If we don't factor in the different probability for layoffs in accounting versus tech, we're vulnerable to survivorship bias because we only looking at earnings for people who don’t get laid off, rather than also considering the earnings of those people who spend months or years out of work after a layoff.

The Quintessential Example of Survivorship Bias

Optionality is Antifragility

Big Tech jobs are more concentrated than desirable jobs in accounting. Concentration causes fragility because volatility in the industry likely affects all of its members at once. Accountants have distributed options across many different organizations and industries, on the other hand, which allows them to be antifragile by changing industries, pursuing growth where it's available.

This distribution across industries is part of the reason why there are many paths into and through an accounting career. I believe public accounting firms are an important funnel for training and accelerating people's paths into the profession. I came into public accounting through industry, then earned a CPA license. Then I specialized in cyber risk. Later, I continued into data analytics. I pursued each of those specializations within the accounting profession. And I feel like I still have many options for growth.

Ten years ago, tech and data bootcamps allowed people to break into careers, but today those paths are less effective because deep layoffs in tech have flooded the marketplace with experienced tech talent to compete against at all levels. Those saturated market conditions might last for a while.

The Best of Both Worlds

I'm a huge tech enthusiast, and this passion has served me well in my career, so I would be the last person to discourage someone from pursuing a career in technology or developing technology skills. Quite the contrary is true.

Each person should find the combination of options that best aligns to their long-term goals — a strategic approach.

In my career, I found that taking tech-focused roles as an accountant has provided me the chance to work with teams that I enjoy, learn innovative skills, and achieve healthy earnings over the long run. That’s why I encourage others to learn more about these opportunities and skills.

If you’re interested in applying innovative skills and knowledge in the accounting profession, then my newsletter and website have resources for you. I hope you let me know how it’s going and how I can help.