At some point in your life, you probably had a member of your extended family tell you to forgo college and just be a plumber. Apparently, there’s good reason.
About a decade ago, Laurence Kotlikoff, a professor of economics at Boston University, made waves by claiming future plumbers would have about the same spending power throughout their lives as doctors. He cited the expensive cost of college and lost wages as two major reasons that future doctors (or other professions that require advanced degrees) would struggle at building wealth faster than plumbers.
At the time, many pundits criticized and tried to poke holes in Kotlikoff’s hot take. But how reasonable would his ideas seem today? I found that to be an interesting question. So, I thought it’d be fun to run some numbers and compare being a plumber vs doctor over the long run using 2021 data.
We’re analyzing the two occupations solely in terms of wealth-building potential. First, we’ll take a look if the doctor pays back all his student loans as fast as possible. Next, we’ll adjust the simulation for the Public Service Loan Forgiveness program (PSLF) and see if this popular federal student loan program tips the scales in this debate.
How do you become a plumber and how much do they make?
The big upside of being a plumber is how fast you can start working and making money. In most cases, plumbers start out as apprentices making around $12 an hour. They work under a licensed plumber for a few years and eventually make it to the journeyman plumber level, where they’re getting about $18 an hour.
After several years of training, you can sit for the master plumber exam in many states and increase your pay commensurately. Master plumbers might get an hourly rate of $30 depending on the state. According to my research for this article, plumbers frequently have to work more than 40 hours a week, so I’m assuming they’re going to be eligible for overtime for 10-20 hours a week.
If you annualized these hourly wage numbers, a plumber might start out around $30,000 as an apprentice, move up to $60,000 as a journeyman with a little overtime, then top out around $100,000 as a master plumber. The whole process takes about six to ten years to reach the top rank of the profession.
How do you become a doctor and how much do they make?
Becoming a doctor takes a long, long time. You have to go to four years of college, take a lot of science and math classes, and knock the MCAT out of the park. Then you apply to a bunch of med schools and spend four years of your life there.
Following that, you have to complete a residency that’s three to seven years in length. Finally, if you want to be a specialist, you’ll add an additional two to three years for fellowship.
During the residency, you make something between $50,000 and $70,000 a year. Fellowship might be a little more than that, but not much more. Once you’re at the end of your training, you can expect a big salary increase depending on what kind of job you take and where you work.
If it’s in academic medicine, you’re going to earn a lot less than private practice. Outside of the big money specialties like derm, neuro, ortho, and cardio, you would probably start out somewhere around $200,000 to $300,000 as long as you specialized.
Most doctors have to take out student debt
There’s one complication to this that we need to address. Doctors have to take out student debt and a lot of it. If you factor in the loan origination fees, the long training period during which interest continues to accrue, yearly tuition increases, and undergraduate degree student loan burdens on top of medical school loan burdens, docs have a lot of debt once they finish their training.
How much debt do they have? The latest report from the American Association of Medical Colleges found that the median debt for medical school graduates was $200,000. While some students get financial assistance from their family, its important to note that many of the ones who don’t have a lot more debt than the median. So, assume that tuition costs about $50,000 annually over four years of medical school.
First round: plumber vs doctor during med school, residency, and fellowship
Here are the assumptions. The doctor spends $20,000 a year on undergrad and $50,000 a year on med school. The plumber’s income steadily increases from $12 to $18 to $30 per hour as they climb the apprentice, journeyman, master plumber career ladder. Both put 50% of their pay to either investments or debt.
The doctor’s debt has a 4% interest rate because he uses the Revised Pay As You Earn plan to get an interest subsidy, perhaps because he hired me as a student loan consultant to optimize his debt. I’m trying to give the doctor every advantage here. Still, the stats below are a reality check.
Let’s say the doctor is a urologist. After all, the plumber handles leaky pipes where people relieve themselves and urologists take care of the internal bodily pipes, so I think it’s a nice comparison. Urologists generally have five-year residency programs.
Let’s also say our doc, let’s call him Brad, decides to go to a two-year fellowship after residency. At the age of 32, our plumber, let’s call him Joe, has been a master plumber for several years. Our urologist doc Brad is about to start making real money at the end of his fellowship and transition into an attending position.
Second round: plumber vs doctor after training
Private practice urologists make a lot of money. They are among the top paid specialties in medicine. Anyhow, Salary.com puts median earnings in urology at around $387,000.
I don’t think our doc Brad would start at that level. But let’s give him the benefit of the doubt and say that he’ll have a starting salary just below that level of $380,000. Both jobs will receive a pay increase each year of 3% to keep up with inflation.
