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With apologies to NBC...this is must see TV. In the following Tech Ticker interview, Boston University Prof. Laurence Kotlikoff states that high profile careerists like doctors, lawyers and investment bankers may wind up packing a less powerful dollar than their local plumber.



So how heavy is the burden of prestige? Is a top school really worth the price of admission? These themes have surfaced more and more in the public eye and are certainly of concern to future Wall Street professionals. After all, the era of gargantuan bonuses may be coming to an end. This has brought about a healthy dose of questioning the status quo with regards to the attitudes surrounding education and prosperity.

Are you guys still cool with the 80-90 hour workweeks and everything that comes with them...if you know some trade school products will be getting more bang for the buck?
I always wonder whether the lure of the IB/PE/VC track has any relative strength outside of it's monetary potential...is anyone in finance for anything other than money?

Is the Kotlikoff/Davidowitz/Rogers doctrine correct?

Will the farmers, plumbers and electricians be the pompous rich boys of the future?

While the bankers scream bloody foul?

Looks more likely than we ever thought possible...

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Comments (27)

  • alexpasch's picture

    This is true for a lot of careers, but not those in finance.

    His argument is more for people getting PhDs so they can be teachers; or (mediocre) doctors, because the opportunity cost of all the extra years of schooling.

    As with anything, it's all about what you make of yourself. He's talking about the AVERAGE. If you're the most baller doctor or financier, you will make 50x the typical plumber.

    This is why companies like APOL are evil...they screw the taxpayer and the student.

    Consultant to a Fortune 50 Company

  • econ's picture

    It's my understanding that lawyer salaries have already been declining. Just because Job X pays great in year YYYY, doesn't mean it'll pay well in year YYZZ. People make this mistake all the time. I even heard some successful hedge fund manager talking about how when he first graduated from Harvard (I think it was Harvard) you could earn the same amount as a doctor, lawyer, and hedge fund manager. He choose to be in the hedge fund business and, luckily for him, hedge fund managers salaries blew up while doctor and lawyer salaries stayed the same and declined. It just goes to show you, it's not always easy to predict future wages. (If you're interested in the hedge fund manager interview, watch "Untold Wealth: The Rise of The Super Rich" on hulu).

    When you listen to the video, the speaker talks about how much of a burden student debt is, which is also a huge issue for many high paying professions.

  • Barboone's picture

    Take it from me. I used to own a plumbing company and in no way could you make more money than a banker. More than a doctor, Yes. a Banker no. That's why im in finance now.

    "The higher up the mountain, the more treacherous the path"
    -Frank Underwood

  • txjustin's picture

    Are you implying you made more than the average dr. when you owned your plumbing company?

  • Tar Heel Blue's picture

    The advantage that bankers will almost always have over plumbers is scalability, as described by Nassim Taleb in The Black Swan. As a banker, the work required to do a $100 million deal is not substantially different than the work required to do a $10 billion (or larger) deal. Because of this, the best bankers will have few limits on their earnings potential. In the same way, a hedge fund manager can increase his earnings simply by managing more money. Lawyers also have this luxury, though it depends on the specialty (mass tort lawyers, for example, can make ridiculous amounts of money just by signing up more defendants).

    The problem with plumbers and doctors is that a man can only fix so many toilets or perform so many surgeries in one day. Now, one could own a plumbing company or health services company and employ an unlimited amount of plumbers or doctors, but neither of these are industries that provide big economies of scale. You will not have any huge advantage over the guy down the street, and he can probably provide better service, which is an important quality when hiring a doctor or plumber.

    I don't argue that the money to be made in plumbing will increase in the future- it's simple supply and demand. However, I don't think the best plumber will ever be able to outearn the best bankers, because of the natures of the professions.

  • Easy's picture

    The kids who end up working in finance have the intelligence and ability to do plumbing instead if plumbing indeed became more lucrative, but not the other way around. The potential supply of plumbers is a lot higher than the potential supply of financiers.

    Oh shit wait that doesn't fit the populist-everyone's-a-winner narrative does it? I meant that finance and plumbing require their own special skills and abilities, and I can't wait until the day that plumbers get the last laugh on these greedy bankers who think they're so high and mighty.

  • couchy's picture

    if by plumbing you mean ceo of contracting company, then yes you will outmake a banker easily.

