How practices are adapting to the ongoing accountant shortage

The news is filled with stories of worker shortages, among them is a significant shortage of accountants. As of March 2024, the U.S. national unemployment rate was 3.8%, so finding new talent is tough. However, the lack of accounting professionals, especially certified public accountants, could have an impact that reverberates throughout the economy.

The key to functioning capitalism is sound, accurate public accounting practices. So what happens to the accounting profession when there’s a labor shortage?

Let’s take a look at:

• Challenges the accounting field faces
• Reasons the accounting talent shortage is likely long term
• Accounting shortage solutions firms are implementing
• How much of a threat the talent shortage is to the accounting profession
• How automation helps handle the shortage of accountants

What’s going on in the world of accounting practice staffing? While a career in accounting has long been considered a stable, respectable job, the reality is that it’s really hard to be an accountant.

And there’s significant reason: accountants require a bachelor’s degree and CPAs need an additional 30 college credits. That amounts to a fifth year of schooling before students even qualify to take their CPA exam. For many prospective accountants, the math simply doesn’t add up.

College graduates can expect to spend the first five or so years on the lower rungs of the career ladder. The hours are long and starting salaries have been somewhat stagnant for years. Kristin Gayoso, a retired CPA featured in an episode of NPR’s The Indicator from Planet Money (a gem of financial reporting), pointed out that based on the hours she worked, her pay came out to less than minimum wage.

Due to the shortage of accountants and fewer entering the workforce, many are spread thin to manage the increasing workload. In these tough financial times, today’s accountants have had to significantly adapt policies and procedures in response to the following:

• Tariff wars
• Combat wars
• Brexit
• Cryptocurrency and NFT volatility
• Housing market dips
• Environmental protections
• The COVID-19 pandemic
• New regulations
• Additional economic and geopolitical strife

In addition to global economic factors, day-to-day influences have made accounting jobs more challenging:

• Remote work has created additional security challenges
• Many accountants left the profession in the Great Resignation
• High turnover has led to a loss of institutional knowledge, which in turn, means routine tasks take longer as new employees ramp up

So how long will the shortage last? Will things settle down as the current economic woes subside? Well …

Due to lingering pandemic impacts, political upheaval, and economic shifts, most industries are reckoning with people shortages. However, there are several factors affecting the accounting industry specifically.

One thing accountants, in particular, face is the aging population among their ranks. Estimates are that roughly half of accountants are boomers, meaning a significant portion are retiring now and in the next few years.

Meanwhile, the number of people starting accounting majors or taking a CPA exam has declined over the past few years. So while a large percentage of current professionals are exiting the ranks, there’s a severe shortage of accountants replacing them.

Another issue is the introduction of new career paths available to accountants. Traditional accounting roles are still necessary, but companies are competing with other industries for a smaller pool of folks with accounting skills. For instance, the tech sector is providing more glamorous and higher paying jobs to new grads than traditional accounting firms.

And of course, the pandemic played a role in current staffing issues. Many accountants reevaluated the long hours and relatively low pay for the amount of education and effort required for the field and have opted to leave it altogether.

Both large and small practices are implementing a plethora of changes to deal with accountant staffing issues, including:

Recruiting students — According to that same episode of The Indicator, companies are offering scholarships to accounting students. They’re also tapping candidates from underrepresented groups and students majoring in subjects outside accounting and finance. Many companies also find recruiting CPA exam candidates to be a lesser-tapped well of emerging talent, rather than selecting from only folks who have already received their CPA license.

Investing in staff — Some companies are increasing base salaries to align with the long hours required to complete the work. In addition to better pay, more companies are also offering better benefits, from more comprehensive health coverage to unlimited paid time off and training in new skills.

Spreading the work around — In the past, some of the more tedious tasks were relegated to junior accountants. Now, even partners are rolling up their sleeves to meet deadlines. While this does help to evenly distribute the workload, it also has the potential to increase burnout across the board.

Facilitating flexible remote work — Once the proper security processes are in place, the option for accountants to work remotely opens up on a broader scale. This not only increases the flexibility for staff to work at home or in the office, it also gives practices a chance to hire talent from outside their geographical area.

Obviously, a decline in accounting graduates means a smaller pool of candidates to choose from. And with fewer people sitting for the CPA exam, specialists are harder to come by. There will be inherent challenges to fully staffing a qualified team when simply hiring accountants itself is a sizable hurdle. 

That said, the impact on the industry as a whole depends largely on how companies handle shortages. Many an accounting firm may simply expect accountants to “wear multiple hats” or pick up the workload of their missing colleagues. While this response is understandable and seems fairly economical from the hiring side, as previously mentioned, it’s likely to lead to burnout, thus exacerbating the issue. 

This is where that old adage of “work smarter, not harder” comes in: according to the recent Avalara State of finance report, roughly 75% of companies surveyed are implementing technology solutions for a variety of business problems. 

While software may not be a full replacement for experienced accountants, automation technology can be a vital part of many business models.

Another way accounting practices and departments can combat accounting team staffing shortages is by relying on technology, particularly automation. Thankfully, advances in technology help automate many of the tasks dragging down productivity and revenue.

This is especially true for repetitive work previously done manually, such as managing and filing sales tax returns. The right software can automate many of the redundant tasks accountants are required to complete for each account. By handling routine information and data processing through automation, staff is freed up to work on more valuable problem-solving or revenue-generating tasks.

And automation helps with more than expediting manual processes. By removing the opportunity for human error, technology and automation can help increase accuracy to protect the practice and prevent even more work down the line.

The applications for technology extend beyond sales and use tax. Technology is also streamlining the property tax compliance process. Thanks to automated property tax software, firms can offload cumbersome jobs like data entry and free up accounting professionals to spend their time on clients and revenue, rather than housekeeping.

Technology and its adoption, particularly automation, is likely to remain a sticking point for accounting professionals new and experienced alike. In fact, a recent survey showed more than 60% of accountants feel technology is more important to job satisfaction now than two to three years ago. So not only is technology becoming vital to getting the job done, it’s also a key way to attract fresh talent.

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Takeaways from the accountant shortage

While accounting firms, practices and departments are already feeling the crunch of the shortage, its effects are likely to get worse before they get better. Until college and university programs see increased enrollment of students en masse, companies are going to have to continue to innovate within existing teams.

But before an influx of accountant candidates materializes, the industry is going to have to figure out how to make accounting a competitive field again. That’s what makes technology such a crucial tool in solving the accountant shortage.

Because the causes of the accountant shortage are varied and complex, the solution must be as well. Reducing burnout, right-sizing compensation, and increasing job satisfaction are all necessary steps to fixing the shortage of accountants, but the first and most important step often starts with getting on board with the right technology.

This article was updated as of May 3, 2024.