starting salaries for agribusiness graduates from an aascarr institution: the case of southern...

Starting Salaries for Agribusiness GraduatesFrom an AASCARR Institution:The Case of Southern Illinois University

Kim HarrisDepartment of Agribusiness Economics, Southern Illinois University,Carbondale, IL 62901. E-mail: [email protected]

Dwight R. SandersDepartment of Agribusiness Economics, Southern Illinois University,Mailcode 4410, Carbondale, IL 62901. E-mail: [email protected]

Shaun GressFirst Farm Credit, Bloomington, IL.

Nick KuhnsSouthern Illinois University, Carbondale, IL 62901.

ABSTRACT

Starting salaries for agribusiness economics graduates from a non-land grant ~AASCARR! insti-tution, Southern Illinois University Carbondale ~SIUC!, are examined and compared to those doc-umented for land grant agriculture programs+ Factors such as advanced degrees, grade point average,gender, rural backgrounds, and community college transfers are found to significantly influenceearnings+ SIUC graduates’ starting salary and its determining factors are found to be comparable tothose of land grant universities+ The results suggest that non-land grant agribusiness graduates arecompetitive in the national labor market+ Furthermore, the results are consistent with previous find-ings that show increasing students’ grade point averages can increase marketability and startingsalary+ This is important information for students, their advisors, and agribusiness hiring mangersbidding for their services+ @EconLit citations: J310, J430+# © 2005 Wiley Periodicals, Inc+

1. INTRODUCTION

The American Association of State Colleges of Agriculture and Renewable Resources~AASCARR! consists of 64 non-land grant universities with agriculture or natural resourceprograms ~United States Department of Agriculture, 2000!+1 The largest agricultural pro-grams in AASCARR include California Polytechnic State University, University ofWisconsin–Stevens Point, and Texas Tech University+ In 1999, 44 of the 64 non-landgrant universities enrolled 27,400 students+Moreover, the largest area of AASCARR student

1 The data in this section are from the USDA’s Food and Agricultural Education Information System ~http:00faeis0tamu+edu! based on 1999 survey data+

Agribusiness, Vol. 21 (1) 65–80 (2005) © 2005 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/agr.20035

65

enrollment is agricultural business and management with 4,799 undergraduate students+AASCARR students comprise over one-third of the nation’s total agribusiness majors+Clearly, these graduates are an important resource in the national agriculture labor mar-ket+ Therefore, knowing how starting salaries for non-land grant agribusiness studentscompare with those from land grant institutions is crucial to understanding this labormarket+ In this study, we focus on a representative AASCARR institution, Southern Illi-nois University Carbondale ~SIUC!, with the tenth largest enrollment among AASCARRagriculture programs+ The objective is to compare starting salary levels and salary deter-minants for agribusiness majors from SIUC with those reported from land grant institu-tions+The results are important to agribusiness students, academic advisors, and employers+

Salary research for agricultural graduates focuses on land grant universities and ram-ifications on labor markets and equity issues ~Barkley, Stock, & Sylvius, 1999!+ In thisresearch starting salary data from a non-land grant agribusiness program, AgribusinessEconomics at SIUC, are examined+ Special attention is given to how starting salary andits determinants compare to those found in prior studies at land grant institutions+ Non-land grant agricultural colleges may be considered “second best” in national labor mar-kets; therefore, it is important to understand if graduates’ salaries are priced in a mannersimilar to those of students from land grant programs+ In this research, we extend theliterature on agricultural labor markets by examining the determinants of starting salariesfrom an AASCARR university+We are careful to discuss the implications for the relevantstakeholders: students, instructors, and agribusiness hiring managers+

2. PREVIOUS RESEARCH

Starting salary research for graduates of agricultural colleges focuses on three land grantprograms: University of Georgia ~UGA!, Virginia Polytechnic Institute and State Uni-versity ~VPI!, and Kansas State University ~KSU!+ Broder and Deprey ~1985! constructa salary model using a total sample of 103 agricultural economics graduates of UGA forthe period 1970–1981+ Preston, Broder, and Almero ~1990! extend the work of Broderand Deprey ~1985! by measuring the effect of individual characteristics, educational back-grounds, and occupational experiences on the earnings of 243 agricultural alumni ~allmajors! from VPI over the time period 1977–1985+ Separate models are estimated forboth starting salaries and current salaries ~earnings of workers with several years of labormarket experience!+ Barkley ~1992! analyzes a more extensive survey of 1,097 KansasState University agricultural alumni ~all majors! from 1978 to 1988, confirming and extend-ing many of the previous results about labor markets for agricultural graduates of landgrant universities+ In an updated sample, Barkley, Stock, and Sylvius ~1999! use surveydata to identify determinants of starting and current salaries of 2085 agricultural gradu-ates from KSU from 1976–1997, paying particular attention to salary differences betweenmale and female alumni by estimating separate salary models by gender+ Most recently,Barkley and Biere ~2001! compare and contrast the salaries of 121 graduates of the Agri-business and Agricultural Economics undergraduate degree programs at KSU+ Startingsalary models are estimated for both majors,with no significant differences found betweenthe two departmental programs+

