What Do You Consider a Good Salary?
I went to a career-type workshop this week and the guest speaker was a man who had earned a PhD in engineering and an MBA within the last few years and is now working in the private sector. It was a great talk because he was able to compare for us the daily life of a person working in several different types of private sector jobs that are typical for PhDs to transition into (start-ups, entrepreneurship, large companies, consulting, academia).
One of the exercises that he did when he was finishing his MBA that he encouraged us to consider was ranking these different job types on a few factors that were important to him and then adding up the scores to see which type of job he estimated would satisfy him the most. Two of those factors were short-term compensation and long-term compensation, and his metric went from -4 to 4.
For a while we let him go on talking about how the compensation on this type of job would be a “2” and this one would be a “3” and this job had long-term potential to be a “4” before someone finally asked him how those scores translated to dollars. He danced around the question a bit, but then gave us his general ranges:
- 1 – $80,000 to $120,000 per year
- 2 – $150,000 per year
- 3 – $300,000 to $500,000 per year
- 4 – a million dollars or more per year
The speaker clearly valued jobs that are about a “2” for now but have a “4” in long-term potential.
Throwing out ranges like that was a bit shocking to me and I suspected that his MBA training had greatly influenced his salary expectations in comparison with his PhD training. It made me consider what I think a “good” salary is, particularly for a first job post-PhD (keep in mind that’s around the late twenties to early thirties for most people):
- 1 – around $35,000 per year (about what a postdoc is paid)
- 2 – $50,000 to $60,000 per year
- 3 – $80,000 to $100,000 per year
- 4 – $120,000 to $150,000 per year
If I had a 1 salary in a few years that would be disappointing but fine and if I had a 4 salary right out or within a few years I would be beyond thrilled. I guess I’m expecting a 2-3 if I do something typical with my PhD, aside from a postdoc, which is Kyle’s next step. (When I asked Kyle what he thought a “good” salary would be, he said $100,000 per year.)
To combat lifestyle inflation when we get to the salary levels I mentioned, I need to keep in mind that those salaries are way, way above what we’re making now, at which we are more or less satisfied. The median household income in the US in 2009 was $49,777 (source) and if Kyle and I both received what I consider a “3” salary or higher we would be in the top 5% of US earners (source). But where we’re living will matter a lot as well – the cost of living in our hoped-for future home city is about 50% higher than where we live now (source) so if we both have “1” jobs in that city that will be an effective decrease in purchasing power.
I was just amused/surprised to see how high this speaker’s rankings were, but I assume it was inflated from looking at what his business school classmates were able to earn with their post-MBA jobs. Mine are inflated too by the expectations of the types of jobs typical for my future degree. We don’t need to earn that much to survive and thrive, and likely won’t if only one of us takes a typical job and the other does something atypical.
What would you consider a “good” salary for you now, when you were first out of school, or when you complete your terminal degree? Is that more determined by your personal needs or your job type? Are you ever surprised by the salary expectations of others?
photo by 401(K) 2012
Filed under: income
How Does Your Salary Compare to the Living Wage?
I Don’t Work for the Money
Future Directions for EPF
Solving Our Two-Body Problem in 30 Seconds45 Responses to "What Do You Consider a Good Salary?"
Leave a Reply
Recent Comments
- Adam on Home Equity Is Funny Money
"Hi Emily - I just stumbled upon your blog. Great post! Up in Canada this is a…" - Emily on Home Equity Is Funny Money
"I agree that an appraisal is the best number to work with. I can't think of why …" - JL on Home Equity Is Funny Money
"I only note it as round numbers, in $50k or $100k estimates. I also usually upda…" - We Maxed Out All Our Retirement Accounts for the First Time! - Evolving Personal Finance | Evolving Personal Finance on Avoiding an Expensive 401(k) Plan through Self-Employment
"[…] was the first year that we contributed to Kyle’s expensive 401(k…" - Business Goal Tracking for Week 8 of 2022 - Evolving Personal Finance | Evolving Personal Finance on Business Goal Tracking for Week 6 of 2022
"[…] Done as of two weeks ago! […]…"
Going back to my comment on class, my father never made more than $50,000 in his life. When we got out of college and my one friend got a job making $60,000 a year right out the gate, I considered him rich!
For me, at this stage in my life, I would consider $30,000-40,000 a “good” salary. Combined with my wife’s, it would be a really solid middle class income. If I had become a teacher, my starting salary would have probably been about half of that.
Edward Antrobus recently posted..A Random Grab-Bag Post of Useless Trivia
It’s strange to me too that either Kyle or I could be making as much as our higher-earning parent, respectively, within a few years. I think that if Kyle and I were both making in the range you mentioned we would be feeling much more comfortable.
