On salaries in economics

I recently went to a talk by a woman from the census who connected the survey of earned doctorates to tax records.  She has the entire universe of econ phds for the past 20 years (I’m in there!).  Econ PhDs in industry make more than those in academia make more than those in government.

I have more money than I ever dreamed of (though my dreams were small) and more than we actually need.  When DH is also working we are not even upper middle class anymore (though there are still multiple marginal tax brackets above us).

And yet…

Adjusted by quality/prestige of my PhD, my salary is below the median for academics.

In fact, my salary is below the median for academics in the PhD quality/prestige of the bracket below mine.

Should this matter?  I don’t know.  My friend at a SLAC likes to point out that her salary is way below mine and she’s from the same grad school.  And I think if I were to move to a SLAC I’d be ok with a salary cut (and I’d be happy to move to a SLAC so long as it didn’t come with an increase in my teaching load, which is already high for econ).

DH pointed out that part of the problem is that salary is considered an indicator of quality.  If you have a “low” salary, how good of an economist can you be?  After all, wage equals marginal productivity, doesn’t it?  Especially after the labor market has a chance to sort itself out?  (Answer:  no!  That’s completely ignoring search frictions and compensating differentials).

Should I care about prestige?  Should I equate salary with being valued?  Does it matter when I’m getting paid a ridiculous amount already that others are getting paid even more ridiculous amounts?  Would I be more productive if we had more money?  Should the fact that DH is also making a lot even enter into my equation?

I go back and forth on these questions.  I do like money.  And… half of the people do have to be below median.  It’s just hard when having a below median salary means people think you’re a below-average economist.  You know?  And my salary is publicly available.

Does your field equate salary with productivity?  Does it equate salary with value?  Do you?


20 Responses to “On salaries in economics”

  1. First Gen American Says:

    Well, I just left a job after 25 years for better benefits and better bonus plan (my salary was already on the high end, so that only moved slightly). Honestly though, if it was just salary, I wouldn’t have moved. I moved because my friends at new place are happier and there are more resources to get my job done. At this point in the game, it’s more about happiness than cash, although you do feel quite used when they run you ragged AND your compensation isn’t competitive with the rest of your industry. Each year, our workload got bigger, headcount shrank and the benefits got worse. In this hot job market even the most loyal employees started thinking ourselves fools for staying.

    My husband managed people in the Netherlands for many years and he said that there people cared more about their titles than their compensation and some would even be okay with a pay cut if they could have director in their title so I guess there are some big regional differences regarding the importance of pay.

    Do you really think your pay is below median when you take cost of living into account? I know there are differences in engineering salaries based on COL. And if you put all the phd economists on a map, how many would be clustered in very expensive cities? Is it fair to compare yourself to someone who’s paying $4000/month for a 1 bedroom apartment in Cambridge?

    • nicoleandmaggie Says:

      I don’t think MIT and Harvard and Stanford salaries are high because they’re in high COL areas. (And Berkeley salaries are nowhere near Stanford salaries). I don’t think half of my cohort ended up at those places… I don’t know. But I tend to doubt COL is all of it. There’s probably a lot going on with public vs private. I should have asked more questions at the talk.

      • First Gen American Says:

        Sometimes I also wonder if it’s a chicken or egg thing. Is COL high because of the salaries? Nevertheless there is a big cluster of educational institutes in the northeast where it is very expensive. But that density of talent also leads to more good paying private sector companies which drives COL up even further. Same can be said about Silicon Valley. I can see how it’s easier to start out somewhere expensive than try to move there later. If I think about what I forked out on housing over the years, it’s pretty ridiculous.

      • nicoleandmaggie Says:

        COL is also high because of amenities (California weather) and historesis leading to high population (NYC).

  2. Matthew D Healy Says:

    My parents taught at a State U. before the Internet. Once a year the local paper ran a supplemental section with all salaries above $X for State employees. I know many friends (or their parents) saw it, because I heard remarks.

    Classmates from working class families said “your parents make THAT MUCH?!”

    Classmates from business or professional families said “they ONLY MAKE $XXX!?”

    Never heard any remarks on the subject from other Faculty Kids.

  3. delagar Says:

    I make less than the median for a full professor in my field. I admit this does not please me. It’s true the COL is low here, but that really doesn’t make me feel any better about being underpaid.

    • Matthew D Healy Says:

      My parents taught at UW-Milwaukee; they met as grad students in Madison. Milwaukee faculty got paid a bit more than Madison faculty, supposedly due to cost of living but widely suspected to be mostly because Madison with its nicer campus and greater prestige didn’t have to pay as much to recruit people.

      A Madison faculty joke said “every time you look out the window at Lake Mendota it costs you five bucks.”

  4. revanche @ a gai shan life Says:

    I don’t really know what salaries people make in my field but I know that they can get weird. There are times that people *lower* in the company make more than the higher ups for various reasons.

    On principle as a woman of color, even if I didn’t *need* the money, I push for the max possible salary increases. I know that if I didn’t, it would stagnate very quickly for a lot of reasons. As it happens we can always use the money but even if we had oodles more than we needed I’d still do it because it does indicate “value” to some degree and I’m not about to be undervalued for lack of effort on my part.

