How a PhD would affect the compensation curve of a professional?

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If you are planning to pursue a PhD and aspire to delay your working life by 4-5 years, then this article would help you figure out whether you are ready to make that trade off. There is good news as well bad news. Now if you would like to put off your corporate or working life for few years to earn the reputation of becoming a doctor of a subject, we will analyse whether it is a worthy pursuit in terms of compensation or not.

Let’s start with the good news and then we will discuss the demerit of pursuing a full time PhD in terms of the compensation curve. And finally we will analyse both of them under the light of reality.

Good news
Have you ever heard about any degree which offers full time employment? Yes, there are distance learning programs and part time programs which offer the same advantage. But if you get a full time degree as well as an opportunity to work full time what would you call it? Yes, you guessed it right.

We will call it a PhD. PhD is never about study or a degree only, even in France, universities don’t call PhD students as students, they call early researchers. In PhD your stipend would be much less than a manager who works in a corporate industry. But your advantage is that along with the stipend you also get a degree. But now we need to see how much it helps in the long run.

Bad news

Bad news is this that while pursuing your PhD you are letting go of a significant amount of salary that you could get as a result of working full time in a corporate industry. If you would have worked during those 5 years, then you would have earned significantly more than what you are earning as a PhD student.

Yes, you have a lot of opportunities to collaborate with the industry officials, learn a lot, and earn a doctorate at the end of the day. But once you lost the amount for over 5 years, it’s very hard to get it back in your life time. And again when you pursue your PhD, the corporate industry will also grow rapidly and there would be drastic shift in the way things would work 5 years down the line. If you are not direct part of the corporate industry, it would be difficult to understand and apply in your career curve.


To analyse the whole situation, let’s take two people for example and let’s see how a full time PhD will affect one of theirs compensation curve. There are two friends. We will call them A and B.

First, let’s talk about a little background to make the example clear.

Both A and B were classmates of their MBA institutes. Both are Engineer and MBA. But each of them has taken a separate path. “A” has chosen the path of employment in a corporate industry. Whereas “B” has decided to go with a full time PhD!

Now, “A” earns US $50,000 a year whereas “B” earns US $25,000 as stipend.

We will see what happens after 5 years.

After 5 years “A” becomes a manager and his earning increased to US $65,000 per annum. Whereas after 5 years, “B” earns his doctorate and decides to join a corporate whereas his salary turns out to be US $68,000 per annum!

We will do a little calculation.

Over last 5 years, “A” earns US $(50,000+53,000+56,000+59,000+62,000+65,000) = $345,000 with an assumption that “A” earns an increment of US $3,000 per year for last 5 years.

Over last 5 years, “B” earns US $(25,000*5) = $125,000 without any increment.

The difference between both of them in earning is US $(345,000-125,000) = $220,000 almost a quarter of a million dollars.

Right now as “B” has a PhD degree, he earned US $3,000 more per year than “A”. But is it possible to recoup all the money that “B” has lost over the years. If “A” doesn’t grow at all in skills, abilities and technical know-how then also “B” will take almost another 70 years assuming all other things remain constant.

But this is an absurd idea. It’s not possible that “A” will not grow at all. And again it’s also not practical that as “B” has a PhD degree, he will always grow better than “A”.

Thus, it’s clearly visible that once the money is lost, it’s gone completely. That means there is a huge opportunity cost for pursuing a full time PhD in terms of compensation curve. You are not only giving away 5 years of your life to pursue a PhD, rather you are letting go of almost a quarter of a million dollars.

If you are eager to earn a lot of money, you need to think again before enrolling yourself for a full time PhD program.

In conclusion

Nothing can come in life without trade off. If you want to juggle two things at the same time, you will achieve neither. Thus, you need to decide what you would like to let go of – money, in huge quantity or a full time doctorate degree. Because from the above analysis it’s very much clear that it’s not possible to pursue these two options simultaneously.

Here there are three things you can go. And yes the trade-off of each option is different.

In the first case, you can let go of a full time PhD and pursue a full time employment in corporate industry. Here you are choosing money over a doctorate degree. If you choose this option you may think that you are letting go of learning. But the truth is you will learn a lot during your years in the corporate industry and you will also not lose a quarter of million dollars or even more. You will also earn a good position in a good company.

The second option says that you choose a full time PhD and let go of employment for 5 years straight. Here you have decided to let go of a quarter of a million dollars and choose to be the master of a particular subject instead. This is not at all a bad option if your prime contention is to be called a doctor.

The third option which is the middle ground of the above two is not to let go of employment and a PhD. In India, it’s very popular. This option is all about doing a part time PhD and at the same time being employed full time in an industry. In this particular option, you have an opportunity to work full time, not lose any money and at the same time after few years receive your PhD degree.

Ultimately, nothing is wrong or right. You need to pick which option suits you best. And then follow your own heart without getting seduced by what others opine.