This study extends earlier land grant research efforts by explaining entry-level salariesof agribusiness graduates from a non-land grant or AASCARR university+ Specifically,this study systematically analyzes the extent to which individual characteristics, educa-tional backgrounds, and occupational experiences influence the earnings of bachelor and

66 HARRIS, SANDERS, GRESS, AND KUHNS

masters alumni of the Department of Agribusiness Economics ~ABE! at SIUC, a non-land grant university with a campus enrollment of approximately 19,000 students+ Ofparticular interest is whether the labor market is different for graduates from agriculturalprograms at AASCARR institutions compared to agricultural graduates at land grantuniversities+

3. SURVEY DESIGN AND DATA

The data needed to analyze the determinants of starting salaries of ABE alumni are col-lected from a survey sent to a sample of 270 ABE alumni who received their bachelors ormasters degrees during the years 1977 to 2001+ The year 1977 was the first in which theABE Department conferred degrees+ Surveyed individuals had been out of school for oneto twenty-five years+ The mailing list was randomly chosen from the SIUC Alumni data-base of all 835 domestic graduates who earned a Bachelors of Science Degree with amajor in Agribusiness Economics+Although limited to one university, the sample is pre-sumed to serve as a reasonable representation of the general population of agriculturaleconomics and agribusiness students from AASCARR universities+

The first mailing was sent January 3, 2002+ It consisted of a cover letter, a fixed-response questionnaire, and a business reply by mail envelope for returning the question-naire+ One week later the initial mailing was followed with a postcard reminder+ Twoweeks later any remaining non-respondents were sent another cover letter and question-naire+ Of the 270 surveys mailed, 171 were returned ~63% response rate! and 142 wereusable+ The questionnaire inquired about age, gender, job position, annual salary, numberof jobs held, degrees earned, work experience, geographic location, grade point average,rural or urban background, and formal education+ This information is used to determinethe factors that influence starting salaries of ABE graduates+Unlike some previous research,starting salary information is actual salaries, not mid points of categorical choices+

4. SALARY MODELS

A central focus of this and prior studies is the importance of various determinants ofalumni salaries+ In particular, the objective is to identifying factors that determine agraduate’s beginning salary+ During the years leading up to graduation from college andentry into the labor force, little concrete information about job performance is available+Employers’ assessments of prospective employees tend to rely on indirect measures ofcareer potential, such as performance in college and personal background ~Preston,Broder,& Almero, 1990!+ An understanding of these factors is beneficial to students and theiradvisors as well as agribusiness hiring managers+

Model specification follows Barkley, Stock, and Sylvius ~1999!, where graduate i ’sstarting salary, STARTi , is a function of three categories of explanatory variables, includ-ing college experience variables ~COLLEGEi !, career choice variables ~CAREERi !, anddemographic characteristics ~DEMOi !+

STARTi � f ~COLLEGEi; CAREERi; DEMOi ! ~1!

Starting salary is graduates’ annual pay in the first job after finishing their ABE degree atSIUC+ College experience variables characterize academic performance, degrees obtained,and activity during the graduates’ formal education+ Career choice variables reflect career

STARTING SALARIES FOR AGRIBUSINESS GRADUATES 67

choices made by the individuals such as geographic location and private versus publicsector+ Demographic variables are largely beyond the graduates control and capture suchimpacts as gender+

4.1 College Experience Variables

College experience variables are meant to capture students’ performance and activitiesduring their tenure in the educational system+ Here, we follow previous researchers inspecifying the college experience variables+

4.1.1 Masters degree. Previous land grant studies found that graduates possessinghigher educational levels would earn higher salaries+ When comparing salary differen-tials between graduates with bachelors degrees and masters degrees, students with mas-ters degrees experienced salary premiums ranging from $4,620 ~Barkley, 1992! to $6,905~Barkley, Stock, & Sylvius, 1999! in 2001 dollars+2 To capture this effect in our model,we specify the variable MASTERS � 1 if masters, and � 0 if bachelors is the highestdegree earned in ABE at SIUC+3

4.1.2 Advanced degrees. Earlier research on returns to bachelors and masters degreesalso found statistically significant salary premiums for individuals who pursued otherformal education beyond a bachelors or masters degree+ Preston, Broder, and Almero~1990! found a salary premium of $5,106 for Virginia Tech graduates who completed anykind of advanced degree+ In a more detailed analysis, Barkley, Stock, and Sylvius ~1999!find statistically significant salary premiums ranging from $4,810 for an MBA to $12,015for a Ph+D+ Advanced degrees are also expected to be an important determinant of per-sonal income for graduates of non-land grant universities+ This salary determinant is mea-sured with the variable ADVANCED � 1 if additional degree earned, and � 0 otherwise,where additional degrees include Ph+D+, M+B+A+, J+D+, or a M+S+ earned outside of theABE department at SIUC+