I really try to remember what the median salary is in the US, and make my idea of a “good salary” somewhat grounded in that.
Frankly, in this economy I will be happy if I get a full time job with benefits right out the gate after school, even at your level 1. (I came into grad school thinking I’d make my degree versatile by being willing to work in different sectors where I could use it – academia, nonprofits, government, and one private area – and all three have totally bombed with the recession, even the private area, as it’s indirectly dependent on construction.) Given that businesses are doing better but still aren’t hiring, and the government has continued to lay people off, I’m not very optimistic about the employment situation getting better in ANY of those sectors, and that’s just depressing.
So for that reason, I’d like to try to think of our current standard of living as “normal,” not temporary, which is a little depressing because we don’t save enough for retirement, I wish we could afford an apartment with a dishwasher, etc. But I think if we consider it temporary we’ll be less careful planners. There might also be times when my husband and I are not both able to work at the same time for various reasons, and I think the double version of our grad school stipends would be within probably five thousand dollars of what one of us could make at a decently paid position a few years out of school. We probably won’t make $100,000 combined, at least within the next decade, but more than we’re making now would be pretty sweet.
It’s a great point that unemployment is still a big danger for new grads and that in some ways any job with benefits may have to do. I would like for us to live off one of our incomes for a while after we both graduate until we have a better idea of what our stable employment/salary situation will be, and to possibly prepare for me leaving the work force for a time. With the exception of the delay between when Kyle graduates and when I graduate, I would rather one of us be unemployed than live apart so unilateral employment may be a reality depending on the market in a few years.
As you can probably tell from my posts, I go back and forth on thinking that what we live on now is enough vs. considering that we can’t live this way forever. I try to think of this time in our lives as normal but don’t always succeed.
Yes, I feel the same way. Unilateral employment looks somewhat likely with him graduating first and neither of us wanting long distance relationships either, not to mention throwing kids in the mix. (If there’s health insurance available I think that “potential unilateral employment” period might wind up being a good time to throw them in though!) It seems good to keep in mind that we can live off one salary.
It’s interesting how that number changes over time too.
When I first started working in the software on internships, I thought that making about $20/hour (~$40k annualized)) was normal. With each pay increase, I thought that one was good too! My pay has gone up so much over the last few years since I started working post-undergrad. I remember thinking that the salary they offered me right out of college was incredibly high, but this year, I’ll pull in almost 40% more than that first year.
I would say that a salary at almost $100,000 was pretty good when I finished my undergrad for where my employer is. Now, I would think of my current level as “normal”, but a good income would be in the range of $150,000-180,000. It embarrasses me to say that (sort of out loud) though.
That amount is WAY more than what I need to live on. I’ve been living off of about $40,000/year for the last two years, but this year will probably be closer to $50,000 because of all the moving expenses and such. Something my dad has told me is that I should happily take whatever money they will give me, but try to ask for more because they can probably afford it.
“We don’t need to earn that much to survive and thrive, and likely won’t if only one of us takes a typical job and the other does something atypical.”
So? The more you earn, the more you tithe and the more you can save. The more you save for retirement, the more room you have to save for your kids’ college education. Don’t sell yourself short.*
*I’m still working on that one.
Leigh recently posted..July savings plan
I totally agree that we should push for the highest salaries possible for the positions and geographical areas that we take. That first starting salary can drastically affect lifetime earnings! I was just trying to say that my idea of a “good” salary is determined by the expectations in my field rather than our needs/wants. I’d love to be in a place where we can save a ton of money to give us options for the future, like you are.
I think your ranges for first post-PhD jobs (if the PhD was in a STEM field…) are right on. Honestly though, I remember people I graduated undergrad with going into jobs in the 2 range and I would really hope that my PhD was worth more than that. With the exception of a post-doc (since the point of a post-doc is to broaden your talents, ie educational compensation along with monetary compensation) I would probably be bummed if my first job earned me less than that 2 range. At the same time, I agree with you about not needing anything more to survive. If I had to live off of a grad student stipend my whole life, I could make it happen. I would just like to see my PhD benefit me financially compared to what I could have achieved immediately after my BS.
Julia recently posted..You will give me $200? Yes please!
Yes, our PhDs are both in STEM fields. What I was thinking is “1” is a postdoc, “2” is government work, “3” is private sector in a scientific role, and “4” is private sector in a business role. I’d really love a 3-4 type of job but depending on where we live and the competition it might end up as a 1 or 2. Ideally the PhD should get you a significantly higher pay grade than the BS because of the opportunity cost, but you also have to consider the long-term salary possibilities of the BS vs. PhD because you can’t get promoted too high in many companies without a PhD or MBA.
