3 min read

The $1,000,000 Mistake; $10k at a Time

The $1,000,000 Mistake; $10k at a Time

Dr. Catenaccio took a look at 45 physician specialties. 42 out of 45 had women with a starting salary $26,800 less than male counterparts.

The true gap is much more than that. This number is just for a single year of compensation. Over a career, it's a massive difference.

You might have your dream job and ideal salary. Your golden words easily convince your employer of a generous yearly raise. Don't let me waste your time. This article is not for you.

Career compensation is often a trajectory. Ideally, every job pays more than the previous, with raises smattered here and there.

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What happens when that salary trajectory is stunted at the very start? A wealth disparity over $1,000,000.

By the Numbers

Maybe a $26,800 salary disparity is too high of a number or not realistic. Let's use $10,000 instead.

  • for 30 years
  • assuming ~7% investment returns (S&P average)
  • disregarding tax, inflation, and other factors

Here it is visualized.

just a million, $10k at a time

Why it matters

People accept lower compensation structures for a multitude of reasons.

  • really really love teaching
  • specific geographical constraints (large cities generally pay less than rural)
  • lifestyle constraints or preferences
  • lack of awareness
  • lack of effective negotiation
  • gender or racial discrimination
  • low anchors due to salary history

Let's dive into the negative ones.

Lack of awareness

$10,000 seems like a small amount when physician salaries are 6 figures. It's also easy to overlook the impact over a longer period of time when salaries are measured annually. But hidden in plain sight is a trendy term taught poorly in grade school: compound interest.

Hopefully the above visualization and other tools can help hammer home that every $10k is a meaningful amount of money.

Lack of effective negotiation

Physician salary data is hard to find and hard to substantiate. As a result, it's extremely difficult to know what a standard job offer will look like.

Employers are extremely good at negotiation – it's part of their job. The negotiation can quickly fall in their favor when a candidate lacks useful evidence or experience negotiating job offers.

You can utilize contract lawyers, negotiation firms, and salary databases to help better understand a contract and negotiate accordingly. Even better, find a mentor or someone who can guide you through this process. Hospitals have the upper hand here, as it's easy to disregard surveyed salary data as inaccurate or biased.

Gender or racial discrimination

Mostly out of your control. This is the most unfortunate reason for a pay gap in physicians. It's a common and an uphill battle.

Pretty sad, isn't it?

Low anchors due to salary history

Many states still allow employers to view and utilize salary history when creating an offer for a candidate. After all, hospitals are businesses. Good businesses make money. Why pay $350k for an employee when they'll sign for $300k?

Dig deep into offer letters and get explanations behind compensation numbers. Make sure the numbers are backed by reasons beyond "oh, it's more than you previously got paid."

In various states and counties, it's mandatory for the employer to provide a salary range for the role. Get the salary range as soon as possible and pepper questions like "why am I not at the top of the salary range?"

Importance of Early Career Compensation

Wealth disparities start in early career. $10k here, $10k there. Before you know it, it's $1,000,000+.

While it's never too late to start fighting for a higher compensation package, the greatest effect is early in a career. When negotiating for a high salary, it's not only a pay bump for your current role, but a compounding pay bump for your entire career.

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When negotiating for a high salary, it's not only a pay bump for your current role, but a compounding pay bump for your entire career.

So, start early if possible. And remember that each raise, no matter how small, has a very significant compounding effect.

Play with Numbers

We built a wealth disparity calculator for you to visualize how a persistent pay gap compounds throughout a physician's career. Maybe instead of $10k, it's $50k.

Just a cool $4,720,000.

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