4.1.3 Grade point average. Another variable contained in the land grant models wasscholastic performance or grade point average ~GPA!+ GPA is considered a measure ofstudent ability and achievement and is expected to have a positive impact on salary+ Broderand Deprey ~1985! find a GPA premium of $2,287, but it was not statistically significant+Barkley ~1992! finds that a GPA between 3+5– 4+0 statistically increases starting salariesby $1,864+ Barkley, Stock, and Sylvius ~1999! estimate a variety of relationships betweenGPA with somewhat mixed results depending on graduates’ gender+ However, in com-bined samples, they generally find higher GPAs are statistically linked with higher start-ing salaries+ Surprisingly, Barkley and Biere ~2001! do not find a consistent statisticalrelationship between GPA and starting salaries+ The impact of GPA on SIUC graduates’

2Results from all previous studies are adjusted to 2001 dollars to facilitate meaningful comparisons with thisresearch+ The adjustment is made using the proportional change in the consumer price index from the base yearreported in the original research publication to 2001+ The adjustment factors are as follows: Broder and Deprey,1985 ~1+948!, Preston, Broder, and Almero, 1990 ~1+646!, Barkley, 1992 ~1+497!, Barkley, Stock, and Sylvius,1999 ~1+103!, Barkley and Biere, 2001 ~1+103!+

3All of the indicator variables are constructed such that the base case ~� 0! includes the greatest number ofobservations ~Barkley, 1992!+


salaries is expected to be positive, consistent with land grant universities+ The impact ofundergraduate scholastic performance is captured with the binary variable, GPA � 1 ifgrade point average ,3+0,� 0 otherwise+

4.1.4 Internships. Students are typically encouraged to take internships to gain work-place knowledge and experience+ Therefore, internships are often highly competitive andeagerly sought after by students+ But, do they provide a financial reward in terms of higherstarting salaries? Here, we include the variable, INTERNSHIP � 1 if the graduate par-ticipated in an internship and � 0 otherwise, to identify those students who participated ina college internship+

4.1.5 Transfer students. Native alumni are graduates who spent their entire aca-demic careers at SIUC+ Transfer alumni are students who spend two years at a communitycollege and then transfer to SIUC with junior standing and receive their bachelors degree,usually within two years+ The only prior research on transfer students is Barkley ~1992!,who fails to find a statistical difference between starting salaries for native and transferstudents at KSU+ To see if this result holds at a non-land grant university, we test fordifferences between transfer and native SIUC students using the variable, NATIVE �1 iffour-year student,� 0 if transfer student+

4.2 Career Choice Variables

Again following Barkley, Stock, and Sylvius ~1999!, the starting salary model includesvariables reflecting career choices and job search characteristics+ Career choice variablesreflect decisions that may be made conscientiously by the graduate reflecting things likelocation preferences+

4.2.1 Job search. Barkley, Stock, and Sylvius ~1999! find that longer job searchesare statistically associated with lower salaries+ In this research, the length of job searchesis gauged by whether or not employment is secured prior to graduation+ Graduates notplaced until after commencement may be “settling” for a lower salary as they are unableto find employment at their reservation price+Alternatively, less motivated students maydelay job searches, resulting in placement occurring after graduation+ In either case, theexpectation is that longer job searches should be associated with lower starting salaries+The impact is captured with the variable SEARCH � 1 if job secured prior to gradua-tion,� 0 if the job search extended beyond graduation+

4.2.2 Private sector. State, federal and nonprofit jobs are expected to have lower sal-aries than private sector jobs+ Government employment often provides more job securityand better benefits than jobs in the private sector, thus government jobs are likely to havelower salaries than positions in the private sector ~Broder & Deprey, 1985!+ However,previous research has failed to find a statistical link between starting salaries and privateversus public sector jobs ~e+g+, Barkley, 1992!+ In this research, the difference betweengovernment and industry jobs is captured with the variable PUBLIC � 1 if employed inthe public sector, and � 0 if private industry+

4.2.3 Local or rural jobs. Prior research has found graduates earning lower startingsalaries if they remain within the region of the university ~Broder & Deprey, 1985! or if


they take jobs in rural areas ~Barkley, Stock,& Sylvius, 1999!+ Southern Illinois is definedas the approximately 60 counties south of Interstate 70+ The majority of ABE students arefrom these 60 counties, which primarily consists of rural communities and small townswith populations under 25,000+Alumni working in southern Illinois are expected to havelower beginning salaries than graduates who take a position outside southern Illinois,reflecting fewer employment opportunities+ The variable LOCAL�1 if the job is in south-ern Illinois, and � 0 otherwise, captures the effect of job location outside southern Illinois+

4.3 Demographic Variables

Demographic variables are used to capture the impact of characteristics that are largelybeyond graduates’ control+ Previous researchers ~e+g+, Barkley, Stock, & Sylvius, 1999!have examined the impact of demographical variables, such as gender and marital status,on starting and current salaries+ Here, we focus on variables thought to influence startingsalaries, including gender and background+

4.3.1 Gender. Previous studies estimate large and statistically significant earnings pre-miums for male versus female graduates+ Gender gap estimates range from $2,853 forVPI graduates ~Preston, Broder, & Almero, 1990! to $7,789 for UGA graduates ~Broder& Deprey, 1985!+ Given these strong findings, it is anticipated that a large and significantdifference in earnings exists between male and female graduates of AASCARR univer-sities as well+ Salary differences due to gender are captured with the variable FEMALE �1if female graduate and � 0 if male+

