Teaching: You do the math....

If you think teaching is your calling, I strongly encourage you to look at the following statistics:

• The estimated average salary of all public elementary and secondary school teachers in the 2004–05 school year was $47602 (Source: United States Labor Statistics, http://www.bls.gov/oco/ocos069.htm)
• According to a 2004-05 survey by the American Association of University Professors, salaries for full-time faculty averaged $68,505. By rank, the average was $91,548 for professors, $65,113 for associate professors, $54,571 for assistant professors, $39,899 for instructors, and $45,647 for lecturers

Don't forget to factor in the following when comparing those two salaries:

• It takes, on average, 4-6 years beyond your masters to get a PhD degree.
  
• Your chances of getting a position of an Assistant Professor can be as low as 5% in some fields.
  

Academia is Business!

Academia is business. It's not your average American business. But more like an average Soviet business. It's big. It's usually state owned (or controlled). It's oligopolistic: schools use accreditation, strict licensing requirements for employees, etc. to keep others out the industry. Nevertheless, its business.

You, as a PhD student, is an employee of that business. Obviously, because it's a very inefficient business (mainly because it operates in the absence of free market) it cannot pay a PhD student what a personal of his or her qualifications would demand in the real world. So what is school's marketing strategy to attract PhD students?

First, academia creates this exclusivity aura around PhD. Their marketing message is that having a PhD is like having a Rolls-Royce. It's a sign of exclusivity. The reality is that you don't really need a Rolls-Royce. Hey, if Warren Buffet can get around in a Lincoln, so does everyone else. Pragmatically, the only reason to have a Rolls-Royce is to impress someone, to have that feeling of exclusivity. Similarly, the only reason to have a PhD is to have the privilege to be a professor.

Academia also promises you "eternal life" of a tenure professor. This will mean high pay for little work until you die. The trick here is that this offer is as alluring as a lottery prize. Very valuable, yet you are not likely to get it.

Very often this marketing message doesn't work well and schools have problems attracting PhD students. In this case, there's another source of PhD students: international students. For an international student PhD can be a valuable platform for immigration. Also they don't sacrifice as much financially. In countries like India, China, or Russia, 20,000K per year is really a salary of young professional. That's why there are so many international students in U.S. PhD programs. However, as the standard of living is rising in BRIC countries, there will be a dry-out in the stream of international PhD students (I think there are already signs of the dry-out).

How to get accepted into a PhD program

Pragmatically, there's only one reason as to why a professor would want to have you as his or her PhD student. And that is to get some publications out of you. Publications is the most valuable thing in the world for a professor, because his or career largely depends on the quantity and quantity of publications.

So if you want to get into a PhD program, you must demonstrate that you have a great potential for conducting and publishing research. Preferably, you should try to publish a paper or two before you apply to a PhD program. Even a trade press publication might help.

So everything that you write and say during the application processes should be geared towards making a strong case that you can co-author a lot of papers with professors in the department.

It's all about the money!

Many professors like to preach to their PhD students that being a professor is not about money. One of my advisers once told me after a few glasses of wine: "You know, I didn't go into academia because of money... I could be a millionaire if I wanted to! Yet I chose to do research and help young fellas like you instead".

Don't be so naive my friend... It's all about money. In fact, since there are so few opportunities in academia to make good money, most profs would step over their mom's dead body to pick a few bucks from the floor. I was once assigned to crunch survey data which contained responses from faculty members at a big school. Guess what was number one concern among the altruistic profs? Yep, money! Virtually every prof was whining about money and asking for salary increase.

Cash, Rules, Everything, Around, Me
C.R.E.A.M.
Get the money
Dollar, dollar bill y'all

The Ph.D. Glut Revisited

Folks, this may look like a blunt case of content theft, but I just don't want this article to disappear from the web one day. This article should be read by anyone before applying to a PhD program
The Ph.D. Glut Revisited
by Gary North
http://www.lewrockwell.com/north/north427.html

The economist rarely uses the words "glut" and "shortage" without adding: at some price. Other scholars are not equally wise.