    Also I know for the sake of my ego, I don’t want to be “undervalued” in this one external marker of “success” even if I don’t really use it as a marker of success. I do use it as a marker of progress I suppose.

  5. SP Says:

    I feel thi. I’m currently less than my peers at my work. I was mostly totally happy with my salary and my job until I saw the comparison. Then, oooof, I was extremely frustrated and angry, and yeah, hurts the ego. Even though I basically have no real use for more money at this point. (I mean, in a day to day sense… I’m sure I’ll put it to good use.) When not looking at it statistically and with a wider net, it is also easier to correlate salary to being valued and quality, too. Although I think it more has to do with inequities in who pushed for increases and management action, versus complacency. Like, it is partly value, yes, no one (including me) advocated for me, and that sucks. But it was also partly just oversight.

    Anyway. I think you are on to something on public versus private, as you note that Berkeley tends to be quite a bit lower than Stanford salary, even in cases where it not a lot lower in rankings/prestige. Cost of living probably has something to do with salaries too, at least nationally. (Also, housing near Berkeley is in fact less than Stanford housing, but I think public/private is a bigger factor there.)

    • nicoleandmaggie Says:

      Ah but Stanford seriously subsidizes housing for faculty. You can buy a house super cheap (for the area) that you can only sell to other Stanford employees and they rent apartments at way below local rental costs. (Do you really own the house if you’re limited in who you can sell it to? But also they’re huge and really nice and the school district could not be better.). I think Berkeley helps with loans? I don’t actually know. And Stanford pays Berkeley level tuition for faculty kids no matter where they go. And other perks.

      • SP Says:

        yes, aware of that program, which is very interesting way of mitigating housing costs. You do miss the RE appreciation upside for the portion stanford owns, but definitely worth it. It is for sure the better paying/benefit place, hands down, no questions asked. Probably one of the best in the nation. (Berkeley can offer start up package that includes funds that can be taken out as cash payments for housing downpayment, and some loan help that is not super competitive in current low interest market. I think absolutely no tuition help?)

  6. Alice Says:

    I’m a freelancer and am paid by the project, so am in an odd boat for this question.

    On a project-by-project basis, I see my getting hired for a given project as a signal of the value placed on me as an individual: they’re picking me, not someone else. The exact fee is usually within a specific range regardless of who gets the work, though. They demonstrate the value that a particular company places on the role I’m fulfilling.

    The one company I work with that consistently pays less than the usual range, I don’t interpret it as lack of value, but I do interpret it as lack of respect for my role in general and me as someone who fulfills that role. I suspect it’s really being driven by two specific people at the company, but it bugs me. I do a handful of projects with them each year for the sake of maintaining contact with the other people there… but they hear “sorry, I can’t do your project” from me more often than they would if I didn’t feel disrespected by their pay practices.

    On a total income level… pre- and mid-pandemic are two different things. Pre-pandemic, it was. Volume of work, as translated into dollars, was a sign of people wanting to work with me. Mid-pandemic is a different story. With childcare issues affecting my availability to work… my yearly income is 1/3-1/2 what it was before. Income is meaningful as income, but that’s about it. (Though I guess it’s a depressing marker of how deeply things are affected. Not that I needed one of those….)

  7. Lisa Says:

    I have spent much of my career willfully ignoring the fact that my salary was significantly less than similar peers at my uni. Possibly criminally less, as I’ve heard a few offhand comments along the lines that they’re glad I haven’t sued. I’m trying to work my way out of that hole in the sand, though. My “awakening” started when a colleague make a comment similar to the one you made above – that you really don’t need the $ because DH makes a lot. I had long justified things to myself this way. In my case, my DH makes A LOT more than I make, so I figured that my salary is insignificant in the scheme of things. It sounds somewhat reasonable when I think it to myself. But when the colleague said it out loud, I was shocked and told her that it doesn’t matter what her partner makes, she deserves to be paid fairly for her work! It’s one thing for employers to devalue us, but another thing entirely if we devalue ourselves.
    I’m not yet sure what it will look like for this to be fixed for me. Recently, I got a significant raise out of the blue, which was nice (and further evidence that I was significantly underpaid!). But it doesn’t feel good to know that colleagues who should be looking out for you are not doing so. These types of slights are adding up a lot lately.

  8. yetanotherpfblog Says:

    In my experience, the people who get paid more aren’t those who are “better” or “more productive” at their work, but rather those who are more mercenary about it, treat it more transactionally, and always keep their mind on the compensation piece. Sometimes those people also happen to be very productive, but sometimes they don’t.