4.3.2 Rural background. Graduates with rural backgrounds may receive higher start-ing salaries because many of the jobs taken by agribusiness graduates involve knowledgeof agricultural processes or rural values+ Broder and Deprey ~1985! found that a ruralbackground statistically contributed to starting salaries for agricultural economics grad-uates at UGA+ In our sample, 87% of the respondents indicated they had a rural0farm0agribusiness background+ The variable BACKGROUND � 1 if non-rural background,and � 0 if rural background, is used to gauge if there is a rural impact similar to thatdocumented by Broder and Deprey ~1985!+

4.3.3 Declining opportunities. Preston, Broder, and Almero ~1990! as well as Bar-kley ~1992! document a statistically significant downward trend in real starting salariesamong agricultural graduates+ Barkley, Stock, and Sylvius ~1999! note a significant down-ward trend in real salaries, but they do not specify a trend variable in their model+ Theevidence suggests that real starting salaries in agricultural are falling+ This trend may bedue to declining opportunities in a largely mature and consolidating industry+A time trendvariable, TREND, is specified to capture trends in the data+

5. EMPIRICAL RESULTS

5.1 Summary Statistics

The number of categorical responses for each explanatory variable is presented in Table 1+The college experience variables indicate that a total of 21% of the graduates sampled


earned some type of advanced degree, and 17 of the 30 advanced degrees included M+S+degrees in ABE+ Thirty-four percent of the graduates finished with a GPA below 3+00+Thirty-two percent of the graduates completed internships, and four-year SIUC studentscompose 44% of the total sample+

The career choice variables indicate that only 20% of the alumni are employed in thepublic sector, and 35% are employed locally in the southern Illinois region+ Forty-sevenpercent of the respondents secured jobs prior to graduation+Males ~84%! and rural back-grounds ~87%! dominate the sample+ These proportions are fairly consistent with thosereported from land grant universities ~Broder & Deprey, 1985; Preston, Broder, & Alm-ero, 1990!+

5.2 Data Characteristics

Students commonly ask questions such as, “Will an internship help me get a job morequickly?” Interrelationships among the response variables are examined by cross-tabulating the data, and then a Pearson chi-squared test for independence is performed onfactor pairs ~Table 2!+ So, for instance, the expected number of job searches that are com-plete prior to graduation given the number of internships is 21+2 ~450142 � 67 � 21+2!+ Ifthe actual number of completed job searches conditional on an internship is significantlydifferent than 21+2, then there is a statistical association+ The actual occurrences and theexpectations are presented in Table 2+

In this case, an internship is statistically associated with finding a job prior to gradu-ation ~10% significance level!+ The expectation is that 21+2 of the students with intern-ships would find a job prior to graduation, when in fact 28 students successfully land ajob prior to commencement+ A couple of other interesting points are evident+ A highernumber of graduates with masters degrees go into public service than would be expectedby chance+ Oddly, lower GPAs are associated with native students+ One possible expla-nation is that core curriculum classes—including math and English courses, which stu-dents frequently find difficult—are transferred into SIUC without a grade+ Therefore, atransfer student’s GPA only reflects courses taken at SIUC and primarily within the ABEmajor+ In contrast, a native student’s GPA reflects two years of university core courses inaddition to those courses within the major+

TABLE 1+ SIUC Agribusiness Economics Graduates,Response Characteristics, 1980–2001 ~142 Observations!

Non-Base Case ~� 1! Number Percent

Received ABE Masters 17 12%Obtained Advanced Degree 13 9%GPA,3+00 48 34%Completed Internship 45 32%Native ~4-year! Students 63 44%Job Secure Prior to Graduation 67 47%Employed in Public Sector 28 20%Employed in Southern Illinois 49 35%Female 23 16%Non-Rural Background 19 13%


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Job searches are shorter for students with higher GPAs and internship experience+ Femalestudents tend to be four-year native SIUC students, and are less successful at finding jobsprior to graduation+ Finally, students with non-rural backgrounds are notably differentfrom the rest of the sample+ That is, these students tend to obtain a masters degree or otheradvanced degrees+ Probably as a consequence of continuing their education, they usuallydo not hold internships+Additionally, non-rural graduates have a propensity to take pub-lic jobs outside of the southern Illinois area+

The above analysis is limited in its pair-wise nature, but still the interrelationships areinteresting and help provide insight to students+ For instance, it is important to informstudents that a high GPA and an internship can shorten the job search+ But, more impor-tantly, how do these factors impact starting salaries+ The determinants of starting salariesare explored in the following sections+

5.3 Average Starting Salary

Average starting salaries for SIUC graduates are compared to those reported in previousstudies adjusted to 2001 dollars using the consumer price index ~CPI!+ Where possible,the originally reported salaries are broken into graduates and undergraduates and the majorsincluded in the sample are indicated+ The adjusted salaries are reported in Table 3+

Despite differences in the make-up of the samples—such as location, mix of advanceddegrees, and the sampling date—the adjusted starting salaries are similar across the stud-ies and universities+ Reported undergraduate salaries are in a fairly narrow range from$28,656 ~SIUC! to $30,753 ~UGA!+4 The average starting salary for a masters degreeranges from $32,919 to $37,952+Across all degrees, starting average salaries range from$27,860 ~VPI! to $31,565 ~UGA!, with SIUC’s average salary falling near the middle ofthe range at $29,166+

Given the disparity in samples, it is difficult to construct a rigorous statistical test fordifferences in starting salaries+However, the mean ABE undergraduate salary has a standard

4It is widely thought that a Laspeyeres price index, like the CPI,may overstate inflation+ So, nominal salariesmay not actually increase as fast as the CPI+As a result, older reported salary data that are adjusted with the CPImay be overstated+

TABLE 3+ Average Starting Salaries for Agriculture Graduates ~2001 Dollars!

