Salaries for doctors and teachers: should we pay more to get better health care and education?

by Alan Cohen

Mindful Stew recently had a nice post suggesting that we should pay teachers more – much more, perhaps as much as $100,000 per year. The basic premise is that we lose a lot of talented teachers because we don’t pay them enough and they go into other, more lucrative professions. Perhaps paying teachers more would thus be a good long-term investment in education.

At the same time, I’ve been reading T.R. Reid’s The Healing of America, a book comparing the US medical system to others from around the world. The unsurprising but crystal-clear conclusion is that Americans pay a lot for very bad medical care. And a lot of this a lot is for doctors’ salaries. In many countries with much better medical systems (France or Japan for example) doctors make half or one third of what doctors in the US make, and yet they still attract good doctors.

So I found myself wondering: If I agree so strongly with Mindful Stew (and I do), how can I also agree so strongly with the implicit conclusion of Reid, that doctors should be paid much less in the US? This post is about how these ideas can be reconciled.

Why we should pay teachers more

During grad school in St. Louis, I volunteered as a math and science tutor at a local high school with many struggling students. My first assignment was just to be in a classroom with a seventh-grade science teacher and help her as necessary. Imagine my surprise when she said, “Let’s memorize the proper order: compounds are smaller than elements are smaller than molecules are smaller than atoms.” (I have forgotten the exact order she specified, but suffice it to say that it was a long, long way from the correct order.) I was thus confronted with a dilemma: correct the teacher and undermine her credibility, or shut up and appear to give my assent to what had been (mis-)taught.

I chose the latter, and immediately asked to be paired with an individual struggling student rather than face similar situations in the future. My tutee was having trouble in math because he didn’t like his teacher. With two months of weekly sessions, I brought him from failure to getting As on every assignment. I gave him confidence that he could do it. He was not stupid, he had just not been motivated by a good teacher.

How can teachers that ignorant and incompetent have a place at the front of a classroom? (And I am certain from what I saw in the science classroom that this was not a fluke.) Clearly, we are not recruiting and/or retaining enough competent individuals into the profession. I say this with great respect for many individual teachers who helped me over the years, and many other dedicated individuals I know in the profession. Many of them are, I’m sure, equally disturbed to see the level of many of their co-workers.

Increasing teacher salaries would go a long way toward fixing this problem. If the average teacher salary was $100K per year, qualified candidates would compete for these positions. In return, however, teachers would need to accept that they should be evaluated, and we should be able to get rid of the worst. Our responsibility to educate the next generation is too great to allow the teacher I saw in St. Louis to continue to have her job, regardless of whether she is well-meaning or member of a union. Since no single evaluation system is particularly fair or accurate, multiple systems should be used: tests, student/parent evaluations, administration evaluations, and colleague evaluations.

Why we should pay doctors less

According to The Healing of America, a typical French general practitioner earns $52K per year. A typical German GP earns $125K. A typical Japanese GP earns $130K. A typical British GP earns $125K. A typical Canadian GP earns half of what an American GP earns. And the American is up around $200K+. Yet all these countries have better health statistics than the US across the board. All spend much smaller percentages of their GDP on health care – often only half as much as the US. All have simpler systems with less bureaucracy, and usually with more patient choice. So it seems clear that in the US (and in Canada too, I’d argue, though that’s for another day) we should pay doctors much less – we’re clearly not getting our money’s worth. The French system was ranked the top in the world by the WHO, and yet they pay their doctors about 25% of what they’d make in the US.

Just paying doctors less would come nowhere close to solving America’s health care woes, but certainly it would help cut back costs, with little negative impact on the quality of health care, it would seem. Or at least it could be that way if we designed the right system…

How to reconcile these ideas

The key insight is that we pay professionals in two currencies: money and respect. (By respect, I include prestige, rank, social valorization, and individual fulfillment.) If you work for a Wall Street bank, you get a lot of the former (money) and not so much of the latter (respect). If you work for a non-profit, it’s the other way around. Talented people will be motivated to varying degrees by these two currencies, so it is possible to attract some of the best and brightest without offering lots of both, so long as you offer a lot of one and a minimal but sufficient amount of the other, or some good mix of the two.

The problem in education in the US is that we offer neither.

The problem in medicine in the US and Canada is that we offer too much of both.

Every society has a limited pool of top-level talent, its best and brightest, and it thus has the dilemma of how to allocate them to different jobs. It would be wonderful if every small town’s budget planning office could be run by someone with a Ph.D in economics from Harvard (to stereotype – I’m not really sure that Harvard is the best place for grad school in economics), but, let’s face it, if we put the Harvard economics Ph.Ds there, we won’t have enough to run US Department of the Treasury, the World Bank, and so forth. As maligned as these institutions may be, they would be even worse off if they were run by the people currently in charge of small-town budgets.

Not all people are equally suited to all jobs – there are probably some excellent engineers who would be awful teachers, and vice-versa – but generally speaking people self-select into appropriate fields. So let’s simplify for argument’s sake and assume that we could get the right people to the right jobs by offering a sufficient mix of money and respect to attract the appropriate level of candidate for all the various professions. In this case, it’s important to offer enough money and respect (otherwise you don’t get good candidates) but not too much (otherwise you drain good candidates from more important professions and waste resources). A good example of paying people too much is the Wall Street bankers, many of whom come straight out of the Ivies, make huge sums of money, and yet contribute very little to the greater good of the economy or pubic welfare.

We need a lot of teachers. We don’t necessarily want to be recruiting from the top 1/100th of 1% to get our teachers – although it would be nice, it would be expensive, and it would mean having many fewer rocket scientists and Nobel-prize level economists. But we probably do want to be recruiting from the top 5%. Ditto for the doctors.

The problem, as you’ve probably noted, is that we can’t write a check for respect. It’s a cultural value, and it goes a long way to explaining why doctors are so revered in Japan, and thus willing to accept relatively low salaries and a stressful economic life. (Teachers are also very respected in Asian society, and make even more horrible salaries there.) So if we want to change the respect we give to a profession, we have to change the culture.

Luckily, the US is so money-obsessed compared to other cultures that we can probably change the culture of respect simply by changing the salaries of teachers. In the end, I don’t think teachers really need to make $100K per year in order for us to attract a really good crop of candidates. But if we want to change the system, we would need to pay this much in order to drastically change the perceptions of the profession and get people from the best universities considering teaching as a serious option. Once the respect for the profession had returned to where it should be, we might be able to lower salaries again if we had the political will. We could maintain a good crop of candidates as long as the salary is enough to avoid economic stress (minimum $50-60K) and the profession is seen as respectable and valued.

Likewise, we are currently overpaying doctors. It is a profession that deserves, and gets, respect. Precisely for this reason, we should be able to recruit and keep top-level candidates even with much lower salaries. I have a Ph.D and a tenure-track position as a professor at a Canadian medical school. I make plenty to have a comfortable life; if anything, I think I am overpaid (though I was underpaid during my Ph.D and years of post-docing). But my colleagues with an MD make three times what I do – even if they don’t actually practice medicine and only do research. I don’t need any more money, so I don’t feel resentful, but I do feel like the system is broken if we are overpaying to this extent.

What do you think? How much should we pay doctors and teachers? How much is respect worth in a profession? Let me hear your thoughts…