One of the most common complaints I hear about academia is that the salary is lower than private practice, sometimes substantially lower. While this is factually correct, I have never understood this argument. Most academic specialists make at least $100k a year, sometimes quite a bit more, which is way more than you need. Then there are the benefits, which are almost always better in academia than in private practice. The opportunity to earn a PENSION? This is guaranteed money for the rest of your life once you retire. I have never heard of anyone getting a pension from private practice, no matter how large the company.
If you calculate the value of the benefits, academia pays much more than the cash salary you earn. I’ve heard some practices don’t chip in for health insurance or retirement- that is HUGE! So it’s hard to compare private practice apples to academia oranges. In addition, many academic institutions give you consulting time, which is time off during which you can go locum elsewhere and make more money. Unless you have a chronic illness which continually drains your resources, academia pays enough. Even if you have huge student loans. Let’s look at how.
Let’s assume you make $100k a year as an academic- a pretty low salary for any specialist. This puts you in the 24% marginal tax rate. With social security, health insurance, and other cuts taken out, let’s say this leaves you with $5000 a month in take-home after-tax after-benefit pay. Now let’s break down expenses for a single person without roommates. This is a pretty free-wheeling estimate since this isn’t a personal finance blog, but it will serve as an illustration.
|Mortgage ($200k house @ 4%)||$950|
|Property taxes & insurance||$200|
|Transportation (gas, taxes, etc.)||$400|
|Utilities (power, internet, etc.)||$150|
|Clothes, household items||$100|
There are several assumptions made in these calculations. Houses in most college towns are inexpensive (apologies if you decided to take a job at UC Davis). Transportation is based off a 10-minute commute- college towns are usually small. You could dramatically cut your transportation costs by living in biking or walking distance to work. You can increase your income by getting a roommate, dramatically offsetting your housing costs. Even if you have high student loans, you can pay them off in a few years and begin saving for retirement with this salary.
Maybe all of this sounds like deprivation to you. Maybe you want to buy a huge house, drive an expensive car, and eat out every night. But… do you really? Is that what will make you happy? Because the science for this is NOT on your side. The science says the paths to real, meaningful happiness are through the purposeful life and the meaningful life, not the hedonic life. And this is NOT a deprivation lifestyle. If you need more evidence, check out this blog which explains how you can have a great life without wasting tons of money.
So, there, if you want to have a nice quality of life as an educator or researcher or academic clinician, you can do so. You have a flexible schedule, intellectual engagement, meaningful engagement (helping students AND animals AND clients), purposeful engagement (great flow during clinics or research or teaching), and you will make PLENTY OF MONEY. OK, bring on the arguments in favor of making tons of money in private practice.