SIUC UGA VPI KSU-1 KSU-2 KSU-3

Undergraduate~sample size!

28,656 30,753 29,172 29,522~125! ~103! ~921! ~121!

Masters~sample size!

32,919 35,748 37,952~17! ~20! ~176!

Average~total sample!

29,166 31,565a 27,860 31,470 30,153 29,522~142! ~123! ~243! ~1087! ~2085! ~121!

Majors Ag+ Bus+ Ag+ Econ+ All Ag+ All Ag+ All Ag+ Ag+ Econ+

Grad+ Dates 1980–2001 1970–1981 1977–1985 1978–1988 1976–1997 1990–1997

Note. The study abbreviations are defined as follows: Broder and Deprey, 1985 ~UGA!, Preston, Broder, andAlmero, 1990 ~VPI!, Barkley, 1992 ~KSU-1!, Barkley, Stock, and Sylvius, 1999 ~KSU-2!, Barkley and Biere,2001 ~KSU-3!+aWeighted average of bachelors and masters+


error of $1,208, implying a 90% confidence interval of $26,669 to $30,643+ Only theUGA average is outside of this range+ Perhaps the best comparison is the KSU-3 data,which is the most recent data for just agribusiness and agricultural economics students+The KSU-3 average starting salary is larger, but it is within one standard error of theSIUC average+ Generally the data suggests starting salaries for ABE students from SIUCare not markedly different from those received by graduates of land grant programs+Next,we examine potential differences in factors that determine starting salaries+

5.4 Starting Salary Regression Results

The alumni starting salary model is estimated with ordinary least squares+ The model wasspecified in a manner similar to prior studies so as to facilitate comparisons+5 The resultsfor the SIUC model are presented in the first column of Table 4+ The remaining columnsin Table 4 present similar factor impacts from prior studies adjusted to 2001 dollars usingthe CPI+ Clearly, each model from prior research is specified differently+ Therefore, thecoefficients presented are not meant as point estimates for statistical testing+ Rather, thegoal is to summarize prior research, and thereby, serve as a point of reference for thedirection and magnitude of salary determinants at land grant universities+

The SIUC model has an R-squared of 0+39, which is comparable to those from priorstudies which range from 0+27 to 0+48+ The intercept term represents the base case: a 2001male B+S+ graduate with a rural background, a GPA equal to or above 3+00, no internships,a community college transfer, who secured a private job outside of southern Illinois aftergraduation+ This base individual is predicted to have a staring salary of $27,107+

All of the college experience variables have the expected sign+ As anticipated, a M+S+degree in ABE adds a statistically significant $5,109 to starting salaries+ The M+S+ pre-mium is consistent with the range ~$4,620 to $6,905! reported at land grant universities+This suggests that a M+S+ degree from SIUC is not valued dramatically different thanthose from major land grant institutions+ Furthermore, additional advanced degrees alsostatistically add to starting salary levels+ For SIUC graduates the average incrementalincome is $5,588+ This is lower than that for land grant universities ~$9,198 to $12,812!,but the difference may stem from the mix of graduate degrees ~e+g+, J+D+ or Ph+D+! in thevarious samples+ Since SIUC does not offer a Ph+D+ in ABE, it is possible that our samplehas a lower representation of Ph+D+’s+ The results confirm that additional education doesincrease salaries, but the increase in earnings must be weighed carefully against the incre-mental costs before making such an investment ~Broder & Deprey, 1985!+

GPA is also statistically significant in determining starting salaries+ A GPA below 3+0reduces starting salaries by $2,551 versus the base case of a GPA of 3+0 or greater+ Thisresult is generally consistent in direction with prior studies, which find high GPAs con-tributing from �$634 to $2,287 to starting salaries, but the magnitude is a bit larger+Academic performance may be a stronger signaling device of potential performance forstudents at institutions without national reputations+ Still, the statistical importance ofgood grades echoes the advice typically given to students by their academic advisors+

Recent findings by Siebert, Davis, Litzenberg, and Broder ~2002!, however, suggestthat allocating more time to improving a student’s GPA is appropriate advice for fresh-

5The model was tested for heteroskedasticity using White’s test+ The null of no heteroskedasticity could notbe rejected at the 10% level+ Multicollinearity was investigated with a simple correlation matrix among inde-pendent variables+ Only one correlation coefficient exceeded 0+30, so multicollinearity is not pervasive in thedata+


man and sophomores but not necessarily for juniors and seniors who desire higher thanaverage starting salaries+ The authors recommend that juniors and seniors would be betteroff allocating more time to work experience and leadership activities than trying to increasetheir grades+ Yet, in this study we find that one type of work experience, internships, isnot statistically important in determining starting salaries+ Unfortunately, prior researchdoes not provide any collaborating evidence for this variable+

TABLE 4+ SIUC Agribusiness Economics Graduates, Starting Salary Regression Results,1980–2001 ~142 Observations, in 2001 Dollars!

