The difference in average starting salaries between bachelor’s and master’s degree graduates has been declining in recent years, according to the National Association of Colleges and Employers’ First Destinations for the College Class of 2021 report.

The report found that there is currently a 22.5% salary differential between the degree levels, which is the lowest in recent years. The differential is a drop from 26.1% for the class of 2020 and 31.8% for the class of 2017.

According to the association, the average annual increases in starting salaries for master’s degree graduates have lagged those for those graduating with bachelor’s degrees. The average starting salary for class of 2021 master’s graduates rose 1.1% from the prior graduation year, while the average salary for the bachelor’s grads grew 4.0%.

“There are several reasons why this is happening,” said Shawn VanDerziel, NACE executive director. “First, it is a very competitive market, and employers are willing to pay a premium for talent, sometimes even for talent without advanced education. Employers are also increasingly screening candidates for skills and abilities, in addition to knowledge, which has opened up hiring to bachelor’s degree holders.”

The association noted that the average starting differential for some disciplines is still considerable, such as master’s degree graduates in legal studies (73.5%) and communications technologies (65%), each of which exceeded the average salary at the bachelor’s degree level by more than 50%.

For the survey, NACE received reports from 290 schools showing outcomes for graduating classes totaling more than 686,000 students in associate, bachelor’s, master’s and doctoral-level degree programs. However, the data presented in this survey are for bachelor’s degree graduates.