Unfortunately, a fresh PhD is not usually worth much more than a fresh BS salary-wise (in academia). We’re hiring techs now straight out of undergrad that get $30-$35K, whereas a PhD (typically with 5+ yrs of bench work) only start at $39K for a postdoc. And the techs get contributions to their retirement plans, whereas postdocs do not (at least where I am).
I guess the benefits of the PhD are that you (hopefully) get to do a diversity of things that you love, and your earning potential does jump up much faster than a technician’s would. But I still think starting salaries for postdocs should account for the additional years of experience and training. Particularly since you could be in your mid-30s before you start a “real” job.
It’d be interesting to compare salary expectations of women vs men. I think women find more fulfillment in what they’re doing and less in what they’re making. The detrimental side-effect of this may be that they accept lower pay with contentment. (Just speculation…) I have an architect friend who was so excited when she got her first job and was making $35K in the DC area. I was shocked. I would have expected her to be making at least $50K. Given the economy, I would have taken the job too – but I certainly would have pushed hard with negotiations and would continue looking for a better opportunity after a year at the company.
Your salary ranges seem reasonable.
I would also think that men expect and push harder for the higher salaries. Isn’t that a consistent contributor to the wage gap? This is why I want to really negotiate well for my first post-PhD job as it affects so much down the line. I’ll probably have to take a workshop or something because I have no confidence in that area!
Last year, my total gross income was in the $90K range. This year it’s significantly lower because I stopped working in June. After I graduate, my ideal first post-MBA total gross compensation would be in the $110K-$120K range (knock on wood). I also want to start a small business to generate enough profits to bump up my income to another $40K. Ultimately, I would be VERY happy if my husband and I can maintain a yearly income of $250K-$350K for 5-10 years, which wil give us enough time save so that we can purchase a few properities and retire at 55, if we wish.
Well Heeled Blog recently posted..Holding Off on Merging Finances
Sounds like a perfect plan – make a lot of money, get a business going, live well below your means, and achieve financial independent early! Are there different salary expectations for different ‘tracks’ within the MBA?
Oh absolutely. Part of the reason why everyone wants to go into finance is because the total comp is so high for people standing at the end of the “tournament” – millions of dollars a year. Even at entry level post-MBA, Wall Street pays higher than any other track. A general management job might pay $110K all-in, an associate at a big investment bank is more like $160K-$200K+ first year all-in.
Well Heeled Blog recently posted..Holding Off on Merging Finances
[…] about for when I do have the problem: Where to Put Excess Income.Evolving Personal Finance asks what do you consider a good salary? Maybe it tells what kind of socioeconomic status I’ve had all my life, but if I made $50k a […]
[…] Antrobus featured What Do You Consider a Good Salary? in the places he’s […]
[…] @ Evolving Personal Finance writes What Do You Consider a Good Salary? – I was surpised to hear what one PhD/MBA considers a “good” salary – my […]
Wow, I have my MBA and I consider his numbers a little ridiculous! Maybe if I’d gone to a top tier school like Harvard, but still….
My numbers are much closer to yours – right now I make under $100,000, and I’m quite content. I supposed where you live might affect those numbers too – I live in a small Canadian city with a fairly reasonable cost of living.
Kris @ BalancingMoneyandLife recently posted..Weekly Link Love – July 20, 2012
Well, it is a top business school (I think) but not Harvard or Yale. Maybe that he has two degrees raises his expectations? Sounds like you have a very nice income!
[…] What Do You Consider a Good Salary? was featured in the Carnival of MoneyPros. […]
I am 22 and would consider a good salary after college with little work experience at 50K before taxes, etc. I, fortunately, aimed high and landed more. I think i should have asked for more, but I didn’t want to push my luck.
My hubby is having a hard time finding a position after college.
SavvyFinancialLatina recently posted..Aiming High, Hopefully We Land Somewhere Close
Good thing you got the big paycheck so you can support both of you, then! I hope I won’t have to support both of us on my stipend when Kyle graduates. 🙁
[…] 4) What Do You Consider a Good Salary? […]
[…] 3) What Do You Consider a Good Salary? […]
[…] 2) What Do You Consider a Good Salary? […]
[…] 5) What Do You Consider a Good Salary? […]
[…] 1) What Do You Consider a Good Salary? […]
[…] 4) What Do You Consider a Good Salary? […]
Sorry for such a long response on an old post!
I think what reneed said is definitely true, at least on gender lines. Woman seek more than money and at the sake of money.
Personally, and from an Australian perspective, I think PhDs sometimes are a detriment to employment – the applicants with PhDs hope for more money, but I think companies often resent it or don’t appreciate it. It therefore narrows the feild in which PhD grads are welcomed. I have a friend with a PhD with more difficult time finding jobs than us straight undergrads. I’m an engineer, and we find work (or did 4 years ago when I graduated) without much difficulty. I know a US engineer who had to move TO Australia just to work, and this was AFTER a masters!