ExplanatoryVariables SIUC UGA VPI KSU-1 KSU-2 KSU-3

Intercept 27,107~17+92!a

MASTERS~� 1 if Masters!

5,109* 6,493* 5,106*b 4,620* 6,905*~2+92!

ADVANCED~� 1 if earned!

5,588* 12,812* 10,121*c 9,198*c

~3+02!

GPA ~� 1 if ,3+00! �2,551* �2,287 �1,864*d �1,135*d 634d

~�2+29!

INTERNSHIP~� 1 if intern!

1,782~1+48!

NATIVE~� 1 if native!

1,911* �587~1+74!

SEARCH~� 1 prior grad+!

1,404 1,775*e

~1+26!

PUBLIC~� 1 if public!

�997 �3,540 �853 226 161~�0+72!

LOCAL~� 1 if in area!

�1633 �7,449* �1,290 �2,050*f �2,297*f �4,375*f

~�1+49!

FEMALE~� 1 if female!

�7,689* �7,798* �2,853* �3,320* �4,222* �2,523*~�5+31!

BACKGROUND~� 1 if non-rural!

�3,886* �3,947~�2+24!

TREND~year graduate!

�225* �895* �503*g �273*h

~�2+50!

R-squared 0+39 0+48 0+29 0+37 0+27 0+40

*An asterisk denotes statistically significant at the 10% level or smaller as reported in the original research+aT-statistics in parenthesis+bIncludes all advanced degrees, including an M+S+cAverage of coefficients on Ph+D+, MBA, J+D+, and D+V+M+dThe coefficient on GPA.3+5+eThe average of coefficients for job hunts that extended beyond graduation+fThe average of coefficients on locations considered rural or with less than 100,000 in population+gTaken from Barkley ~1992! text, p+ 217+hThe average of the male and female time trend coefficients+


Transfer students have a statistically smaller starting salary than native or four-yearSIUC students+ Four-year native SIUC students experienced a salary premium of $1,911compared to transfer students+ This result is in contrast to the statistically insignificantand negative impact documented by Barkley ~1992! for native KSU students+ The trans-fer student salary gap may reflect that native students generally have better academicbackgrounds ~not reflected in GPA!—backgrounds that translate into more marketableskills—or they may be more “polished” than community college students ~Johnson, Taylor,& Kohler, 1991!+ This result is useful to student advisors and individuals responsible forcurriculum design at community colleges and universities, like SIUC, that accept largenumbers of transfer students+ Community college transfer students may not be receivingadequate training in core skills such as public speaking or writing+ Clearly, there are addi-tional costs associated with attending a university for four years versus transferring froma community college+ The additional earnings documented here would need to be weighedagainst the costs of attending SIUC for a full four years+

None of the career choice variables were statistically significant at the 10% level+ But,they all had the expected sign or direction of impact+ Job searches that are successfulprior to graduation tended to increase starting salaries—a result consistent with Barkley~1992!+ This variable may serve as a proxy for certain “soft skills” like motivation, dis-cipline, work ethic, and being goal oriented+ These “soft skills” probably earn a marketreturn for students who possess them+ Alternatively, it may represent seasonal shifts inagriculture labor demand following the traditional spring commencement+

Public sector jobs paid less than industry positions, but not statistically less+ The mod-est impact of this variable is consistent with the statistical insignificance reported in priorresearch+ SIUC graduates who take a position in southern Illinois receive a starting salarythat is on average $1,633 less than those who move out of the area+Although the variableis not statistically significant at the 10% level ~ p value � 0+132!, its sign and magnitudeis consistent with those from prior research+ The implied premium for moving out of thelocal area, or into a metropolitan region, could reflect compensation for being mobile orthe higher cost of living in non-rural areas+ Graduates are not generally willing to movelong distances nor into high cost areas unless they are compensated accordingly+

The demographical variables are all statistically significant with the expected signs+Male SIUC graduates who responded to the survey experienced a beginning salary pre-mium of $7,689 compared to female graduates+As suggested by Goldin ~1999!, the salarygap could be due to labor market discrimination, or due to females self-selecting into jobsof lower salaries due to more desirable working conditions, or more flexible work sched-ules and hours+ Or, as pointed out by Barkley and Biere ~2001!, more females than malesmay take positions in locations where the primary family wage earner’s job is located—aprobable explanation for ABE graduates who return to the family farm or a family agri-business like retail supply or machinery and equipment+ Yet another explanation, positedby Babcock and Laschever ~2003!, is that females are averse to negotiating+ The econo-mists site evidence that suggest much, if not all, of the observed gender-pay gap can beexplained by women’s tendency to ask too little in opening offers and concede too quicklyto counter-offers ~Krueger, 2003!+ This explanation is intriguing and suggests that stu-dents in general, and female students in particular, may benefit from increased exposureto negotiation strategies in the agribusiness curriculum+