    Kid right across the hall from me is the son of the CEO of a contracting company in NYC. 6 figures is laughable to him... 7 figures is OK. We're talkin about 8 figures a year here...

    but then again, this is just comparing the baller banker to the baller plumber.

  • anarchyburger's picture

    I'd be a terrible plumber . I'm pretty damm awful at most manual work, I'm much happier behind a nice excel model than a plumbing system. I don't think if I took these manual jobs I'd be able to earn what I earn at the moment without working very hard for little benefit. It all comes down to the individual and what they're good at and what they like doing.

  • In reply to Saccard
    Ske7ch's picture

    LeveragedFiend:
    And what do you do?

    I'm in uh...waste management.

    I increase liquidity in vital areas and work with traditional PIPEs.

    - Bulls make money. Bears make money. Pigs get slaughtered.
    - The harder you work, the luckier you become.
    - I believe in the "Golden Rule": the man with the gold rules.

  • Walkerr's picture

    I agree, I think the salaries in banking will decline due to regulation and such. Whereas it is very unlikely that the salaries will be regulated in another industry. It's just that the original banking has to get back to how it used to be, borrowing and lending, and not the, now more profitable investment banking and trading.

  • In reply to Walkerr
    SHORTmyCDO's picture

    Walkerr:
    I agree, I think the salaries in banking will decline due to regulation and such. Whereas it is very unlikely that the salaries will be regulated in another industry. It's just that the original banking has to get back to how it used to be, borrowing and lending, and not the, now more profitable investment banking and trading.

    You don't know what you're talking about. Borrowing and lending is much riskier than traditional IBD.

  • guyfromct's picture

    The average MD/DO pulls in 150K in pediatrics, 175K Internal Medicine, 275-300K General Surgery, 400K general ophtho/derm and 800K-1.5MM neurosurgery and vitreoretinal surg.

  • The Phantom's picture

    My ex-gf cheated on me with a plumber. True story :(

  • In reply to Easy
    Edmundo Braverman's picture

    Easy:
    The kids who end up working in finance have the intelligence and ability to do plumbing instead if plumbing indeed became more lucrative, but not the other way around. The potential supply of plumbers is a lot higher than the potential supply of financiers.

    Oh shit wait that doesn't fit the populist-everyone's-a-winner narrative does it? I meant that finance and plumbing require their own special skills and abilities, and I can't wait until the day that plumbers get the last laugh on these greedy bankers who think they're so high and mighty.

    Die in a fire. One of my good buddies is a MAJOR fund manager and he started in the business at age 18 after an illustrious career as a grocery bagger. Don't ever kid yourself that plumbers couldn't do your job.

  • In reply to Edmundo Braverman
    bfin's picture

    Edmundo Braverman:
    Easy:
    The kids who end up working in finance have the intelligence and ability to do plumbing instead if plumbing indeed became more lucrative, but not the other way around. The potential supply of plumbers is a lot higher than the potential supply of financiers.

    Oh shit wait that doesn't fit the populist-everyone's-a-winner narrative does it? I meant that finance and plumbing require their own special skills and abilities, and I can't wait until the day that plumbers get the last laugh on these greedy bankers who think they're so high and mighty.

    Die in a fire. One of my good buddies is a MAJOR fund manager and he started in the business at age 18 after an illustrious career as a grocery bagger. Don't ever kid yourself that plumbers couldn't do your job.

    Damn Eddie "Die in a fire"

    The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

    WSO is not your personal search function.

  • In reply to Edmundo Braverman
    econ's picture

    Edmundo Braverman:
    One of my good buddies is a MAJOR fund manager and he started in the business at age 18 after an illustrious career as a grocery bagger. Don't ever kid yourself that plumbers couldn't do your job.

    Thanks for that. Seriously, I love stories like that.

  • Argonaut's picture

    Keep eating all that damn mcdonalds and plugging up your toilets

    More is good, all is better

  • In reply to Edmundo Braverman
    Cash4Gold's picture

    Edmundo Braverman:

    Die in a fire. One of my good buddies is a MAJOR fund manager and he started in the business at age 18 after an illustrious career as a grocery bagger. Don't ever kid yourself that plumbers couldn't do your job.

    Interesting, I was never a grocery bagger, but I have been a mason, and I am a plumber, and I will never understand the romanticism behind people working in trades.