But back to your post’s level. I thought the presenter’s levels were a bit high. Not many people earn more than a million a year (in my uniformed opinion!) Certainly not in my field, I don’t think! That being said, I don’t think a good job in Australia, with a degree, should be anything less than $65k. I earnt $45k per annum whilst at uni and I was a boarding house supervisor – essentially a job without a degree requirement. So as a ‘professional’, I would expect more. I’m already just outside your #3. That being said, I was shocked to hit six figures within 3 years of graduating, as I earn more than my mother (a teacher) and almost as much as my dad (a banker – but not the investment type). I also know Australian salaries are FAR higher than the US – my mother compared teaching salaries at a conference and was shocked – as was I.
As for my future earning expectations, i can’t really ‘see’ what I want (or I might get) next. Obviously a 5% increase or 10% increase is expected over the years, with inflation and increasing experience, but I can’t imagine $200k – even factoring in inflation. Insane really. As Well Heeled Blog says, when you look at combined incomes it’s mind blowing (my current partner earns a little more than I do, but is likely and willing to climb higher, faster)
I love long comments on old posts! I think the speaker was thinking of a long-term $1M+ salary would be because of a company he started or got in on the ground floor of – and he would be in a good position to do that with an engineering PhD and an MBA. It’s so difficult to compare salaries across countries – higher salaries but also higher COL where you are, and in some places it’s common to report net instead of gross salary if taxes are high. I’m already a little mind-blown by Kyle’s and my combined salary – it SOUNDS so much higher than what we make individually – like “doing okay” vs. “barely getting by.”
[…] What Do You Consider a Good Salary? […]
[…] 3) What Do You Consider a Good Salary? […]
[…] 3) What Do You Consider a Good Salary? […]
[…] 1) What Do You Consider a Good Salary? […]
[…] 2) What Do You Consider a Good Salary? […]
[…] 2) What Do You Consider a Good Salary? […]
[…] 2) What Do You Consider a Good Salary? […]
Wow, this is such an interesting post!
As a teacher, the highest salary I’ve ever made is $40,000, and that’s with a Master’s in Education, a Master’s in Instructional Systems Technology, and being National Board Certified. My husband makes the same as I do, but he’s a university professor with a doctorate. (I guess I should say that my husband isn’t in a STEM field, but I think that’s obvious. 🙂 ) Education is not a field for anyone looking to make money, which is why I’m trying to get out of it. I don’t want an inflated lifestyle, but I want to be able to pay off our debt faster and put away more in our savings/retirement (which is what we would do with any extra money due to a higher salary).
It’s so fascinating to see that other people view a level 1 salary as double what I’m making now… and that even within the circle of post-bachelors educated folks my husband and I are still so low on the salary scale, despite the fact that we’re not in our 20s anymore.
But, like you say, our salary is definitely higher than many, and we are very fortunate to simply have jobs at all. We can pay our bills, we’re paying down our debt, we’ve got employer-sponsored retirement plans, we can put food on the table, and so on.
It sounds like you have a great mindset going forward, because when you do get jobs with higher salaries, you’ll be able to put the extra money towards retirement and savings and you won’t fall prey to lifestyle inflation, which seems to happen so often with people.
Thanks for giving me lots to ponder! 🙂
Mintly @ MintlyBlog recently posted..SIDE HUSTLE JOB ACQUISITION = SUCCESS!
Thanks for commenting on this old post! It is an interesting one – sort of keeping-up-with-the-Joneses. Is education (or perhaps research) a passion for your husband but not for you? I think we’d settle for lower salaries if it was really what we loved – and for my husband, that is research.
Part of the purpose of starting this blog was to generate a place for accountability for lifestyle inflation post-graduation. We do want to increase our lifestyle, but not mindlessly.
Well, education in general isn’t my husband’s passion, but his job is. We’re both in music, so the music part is his passion, and the teaching of it is part of that. I would definitely settle for a lower-than-average salary if I was truly happy in teaching anymore, but I’m not. I finally have figured out the type of position I want in the next ten years, and now I can plan how to get there! It just so happens that I should be able to make a bit of extra income if I follow that path, so my husband could continue teaching if he wants to!
Mintly @ MintlyBlog recently posted..Debt Eradication (or: What We Did with Our Tax Refund!)
[…] 3) What Do You Consider a Good Salary? […]
[…] 2) What Do You Consider a Good Salary? […]
[…] 1) What Do You Consider a Good Salary? […]
[…] 1) What Do You Consider a Good Salary? […]