It is noteworthy that the SIUC gender gap is in the upper range of that reported in priorresearch ~$2,853 to $7,798!+ One potential explanation for this is that many ABE gradu-


ates are placed with rural agribusiness firms+ In these positions, the employees are oftenutilized in the off-season for maintenance, repairs, and other manual-type labor+ It is pos-sible that male graduates generally have more experience in this type of work; therefore,they get some reward for these skills+

Consistent with the findings of Broder and Deprey ~1985!, a non-rural backgroundresults in a $3,886 decrease in starting salaries+ The rural background premium may stemfrom specialized knowledge gained in a rural environment, a perceived “rural work ethic,”or perhaps from a notion that individuals with a rural background may be able to better“connect” with the rural customers of many agribusiness firms+ Regardless, this is a sta-tistically and economically significant premium+ Agribusiness students should not hidetheir rural backgrounds during the interview process+

The real starting salary earned by ABE graduates is declining at a statistically signif-icant $225 per year, all else equal+ This is a smaller magnitude than that reported by VPI~�$895! and KSU-1 ~�$503!, but close to that reported in the KSU-2 study ~�$273!+Regardless, it paints a picture of a mature and consolidating industry where real startingsalaries have stagnated ~see Figure 1 with fitted trend line!+ This is important informationfor students just beginning their college careers and considering various majors at auniversity+

Collectively, the results highlight strong similarities between the labor markets for agri-cultural graduates from land grant and AASCARR universities+ Indeed, the evidence sug-gests that they compete in the same market and are not compensated differently for attendinga non-land grant agriculture program+ Starting average salaries appear to be similar acrossstudies, and the factors that determine individual starting salaries are closely aligned+ Inparticular, advanced degrees, GPA, male gender, and rural backgrounds are associatedwith statistically higher starting salaries, while community college transfers get lowerstarting salaries+ The practical ramifications of these results for students, advisors, andhiring managers are highlighted in the following section+

Figure 1 SIUC agribusiness economics graduates, average starting salary, 1980–2001 ~2001 dol-lars!+


6. SUMMARY AND DISCUSSION

Over one-third of U+S+ agribusiness majors graduate from non-land grant, or AASCARR,institutions+ Yet, little is known about how these graduates fare in the labor market+ Thisresearch fills a gap in the literature by providing an analysis of starting salary levels andthe factors that determine starting pay for agribusiness majors from an AASCARR insti-tution+ In particular, this study examines starting salaries for ABE graduates at SIUC, anon-land grant university located in Carbondale, Illinois+Although the analysis is limitedto one university, it is thought to be representative of agribusiness and agricultural eco-nomics students from other AASCARR universities+

The results confirm many of the findings from land grant universities+ In particular, theadjusted ~2001 dollars! starting salaries are comparable, with SIUC’s average startingsalary ~$29,166! squarely in the range ~$27,860 to $31,565! of those reported by landgrant agriculture programs+ Furthermore, the sign and magnitude of salary determinantsare comparable to those reported in previous land grant studies+ Specifically, for ABEgraduates from SIUC, statistically significant starting salary premiums are associated withan M+S+ or other advanced degrees, higher GPAs, completing a four-year program at theuniversity, rural backgrounds, and the male gender+ These results have important impli-cations for students, academic advisors, and agribusinesses+

Students should particularly focus their attention on salary determinants that they caninfluence+ First and foremost is the student’s GPA+ The evidence consistently indicatesthat higher GPAs earn a market premium+ For SIUC students, a GPA of 3+00 or betterearns them an incremental $2,551 at their first job: studying pays+ Furthermore, studentswith higher GPAs tend to have shorter job searches+ Unless fully employed while pursu-ing their undergraduate degree, students’ incremental costs of raising their GPAs are rel-atively small, and it may provide the clearest signal of their ability to perspective employers+Internships, while associated with quicker job placement, do not statistically increasestarting salaries+ The evidence suggests that students’ time may be better spent studying+

Advanced degrees increase SIUC students’ starting salaries by roughly $5,000+ In thiscase, however, there is a large cost associated with the choice+ Previous research hasshown that for continuing students pursuing a masters degree, the capital recovery cantake from nine to twenty years at a 6% interest rate, depending on assistantship appoint-ments ~Broder & DePrey, 1985!+ Clearly, this investment decision must be made on acase-by-case basis+ Native four-year SIUC students start at a salary that is $1,911 greaterthan transfer students+Again, a student must carefully weigh the incremental cost of attend-ing a four-year university versus the $1,911 starting salary premium it commands overcommunity college transfers+ An updated and detailed analysis of these investments inhuman capital is beyond the scope of this study, but it provides fertile ground for futureresearch+

Agriculture students should be active and motivated in their job search+ Early place-ment is generally associated with higher starting salaries+ Furthermore, rural back-grounds should be emphasized, when appropriate+ Rural backgrounds are associated witha $3,886 starting salary premium for SIUC’s ABE graduates+ Agriculture graduates maybenefit from emphasizing a “rural work ethic” or specific skills obtained in rural settings+It might be particularly important for females, who receive a $7,689 lower starting salarythan their male counterparts, to emphasize hands-on skills that they have acquired duringa rural upbringing+ Likewise, improved negotiating strategies may help to narrow thegender gap in some instances+