A free market theory of pricing rests on the supposition that gluts and shortages are temporary phenomena. Prices adjust so as to clear a market. If this does not take place, the free market economist goes looking for evidence of state intervention.

Consider the problem of excess inventory. It is better to get something for unused and unwanted inventory than to pay for storage. So, selling prices adjust downward. This eventually eliminates the glut. The unpleasant experience also warns the producer not to do this again.

Why does a glut exist? Because of an error in prior forecasting. Suppliers believed that there would be buyers at a specific price. It turned out that there was an insufficient number of buyers at that expected price.

Then why does a glut persist? One answer: ignorance on the part of suppliers. But why should this ignorance persist? Why don't suppliers get the picture?

Experienced sellers do get the picture. The problem is a continuing supply of new sellers who are unfamiliar with the market and ignorant of the past supply-demand conditions. Or, as has been said so often, there's a sucker born every minute. There is no evidence that P. T. Barnum ever said this, but it is nonetheless true.

In the worldwide suckers' market, gamblers are the only people who are slower to learn than young adults with masters' degrees. Bright graduate students possess a pair of non-marketable skills: the ability to write term papers and the ability to take academic exams. They are also economic illiterates and incurably naïve. So, they become the trusting victims of the professorial class.

THE ECONOMICS OF THE PROFESSORATE

No one ever sits down and tells a newly minted college graduate about the economics of the professorate. No one tells the student about the crucial and neglected work of the person who first blew the whistle on the economics of the Ph.D., David W. Breneman. He is the Dean of the Curry School of Education at the University of Virginia. He wrote his Ph.D. dissertation on the economics of the Ph.D. It was accepted in 1970 by the University of California, Berkeley. It was based on research completed in 1968, the year prior to the beginning of the Ph.D. glut. Its title: "The Ph.D. Production Process: A Study of Departmental Behavior." Of all Ph.D. dissertations ever written, this is the only one that one that should be read by every college student who is contemplating graduate school. Of course, no one tells him. Few people have ever heard of it.

I read it in 1970. I do not recall how I came across it. I was completing my Ph.D., so I was facing the Ph.D. glut personally, which had begun in the fall of 1969. It had been predicted for the sciences by Allan Cartter of New York University in 1964. Sometime around 1966, Clark Kerr, President of the University of California, had mentioned this looming problem to a group of us in an elite student organization called the California Club. But I was naïve. I figured, "It won't happen to me." Ha!

As they say in those late-night Ronco ads, "Here's how it works!" Academic departments grow in terms of the number of students enrolled. We know from Parkinson's Law that growth is an institutional imperative. Administrators advance their careers by expanding the number of subordinates in their department. So, every academic department wants more students – students of a special kind.

Students are not of equal value to a department. The lower-division student (freshman or sophomore) does not rate highly in the currency of academic resource allocation: the full-time enrollment, or FTE. The FTE figure is what justifies the hiring of a full-time faculty member. The lower the ratio, the better. It may take 15 lower-division students to generate one FTE. It may take only eight Ph.D.-level graduate students to generate an FTE.

The more Ph.D. students a department can attract, the faster the growth of that department. This is the iron law of academia. All other economic laws are sacrificed for it, as the economist says, other things being equal.

This fact of academic economic life creates an incentive for departments to enroll lots of graduate students. It also rewards those departments that persuade M.A. students to go into the Ph.D. program.

Also, the brightest graduate students may be asked to do unpaid or grant-paid research for senior professors. The professors then publish the results of this research under their own names, thereby advancing their careers. It's the division of labor at work.

"GLUT? WHAT GLUT?"

The Ph.D. glut has existed ever since the fall of 1969. The number of entry-level full-time professorial positions has remained stagnant. Few new universities have been constructed. Legislatures have resisted additional funding.

This has led to a reduction of the number of tenure-level positions. Universities and community colleges have been able to staff their entry-level positions with inexpensive instructors.

