I am writing this as a reply to the guest editorial by William Welker, “Education vs. profession majors and lifetime earnings.” As noted in the title of my reply, has made a few errors. I hope to offer a clarification to your readers.

Please note, I am not related to the author. I am a professor of economics and hold a doctorate from Kent State University, and I teach at the Franciscan University of Steubenville. For the sake of brevity, I will not replicate the calculations that bring up the conclusion: He says classroom educators are the lowest paid professionals. He goes on the measure current earnings, then runs a multiplier for a 35-year career. This leads to the life-time earnings disparity, showing educators to be last in that race for earnings. However, he makes several errors in doing this calculation.

First, he fails to take note that the professions he compares have wage differentials due to a set of well-known causes. In essence, he assumes these professions provide lifetime earnings as being “professional counterparts” when such is not really the case. Second, his 35-year multiplier does not take into account the time-value of money (or the costs of investing in the education process for the indicated professions, though this is a first major element of the wage differences he discovers.) Let’s then offer corrections.

There are differences in causes of these wage differentials. The pay structure of the professions depends on numerous factors, and the main factors have empirical validity. I will mention a couple that are relevant for this analysis: First, the costs of learning a profession matter (higher costs mean higher compensation), and second, labor supply and demand conditions are important and varying from one profession to another (when there are relative few job seekers in occupations, wages are higher.) Now, there are other considerations, of course, but these two factors are important for the case at hand. Once we account for these, we’ll notice something interesting.

I begin with the author’s salary data (which he cites sources for, so no argument on such.) Now, let’s say these salaries grow at an average of 3 percent per year for 35 years. That is an average, of course, but real earnings in the United States have a long run average (across all occupations) of roughly 3 percent (based on Bureau of Economic Analysis data, the author’s calculation from approximately 75 years of history on real GDP growth per year.)

Once one builds a data set for earning for 35 years into the future, we must be careful. The dollars earned in future years are worth less than the present year. Thus, we apply a time-value of money calculation to discount those future dollars. This way, we can sum all the earnings from the years as calculated in today’s dollars. The results indicate lifetime earnings as follows: Doctor: $4.97 million; dentist, $3.23 million; lawyer, $2.4 million; MBA, $2.15 million; K-12 educator, $830,000.

This indicates a narrower range than presented in the faulty calculations from the writer’s approach, which arises when he assumes dollars earned into the future have the same value as today’s dollars (such is not true, due to inflation and our time-preferences, i.e., people prefer having money now rather than later.)

OK, we have wage differences again. This looks to be making the case in support of the analysis. But we cannot do proper comparisons yet. We need to calculate the costs of investing in the skills and knowledge for these professions. This is partly the undergraduate study, partly the extra years for completing the post-grad degrees and partly the lost wages associated with continuing graduate studies (the lost wages are real costs, called opportunity costs.)

I did some quick checks with good search engines to find national averages for education costs, added an average of lost wages per year of study, and established averages for the length of time for the education investments to occur.

For example, I assumed four years of medical school study (and, due to high variations in added residency years, I simplified our analysis by avoiding residencies which offer low salaries, and such has the effect of decreasing doctor “training costs.”) We note getting the dental degree takes four years. Studying law takes three years. A typical MBA requires 1.5 years. The K-12 educator completes training in undergraduate schools and then is licensed for their occupation. Average costs of training add up for these professions as follows: Doctor, $408,000; dentist, $433,000; lawyer, $273,000; MBA, $123,000; and K-12 $60,000. Once the opportunity costs are factored in, representing the missing earnings due to the time spent in study (instead of earning salaries) these costs total: Doctor $733,000, dentist, $693,000, lawyer, $468,000, MBA, $221,000, and K-12 educator, $0. The K-12 educator has no grad school lost wages and has similar lost wages for the other professions which complete undergraduate study.

One can see a key factor: Getting skills in the professions involves differing costs and there is correlation between the costs and the pay rates. Still, to really clarify the result of these differing training costs, we can calculate the benefit-cost ratio for the professions. This is simply taking the present-value of lifetime earnings for the profession, then divide by the present value of the training costs.

Let’s do this calculation:

• Doctor, benefit-cost ratio: $4.97 million, divided by $733,000 equals 6.8 (this means the overall lifetime earnings are 6.8 times the training costs.)

• Dentist: $3.23 million, divided by $693,000 equals 4.7.

• Lawyer: $2.4 million, divided by $468,000 equals 5.22.

• MBA: $2.15 million, divided by $221,000 equals 9.7.

• K-12 educator: $832,000, divided by $60,000 equals 13.88.

Now we see that the K-12 professional enjoys the comparably highest rate of return on the investment they did in the training for their field (again, such is an average.) One way to think about this is that their net gain in relative terms exceeded the other professions that required higher costs of training. This confirms the factor I mentioned regarding the link between training costs and salaries (more training costs means higher salaries) but once we account for the benefit-cost ratio, we discover why many people choose to invest in the training to be a K-12 educator.

This leads to a second point: There are very many K-12 educators (a search notes around 3.2 million K-12 teachers in the United States as of this year.) When job openings arise, there is more competition among these professionals, and such tends to keep wages low.

In contrast, there are 1.1 million active physicians, 202,000 active dentists, 1.3 million lawyers and around 3 million MBA-degreed workers. The labor supply differences contribute to the wage differentials.

Many other factors are important: How agreeable is the job? How safe is the work you are doing? Do you need malpractice insurance in your occupation? What degree of trust is needed for you to work in your field?

Welker’s data analysis is misleading. But I do agree that teaching is a noble profession, indeed, and involves personal sacrifices and self-giving. The lower financial rewards, though, do not imply a fundamental injustice. Such are related to reasonable causes like training costs and market conditions.

(Welker, who holds a Ph.D. in international economics, is professor of economics and director of Catholic business management at the Franciscan University of Steubenville)