Is Ph.D degrees a good investment?

After posting the article “Over education” and “The highest degree” on my blog, I received several emails inquiring about careers of people who pursue the Ph.D degree. I do not want to have a debate about whether one should or should not obtain a Ph.D degree. My view is the highest degree is NOT for everybody. Some would be better with just a Bachelor’s degree or a Master degree rather than pursuit the Ph.D degree. Of course, it is a personal choice depends on their situation and the local market needs.

There is a false belief that higher education will lead to more opportunities. It is difficult for some people, especially people from Asian countries where high degree is considered prestigious, to accept the fact about “over-education” will lead to a point of diminishing returns. Basically the higher degree you get, the more limit your options. In the U.S., working toward a PhD degree usually takes about 8 to 10 years, it prepares graduates for a very specific type of work such as conducting research. I have seen many 30 year-old PhDs that have difficult to find job than a 21 years old with a Bachelor’s degree. Most companies are using the term “overqualified” to reject employment of people with high degree.

There is a false belief among Ph.D graduates that they can easily get university teaching job. The fact is after earning a Ph.D; they cannot expect to get a job as an Assistant Professor or even Associate Professor unless they are doing additional research or post-doctoral research (“post-docs”). Most “Post docs” takes about 1 to 3 years in a university where they receive minimum salary and there is no guarantee that they will get the teaching job. Many Ph.D graduates often move from one “Post docs” position to another until they get Assistant or Associated Professor job. Even at these positions, they still have to demonstrate their ability in research and publish a lot of papers to get into a Professor position. The reason is every university has many professors who do not want to retire so there are fewer opening. When the supply of workers exceeds the demand, workers’ wages tend to fall. This is the situation in most universities in the U.S and Europe. There are too many PhDs produced every year for the academic job market, and most universities fill their teaching positions with adjuncts or temporary positions until some professors retire.

From the economic view, today a graduate with a Bachelor’s degree in Computer Science could make $90,000 a year so in 10 years he could earn $900,000 (Assume no raise). If he continues to study toward the PhD degree instead of working, he could NOT make that amount of money (opportunity lost). Since he still has to pay for school tuition for 10 years, basically instead of making money, he is spending money. By the time he graduates with a PhD degree, if he could get a job teaching in university, he could earn about $120,000 a year. However Software developers with 10 years of experience could earn $180,000 a year or more. Based on this simple example, the highest degree is NOT a good investment as the earnings of people with PhD who are working full time is much less than people with a Bachelor’s degree with 10 years of experience.

Today there are many people with PhDs who cannot find job and most have to work part-time. The American Association of University Professors reports that part-time faculty members represent more than half of all faculty members in the U.S. With so many PhDs on the job market (and more arriving every year), there is no reason for universities or companies to pay a premium salary for them. In strictly monetary terms, the value of a PhD degree is not a good investment.


  • Blogs of Prof. John Vu, Carnegie Mellon University

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