As academics, and student advisors, it is our job to communicate these results to stu-dents so that they can make informed decisions+ Indeed, the labor market is characterizedby imperfect information+ Many students do not even know the starting salary for grad-uates in their major ~informal class survey!+ It is an important role of advisors to bridgethis information gap and stress to students those factors that are significant in determin-ing starting salaries+

Agribusiness hiring managers should realize that they are competing in a national mar-ket where land grant and non-land grant agricultural graduates are priced in similar fash-ion+ Students with advanced degrees and “good” grades are more expensive than otherstudents+Agribusinesses should also be aware of the gender gap that is consistently doc-umented in the industry+ Consciously made or not, lower salaries paid to female graduatesmay push otherwise high potential female students into other fields of study; thereby,lowering agriculture’s available talent pool and the benefits of a diversified workplace+

Finally, all stakeholders should be aware of the declining real starting salaries for agri-culture graduates+ This most likely reflects the continued consolidation in agribusiness—especially in the core areas of production, processing, and food manufacturing—which isslowly decreasing the demand for traditional agriculture students+ Declining real salariesmay not be evident in growing agricultural segments such as retailing, foodservice, oragri-tourism+ However, as pointed-out by Starbird ~2003!, an increasing supply of agri-business programs and students may also be depressing starting salaries+ Students, uni-versities, and agribusinesses should contemplate strategic steps to cope with this reality+

In summary, these findings provide students, faculty advisors, and agribusinesses withvaluable information+ Agribusinesses should use this information to evaluate their indi-vidual hiring practices to assure they are competitive in the labor market+ Starting salaryinformation should be highly valued by currently enrolled and perspective agriculturestudents+Most importantly, faculty advisors should use this information to assist studentsin career decisions and in allocating scarce labor resources to the highest return+ If uni-versity graduates allocate their resources better, they are likely to be more productive andefficient and therefore increase their lifetime earnings+

REFERENCES

Babcock, L+, & Laschever, S+ ~2003!+ Women don’t ask: Negotiation and the gender divide+ NewJersey: Princeton University Press+

Barkley, A+P+ ~1992!+ Earnings of Kansas State University agriculture graduates: 1978–88+ Amer-ican Journal of Agricultural Economics, 74, 215–222+

Barkley, A+P+, & Biere, A+ ~2001!+ Does undergraduate major matter? Differences in salaries andsatisfaction levels of agribusiness and agricultural economics majors at Kansas State University+International Food and Agribusiness Management Review, 4, 167–187+

Barkley,A+P+, Stock,W+A+, & Sylvius, C+K+ ~1999!+Agricultural graduate earnings: The impacts ofcollege, career, and gender+ American Journal of Agricultural Economics, 81, 785–800+

Broder, J+M+, & DePrey, R+F+ ~1985!+ Monetary returns to bachelors and masters degrees in agri-cultural economics+ American Journal of Agricultural Economics, 77, 666– 673+

Goldin, C+ ~1999!+ Understanding the gender gap:An economic history of American women+ NewYork: Oxford University Press+

Johnson, D+M+, Taylor,W+N+, & Kohler, E+T+ ~1991!+ Native and transfer students+ National Asso-ciation of Colleges and Teachers of Agriculture, 35, 41– 44+

Krueger, A+B+ ~2003!+ Economic scene+ New York Times, August 21, p+ C2+Preston,W+P+, Broder, J+M+,& Almero,M+C+ ~1990!+ Temporal analysis of income earned by former

agriculture students+ American Journal of Agricultural Economics, 72, 13–23+


Siebert, J+W+,Davis,G+C+, Litzenberg,K+K+,& Broder, J+M+ ~2002!+ Time allocation decisions asso-ciated with job market preparation: Undergraduate perceptions versus market realities+ Ameri-can Journal of Agricultural Economics, 84, 222–233+

Starbird, S+A+ ~2003!+Graduate agribusiness management programs:Too many and too cheap+Reviewof Agricultural Economics, 25, 271–276+

United States Department of Agriculture+ ~2000!+ Food and agricultural education information system+

Kim Harris is an Associate Professor of Agribusiness Economics at Southern Illinois University.Dr. Harris obtained a PhD in Agricultural Economics from the University of Illinois at Urbana-Champaign in 1985. Current research interests include agricultural labor markets, agribusinessfinance and management techniques.

Dwight R. Sanders earned his PhD in Agricultural Economics from the University of Illinois atUrbana-Champaign in 1995. Dr. Sanders is currently an Assistant Professor of Agribusiness Eco-nomics at Southern Illinois University. Current research interests include agribusiness risk man-agement, price analysis, and forecasting.

Shaun Gress received his MS degree in Agribusiness Economics at Southern Illinois University atCarbondale in 2003. Mr. Gress is currently a loan officer with First Farm Credit of Bloomington,Illinois.

Nick Kuhns is a graduate student in Agribusiness Economics at Southern Illinois University.Mr. Kuhns also works as a banking vice president in Litchfield, Illinois.


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