    Plumbing: Life is not one giant porno. There are no horny housewives waiting for you to get under their sink so that they can unzip your pants and bow to the pope. Aside from the uncommon flirting, I actually fear nothing more than seeing a housewife at a repair job, because chances are she is really pissed because she thinks you are late (even if you are 15 minutes early), and there is a fairly good chance she has been dying to take a monster shit all day, but first she needs you to fix the toilet. Also, this is America, and most housewives have three kids, are certifiably insane, and very fat. That is what I walked into for most repair jobs. The commercial side is a little different. I chose to go higher off the ground for a pay raise, which obviously comes with risks. If you fuck up on a pitch book/trade execution, someone is there to let you hear it. If I fuck up 150 feet off the ground, depending on how I fall, I may have to be identified by dental records. I know this because I have seen it. I remember working in 2009, and some guy fell 200 feet, got lucky, and was in a coma for 8 months. It really puts a different perspective on what is a bad day at work.

    Masonry: Do you want to work for a 45-50 year old version of the Situation? Then cement is for you! Seriously, these guys are cheap as hell, drink warm beer for lunch (if they stop for lunch), and are looking to fuck anything that walks. They are the reasons why we have statutory rape laws. My first day of shitty work came when I had to clean out a cement mixer. I didn't think I was going to die, I knew I was going to die. It must have been 120 inside of it, and I was wearing some outfit that made it look like I was trying to land on the moon. That was actually the exact moment I realized I would be going to college. A few weeks later I quit because I was making less than the illegals I picked up from HD. Not even a month later I was watching dirty jobs, and what did I see? Some poor asshole cleaning out the inside of a cement mixer.

    These experiences were not useless though. I can honestly say I will do everything possible to keep the job I landed for this summer, because there is no fucking way I am going back into trade work.

  • In reply to Cash4Gold
    txjustin's picture

    Cash4Gold:
    Edmundo Braverman:

    Die in a fire. One of my good buddies is a MAJOR fund manager and he started in the business at age 18 after an illustrious career as a grocery bagger. Don't ever kid yourself that plumbers couldn't do your job.

    Interesting, I was never a grocery bagger, but I have been a mason, and I am a plumber, and I will never understand the romanticism behind people working in trades.

    Plumbing: Life is not one giant porno. There are no horny housewives waiting for you to get under their sink so that they can unzip your pants and bow to the pope. Aside from the uncommon flirting, I actually fear nothing more than seeing a housewife at a repair job, because chances are she is really pissed because she thinks you are late (even if you are 15 minutes early), and there is a fairly good chance she has been dying to take a monster shit all day, but first she needs you to fix the toilet. Also, this is America, and most housewives have three kids, are certifiably insane, and very fat. That is what I walked into for most repair jobs. The commercial side is a little different. I chose to go higher off the ground for a pay raise, which obviously comes with risks. If you fuck up on a pitch book/trade execution, someone is there to let you hear it. If I fuck up 150 feet off the ground, depending on how I fall, I may have to be identified by dental records. I know this because I have seen it. I remember working in 2009, and some guy fell 200 feet, got lucky, and was in a coma for 8 months. It really puts a different perspective on what is a bad day at work.

    Masonry: Do you want to work for a 45-50 year old version of the Situation? Then cement is for you! Seriously, these guys are cheap as hell, drink warm beer for lunch (if they stop for lunch), and are looking to fuck anything that walks. They are the reasons why we have statutory rape laws. My first day of shitty work came when I had to clean out a cement mixer. I didn't think I was going to die, I knew I was going to die. It must have been 120 inside of it, and I was wearing some outfit that made it look like I was trying to land on the moon. That was actually the exact moment I realized I would be going to college. A few weeks later I quit because I was making less than the illegals I picked up from HD. Not even a month later I was watching dirty jobs, and what did I see? Some poor asshole cleaning out the inside of a cement mixer.

    These experiences were not useless though. I can honestly say I will do everything possible to keep the job I landed for this summer, because there is no fucking way I am going back into trade work.

    This post is pure genius.

  • In reply to Edmundo Braverman
    Easy's picture

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  • Argonaut's picture

    More is good, all is better

  • gwenschuck75's picture

    Gwendolyn Schuck
    Leak detection San Diego