Friday, April 13, 2012

What's the small company discount?

A reader writes in to ask:
Off the top of your head, what do you think the average salary for a [less than 5 years] Ph.D. chemist at a small company in [the Midwest] is?  I mean small: [less than 20 employees.]  It's difficult to muddle through all of the ACS data, and their numbers always seem a little high anyway...
Let's go to the latest published full set of data, which is the 2011 ACS Salary Survey, based on reported numbers for March 2010:


So the median Ph.D. industrial chemist makes 114k. The small company discount is HUGE; the median small company chemist (less than 25 employees) either makes 49k or 86k. As you can see on the right, all the Midwestern areas have median salaries for Ph.D. chemists that are significantly different from the median Ph.D. salary. Also, (not pictured) there's quite a drop between the 50th percentile for a young industrial Ph.D. chemist (87k) and "the median chemist."

Sorry -- probably news that you don't want to hear, reader.

I'm probably seriously comparing kumquats and bananas here, so take it with a grain of salt. Readers, what do you think? 

20 comments:

  1. From personal experience - the lowest I've seen was under 40k, the highest - mid 70-ies. Much of it depends on employers' whims but I think 50-60k is the norm.

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  2. I jumped between two different geographies (New England to South Atlantic), and saw about a 30% cut in starting salary. Both small companies. Six figures is a far-off dream I muse about, on long afternoons by the hood....

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  3. I was offered high 50s at a small company (<25 employees) in one of the most expensive regions on that ACS map for a PhD required (but not advertised as postdoc) position. They refused to even negotiate.

    The ACS numbers are BS. I would like to see a 3rd party audit them.

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  4. The problem is that certain areas that have dense scientific communities and high cost of living sometimes skew the numbers. For example, Southern California's numbers skew the pacific region's average higher than if you just took Oregon and Washington together. Maybe a ratio of pay to cost of living would be a better data chart.

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  5. Anonymous041320121150aApril 13, 2012 at 3:20 PM

    More specifically, this particular job was in _the_ most expensive city in one of the most expensive regions on the ACS map. You would have an impressive commute if you wanted to purchase a home.

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  6. I find it interesting that the BS salary generally trends upward with employer size, whereas MS takes a dip in pay in the 50-2500 employees region. PhDs take an ever greater absolute hit on salary in about the same region. Any ideas why that might be? Are companies this size low-balling the advanced degree folks to be more competitive? Are they located in areas with lower costs of living/operating?

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    1. BS salaries could trend up if chemical engineers sneak into the data set in bigger companies.

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  7. In a depressed economy, small companies hire more talent for less money, whether the job requires a Ph.D. or not. "Bang for the buck;" why hire an MS to do it when we can "buy" a doctor for the same $$$

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  8. I have two friends currently making $45-50K at smaller companies and they have PhDs. SoCal and Bay Area, so it is possible to still get the discount even in a higher cost area.

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  9. Wow,
    45K for 10 years of post high school education. Unbelievable. Supply and demand has really decimated the salaries of PhD chemists. I remember my colleague getting 70K job offers back in the 80's.

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    1. This is Anon 3:27
      The worst part about this is that one of those friends had a better paying job as a BS level chemist and thought they could get a pay raise with a PhD. It's been a long 10 years of getting paid less than that...and it's not getting better.

      On the other hand, the other one is very happy, never having had much of a paycheck it seem like industry is a step up from graduate school! As long as you don't think about the opportunity costs.

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  10. It is somewhat comforting to learn that obtaining the PhD is worthwhile economically. Using the averages by degree and assuming:
    -BS grads work from 21 to 65 (4 yrs UG).
    -MS grads work from 23 to 65 (4 yrs UG + 2 yrs grad school).
    -PhD work from 28 (4 yrs UG + 5 years grad school + 2 years PDF).
    -Grad students make 20k/year, and PDF 35. I'm guessing at both these figures.
    The PhD "wins" with 4.4 M over a career, the MS gets 3.7M, and the BS 3.2M. There are probably some clear (to others) flaws in this, for example employability.

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    1. Your analysis has already been done, but the premium for a PhD was determined to be much lower, at least in biology:

      http://sciencecareers.sciencemag.org/career_magazine/previous_issues/articles/2008_04_11/caredit.a0800055

      A PhD only had about $100K more over their working lifetime than a BS and that was back in 2008! Chemistry may be better, but I doubt $1.2M better...

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    2. I did my version here: http://chemjobber.blogspot.com/2010/05/quick-salary-comparison.html

      ...I never did the B.S. version, though.

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    3. The study I linked to does take into account average earnings each year after degree earned:

      "He used mean salary values as a function of the number of years since completing a degree, and his analysis encompassed all employment sectors and included a 3% discount rate for future earnings. With those assumptions, a Ph.D.'s earnings didn't overtake those of the bachelor's-degree recipient until age 60."

      Your analysis is fairly optimistic, probably because it does not take into account that factor. But chemists have generally done better than biologists (shorter PhD, shorter post-docs, etc.). But from what I've seen chemists are catching up with biologists in those areas fast! I already know people on post-doc #2, they are rarer in chem, but they are growing.

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  11. @bbooooooooooya:
    and Net Present Value - time value of money.

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  12. I worked for a small company in the midwest about 8 years ago. The salary was lower than my experience and credentials would have earned elsewhere but consider potential advantages. I lived in a small town of about 6000 people (Shenandoah Iowa). Housing was incredibly inexpensive. I lived five minutes from work. I saved money over my stay!
    Oh by the way, the people are more friendly too.

    Kilomentor

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  13. @CJ: Hopefully my stats answer your thread's question.

    PhD organic chemist; 4 years industrial experience; working in "West North Central" at an officially small (<500 employees) company; gross salary $77K/year (net salary $56K/year) after two raises.

    @kilomentor: Are you still working in the Midwest? If not, may I ask what compelled you to change jobs?

    Looking at the 2011 ACS Salary Survey chart, I am particularly struck by the MS/PhD salary dip spanning the companies with 50 to 2499 employees. Does anyone have an explanation for this? I guess companies sourcing from temp agencies, regardless of their size, have to pay the same rate for Bachelor's-level chemists. Anyway, many of my employed chemistry friends in "prestige regions" have not gotten spectacular raises, whereas my unemployed job-seeking friends have been low-balled by companies great and small. What a sad time for chemistry careers...

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    1. Well, for what it's worth, Anon, we're in similar boats (re: exp/$). I hope you're enjoying the quality of life -- I am.

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  14. I assume the small company discount is driving the outsourcing boom in pharma? If salaries are a significant portion of your preclinical costs, then having the same work done at a small company could save you 10-15%. Of course, they can't necessarily do all of the same work, and sometimes they don't even have the incentive to (why say no to good data that could get you a nice buyout by a larger pharma company?) and it also assumes that you can keep the pipeline filled with people who could be making more with a managerial position at Wal-Mart than with you (not that much of an overstatement), but other than that, it makes a lot of sense.

    It even makes companies look good after a nice round of outsourcing to Asia to say that they're bringing jobs back to the US. As long as nobody notices that the new jobs are effectively some of the old jobs with 25-50% pay cuts, they'll be rolling in good press. Of course, if Asia learns to play in pharma, that supply of cheap(er) labor might not be so plentiful - at which point, they can either 1) reoutsource, saying that they can't find enough qualified people (who are willing to work for not much) or 2) complain to funding agencies about the s(TEM) shortage, and hope that no one reads job figures.

    Are we sure that Pfizer's or Lilly's CEOs aren't just Catbert in a human suit?

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