United States physician income in context

One of the issues that I have when people assert that United States physician compensation is much higher than other countries is that they make terribly naive comparison.  They compare, say, PPP-adjusted incomes to PPP-adjusted incomes in other countries without accounting for the fact that the “average” person in this country has a much higher PPP-adjusted income by most measures.   Likewise, they’ll compare physician income to “average income” or “average wage” ratios without comparing it to the more relevant labor pool in each country, i.e., at least college graduates (or better). example

Average Physician Gross Income to Average College Grad Gross Income [apples-to-apples]

Note: In both cases, “gross” is pre-tax income, including social security/payroll contributions.

The same data as ratios (gross vs gross)

Average Physician Gross Income to Average College-grad LABOR cost

Note: The college labor cost data (X-axis) is pre-tax and includes the cost of benefits like healthcare, which must be baked into the costs of healthcare itself in this country to pay for employee salaries.  So this tells us something too [whereas in many other countries with socialized medicine this is payed for by (higher) taxes]…

Average Physician Gross Income to Average Net Income of College grads

Note: This is after-tax data.   The average college grads in the United States has much more disposable income available on average (not only are we paid more pre-tax (even gross), but we get to keep a much larger chunk of what we do make).   Although they we do have to pay more for education out of pocket, these costs over the course of a career are relatively small.


In any event, comparing how much more physicians make in proportional terms to their more equivalent peers (college graduates) is, in my opinion, a far better way to analyze the situation.   Most countries pay their physicians around 2x what a typical college grad makes.  If you think about it, this makes sense because there are real opportunity costs involved in going to medical school, going through residency programs, etc (probably even more in this country since our programs are longer and more expensive)…



Note: The data for college graduates income (various measures) can be retrieved directly from this OECD spreadsheet.


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