Those few Ph.D.s who receive a full-time position at a university find that they are paid much less than tenured members of the department. They are assigned the lower-division classes, which are large – sometimes 200 to 1,000 students. These mega-classes require lecturing skills that most professors do not possess. Those untenured faculty members who perform well in mega-classes are kept on until the day of reckoning: the decision to grant them tenure, usually eight years after they go on the payroll. They are usually not re-hired unless they have published narrowly focused articles in professional journals. But mega-class professors do not have much time to do the required research.

The assistant professor is now 35 years old or older. He has not made the cut. He is now relegated to the academic underworld: the community colleges. But here there is fierce competition. Community colleges hire part-time instructors at $10 to $15 an hour. These people seek a full-time position at the community college. They need that initial foot in the door: night school courses for worn-out adults who are trying to earn an A.A. degree. Their natural enemies are the newly dismissed assistant professors from universities.

Who gets an entry-level position at Boonsdocksville State University, which in 1960 was a public schools teacher training college? New graduates with Ph.D.s from the two-dozen major universities.

Then what happens to graduates with Ph.D.s issued by Boonsdocksville State? They go straight into the community college circuit.

This has been going on ever since the fall of 1969. It is great for community college administrators, who have a never-ending supply of optimistic Ph.D.-holding graduates of all but the top two-dozen universities, plus a never-ending supply of burned-out, terrified assistant professors from top universities who did not receive tenure.

If you want to understand this process, watch Ghostbusters: the scene after the parapsychology team has been dismissed from the university. Dan Ackroyd speaks for tens of thousands of Ph.D.-holding rejects who did not make the cut.

For over three decades, all it has taken to generate 1,000 applicants was this ad in a professional journal in the humanities:

Tenure-track position

Ph.D. required

Teach 12 hours of the freshman course

The salary has been almost irrelevant: not more than the average salary of the average American worker with a high school diploma.

If the ad said "Ph.D. or ABD required," it would generate 2,000 applicants. ABD stands for "all but dissertation."

Graduate students do not learn about supply and demand, and it does not pay senior professors to teach them. Here is evidence. In response to the ever-growing glut of Ph.D.'s, the American university system turned out about 30,000 Ph.D. graduates per year, 1969 to about 1975. Since then, it has increased the output. In 1980, it was 33,615. In 1990, it was 38,371. In 2000, it was 44,808. In 2003, it was 46,024. (Statistical Abstract of the United States, 2006, Table 290.) Despite this, we read on a website devoted to selling "how to get higher learning degrees" materials,

The Bureau of Labor Statistics currently predicts that the job outlook for postsecondary teachers (a job commonly sought by Ph.D. graduates) should be much brighter than it has been in recent years. Employment in that area is expected to grow by almost 40 percent by 2012, whereas overall employment is expected to grow by only 15 percent! So, if you're just starting down the track to a Ph.D. and hope to take root in the world of academia, your timing may be just right!

There's one born every minute . . . and two who will relieve him of his funds.

STATE SUBSIDIES

Most degree-granting universities are funded by taxpayers. A university used to be an institution of higher learning that was authorized by a college-accrediting agency to grant the Ph.D. Employees of all but the most prestigious four-year colleges want to be called a university. So, title inflation has matched degree inflation and grade inflation over the last 35 years.

The supply of college graduates with ever-lower academic abilities is funded by money coerced from taxpayers. The American higher education system is structured by the professorate to reward those professors who teach small classes of graduate students. So, year after year, decade after decade, the supply of Ph.D.-holding students increases, despite an academic market that does not hire most of them, and hires a minority at wages that do not compensate them for the money and time invested in earning their degrees.

They cannot teach at the high school level because their advanced degrees force the school districts to pay them too much. A teacher with a B.A. is paid a fraction of what a Ph.D. or Ed.D. is paid. The teacher unions have negotiated payment so that existing employees who attend night school and summer school at Boonsdocksville State can work their way up within the system. Being tenured, they cannot be fired. Earning a graduate degree is a guaranteed way to earn a larger salary. But no district goes looking for Ph.D.s to hire. That financial affliction is entirely generated from inside the union-dominated, tax-funded public schools.