    • revanche @ a gai shan life Says:

      I think that matches part of my experience. I learned to be transactional and very much keep my eye on the compensation prize to advocate for myself. I already knew how to work really hard and provide value and I could have carried on doing that for ages, underpaid and unappreciated, but I was fortunate enough to have women of color mentors who told me straight off never to devalue myself that way. “Let THEM tell you no, don’t say no to yourself!” Was drummed into me, along with the ethos of getting paid for the stellar work I do. It’s not a favor, it’s labor, and other people will be taking that money in if I don’t. I also make it a practice to advocate strongly for those who report to me as well because I do think it’s a marker of how much you care or value a person from a managerial POV. If you can’t be bothered to ask for more money for your team, even when they’ve done everything you needed or more, then what are you saying about how you value their effort?

      • Lisa Says:

        I wish I worked for you! It sounds like you had excellent mentors who did a great job of helping you learn to advocate for yourself. When I asked a senior female colleague about salary inequities her take was that it’s a zero sum game and if we ask for more $, the K-12 schools will get less (we’re at a state school) so we should just be happy with what we have. Not so helpful, in my opinion. I get the idea that it’s a zero sum game at some level (as in, the state has a specific budget), but also know that our large R1 with a huge teaching hospital brings in a TON of money for the state at every level, so asking for salary equity and reasonable raises is not directly taking food out of elementary kids’ mouths, so to speak.

      • nicoleandmaggie Says:

        Yeah it’s probably not fungible like that. It isn’t in my state.

      • revanche @ a gai shan life Says:

        @Lisa I think people who don’t want to advocate for themselves for a lot of reasons tend to find reasons not to. I found myself lapsing into that mentality when I was tired. But I was very lucky to have a mentor from the personal finance blogging community when it was still about people on a personal level and to have met a wonderful woman on her third act of her professional/retired life and yes they both were and still are amazing at reminding me to go for it. They need me as much as I need that paycheck! Hopefully more, at some point.

  9. Debbie M Says:

    I used to compare my salary to the average first-year salaries for people with college degrees (I had a masters)–how were those people finding those high-paying jobs? And I used to want to be a teacher, so I’d also compare my salary to that of first-year teachers in my school district–and I was always doing worse than them except for one year when I got a “big” raise and they had a pay freeze (and also the next year when they hadn’t quite caught up).

    The good news is I had better benefits. (Teachers had good benefits, too, but they didn’t get to contribute to Social Security. I got to contribute to both Social Security and my cushy pension.) And the other good news is that my employer didn’t do lay-offs, just hiring freezes. So as long as you could stand to do two to three people’s jobs for up to a year periodically, you could stay employed. Except then they started doing layoffs too. And then never re-hiring the extra staff after the economy got better post-hiring freeze. I actually finally had to quit from the stress of having too many job duties for too many years.

    A lot of my friends with actual good jobs (programmer, engineer) did get laid off periodically. But they always got new jobs within a year or two. And having double or even triple my salary in the years they did work sure did make it easy to save for those other times. Admittedly, I also only had to work 40 hours a week. Or maybe 45 if I decided to work through lunch.

    So those were my issues. Now for one of your questions.

    My favorite: “Should I equate salary with being valued?” I’m afraid you should. It’s kind of creepy, but the less people get paid, they worse they are also treated in other ways. It’s kind of sickening how our system really kicks you when you’re down. Now, like you said, you’re not actually “down.” But I wouldn’t be surprised AT ALL if the lower-paid faculty get the worse service requests, the worse reviewing requests from journals, the worse TAs and RAs, etc. Though I don’t actually know.

    My salary was also publicly available. Once I figured this out, I looked up the salaries of a bunch of my colleagues. Here are the two main things I learned.

    1) My supervisors were lying when they said that I was getting a special raise and not to tell other people. Everyone got the special raise. (As they should–they were all good.)

    2) I was working in the Registrar’s Office with the computerized degree audit system, and I worked with people in all the different colleges who coded the system to check for their college’s degree requirements and who used the audits to certify students for graduation. All of those people had additional duties, usually academic advising, but sometimes event planning, course scheduling, IT work. I mean they would just mix up random job duties and then wonder why people couldn’t be amazing at all of them

    Anyway, their salaries correlated much better with their job titles than with how good they were. And their job titles correlated highly with how rich the college was. No wonder the people in the College of Education never stayed very long, yikes! They were Administrative Assistants (low-level clerical workers). In the good colleges, they were Information Analysts (mid-level computer workers).

    Also, it’s kind of sickening that the only way to get a real raise is to switch jobs, or, occasionally, to get a better job offer and then threaten to leave. (A lot of the highest-paid academic advisers were people who were good at switching to higher-paying colleges. They stayed visible doing things like leadership roles in the Academic Advisers’ Association–often at the sacrifice to their own jobs. But then they didn’t stay long anyway.)

    Also, I think it’s stereotypically female to be satisfied with your salary. If the other people needed the money more, or if the money were being used for something else important, that would be one thing. But I suspect the money you’re not getting is instead either going to demanding men or to higher ups who don’t want to share. So I fear that not trying to keep up with the average is supporting the patriarchy. (I like the way Revanche described this better.)

  10. omdg Says:

    One of the things that keeps me going is that I could just practice anesthesia in private practice 3-4 days per week and make just about what I make now salary-wise. And I would be OFF when I’m off. Or I could get a job in industry.

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