HOPE SPRINGS ETERNAL

Ph.D. students are a lot like gamblers. They expect to beat the odds. The gambler personifies odds-beating as Lady Luck. The Ph.D. student instead looks within. "I am really smart. These other people in the program aren't as smart as I am. I will get that tenure-track job. I will make the cut. I will be a beneficiary of the system."

If wishes were horses, beggars would ride. Also, if ego were marketable, all Ph.D. graduates would get tenure.

Why does any Ph.D. student at any but the top graduate schools believe that he will get tenure at any university? The odds are so far against him, and have been for a generation, than he ought to realize that he is about to waste his most precious resource – time – on a long-shot. Investing five or more years beyond the B.A. degree, except in a field where industry hires people with advanced degrees, is economic stupidity that boggles the imagination. Yet at least 200,000 graduate students are doing this at any time. Of the 46,000 who earned a Ph.D. in 2003, an equal number (or more) got to ABD status and quit. Probably more than half of the others quit before they got to ABD status.

At $20,000 or more per year in tuition and living expenses, plus the $35,000+ not earned in the job market, trying to earn a Ph.D. is a losing proposition.

In some departments, the years invested are horrendous. Breneman's dissertation went into the grim details, department by department. Anyone seeking a degree in philosophy was almost doomed to failure, yet the Ph.D. degree took on average over a decade beyond the B.A. to earn. There were almost no college teaching jobs when they finished. That was before the glut.

CONCLUSION

Earning a Ph.D. may pay off if your goal is status, although I don't understand why anyone regards a Ph.D. as a status symbol that is worth giving up five to ten years of your earning power in your youth, when every dime saved can multiply because of compounding. If the public understood the economics of earning a Ph.D., people would think "naïve economic loser" whenever they hear "Ph.D."

How much does it cost to get a PhD degree?

A very common misconception is that getting a PhD degree is free. There's a saying that goes like this "free cheese is only only found in the mousetrap". Why would something valuable be offered free of charge?

It is true that most doctoral programs offer full tuition waiver and some sort of a stipend (usually around $20,000 per year). Before you accept an offer from a PhD program, you have to consider some of the factors that don't seem to be obvious. First of all, you really have to "read the small font". Just like car saleswoman, your prospective school may be playing dirty tricks with you. For example, full tuition waiver may not include "other fees". So you may still end up paying 1-2K for tuition per semester. Also, there may be a "as long as the student is in a good academic standing". This may mean that you will get the support for up to four years. Since most PhD students do not graduate withing 4 years, you may be facing a very real possibility of paying full, "out of state" tuition for the last year or two of you studies.... In the worst case scenario, this may be around 6K per "long" semester. Usually, there are ways to get around this. But it will cost you a lot of time and nerves to extend your financial support beyond what is considered by the school a "normal" length of a program.

Even if you don't take into account this dirty financial tricks, $20,000 (or even $30,000) per year may not be enough to live a decent life. You will need money for vocation (if you are planning to live 5 years without a vacation you are a prospective candidate for a mental house). You need money for textbooks. You need money to go to conferences (some departments provide some sort of support for graduate student travel, but this may not be enough). To get a feel of how it is like to live on 20K, you have to talk to folks working at McDonald's. But keep in mind that they are likely to be making more money on per hour basis than you. I have two friends who got out of graduate schools with debt pushing the $100,000 mark. As for me, after living a quite frugal lifestyle, I spent around $50,000 of my own money after 5 years in a PhD program.


Also, don't forget to factor in the opportunity cost. Let's assume that before you get into a PhD program you have a job paying around $50,000 a year... Let's say you manage to save $10,000 a year for the next five years. If you put invest this money at 5% a year, you will end up with roughly $140,000 in 20 years. This is the difference you may never be able to make up even if you end up having a decent academic job after you graduate (see this post). I've know a person, a former mid-level executive, who decided to become a professor after many years in the industry. After more than 6 years in a PhD program, he estimated his opportunity cost at around $1,000,000.

From an economic perspective, a "free" graduate program may be a good deal only to a guy from a poor Indian, Chinese, or Russian village. This, in part, may explain why there are so many foreign students in graduate programs.