At age 41, Brad finally overtakes our plumber’s net worth. Consider that Brad has been out of college for almost 20 years. That’s a long time to wait for a break-even period. What if our plumber Joe built a plumbing business with his expertise and hired a bunch of workers? It’s clear that Joe would leave Brad in the dust.
And that would likely still be the case even if Brad refinanced his student loans and gets his interest rate down to under 3% after he no longer qualifies for REPAYE interest subsidies. So, what if Brad goes the not-for-profit hospital route as an employee? Then we need to look at the PSLF program.
Third round: plumber vs doctor using PSLF
If we assume that Brad decides to work at a not-for-profit hospital, then he’ll get a lower salary but also the ability to use the PSLF program to pay a fraction of what he owes on his med school debt. Brad’s total payments are about $119,000 before all the debt gets wiped away, courtesy of the US taxpayer. At his peak indebtedness, Brad owed about $310,000. Since he’s working at a hospital, he’ll make a lower salary of $300,000.
Interestingly, the break even period is almost identical. Brad the urologist starts winning at about age 41. Even with PSLF, Brad has to wait a long time before he’s finally getting a great return on his investment.
What did I leave out?
If you wanted to scroll back up and take a look at my numbers again, you’ll notice I’m assuming a lifetime savings rate (towards debt and investments) of 50%. That’s really, really high. Very few doctors or plumbers would be able to maintain that level of savings in the face of family, kids, marriage, mortgage, car payments, etc.
However, consider that the doctor is in a higher tax bracket than the plumber. The doctor also probably has lifestyle expenses that the plumber doesn’t have. Do you expect the guy who fixes your toilet tank to show up in anything but jeans, a T-shirt, and maybe some kind of construction overalls when they’re doing a job for you?
Exactly. Plumbers have much lower social life expectations for everything from the car they drive to the house they live in. And plumber liability insurance typically only costs $500 to $1,500 per year. Needless to say that pales in comparison to the professional liability insurance costs that doctors face.
Some folks will say that the higher income positions that doctors live on will make it easier to save. Others will say that I’m not taking into account the higher quality of life the doctor enjoys with the leftover income available for living expenses after saving and investing. Perhaps that’s right. But I made sure to weight the scales in favor of the doctor over the plumber. I made Brad the doctor a urologist instead of a pediatrician or family doctor, for example.
The two things you need to come out ahead as a doctor
If you want to end up with a higher net worth at the end of your career than the guy you call to fix office bathroom issues at your private practice, the first thing you need to do is pick a higher paying specialty. Obviously, surgeons earn fantastic incomes. But there are other specialties outside of surgery that earn well above the median physician salary. See the top-paying specialties of 2021, according to Medscape.
The second thing you need is a solid personal finance strategy to pay back your student loans. In the scenario above, I modeled Brad the urologist doing everything perfectly, and that could’ve easily not been the case. He could’ve used forbearance during residency, neglected to file his PSLF paperwork during training, forgotten to refinance his loans when he became an attending, and more.
So in short, if you want your decision to become a doctor make financial sense over the guy that fixes your pipes, get ready to work a long time and make smart decisions with your debt.
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Honestly being a plumber or hvac guy nowadays might really be the better financial deal. People just look down in the latter relative to the former due to the perceived professional prestige. But prestige in a degree is not worth much . . . . Just ask any of those guys working in mcdonalds who have a PhD. Think they feel more anymore prestigious than their fellow coworker?
Haha I’d argue MD is still one of those degrees that confers a lot of prestige on you, but the PhD market is totally saturated. Just listened to a NPR podcast the other day about the sorry state of the economics PhD job market
Then be a plumber if that looks so much better than a doctor. Oh… ok… I didn’t think so…
Not very prestigious to be a plumber that’s for sure.
This calculation is a joke name the plumber with that much net worth, taxes on the money is not assumed, life is not a planned linear extrapolation of a line with that fixed amount of saving the plumber is almost a living dead, the state of medical education is a mess with exploding costs fees and tuitions, but medicine has been the only recession proof profession of the past century.
Many people would say that plumbing is a pretty recession proof industry. Anyone who is an owner of a plumbing operation is likely far better off financially than most physicians
I’m a plumber and I’m loving it. I made enough money this past year to take off the whole month of Nov., Dec. and Jan. And just so everyone knows you can be a plumber and not have to do service calls. Although that is where the money is.
Haha thanks for sharing Allen.
Since when do plumbers make anywhere near that kind of money (esp. between years 25/26 where it jumps from 60k to 100k. I don’t know about that). The average rate that I see is around 50-60k, and unless you open a business I don’t see it going above 90 and that’s pushing it.
The union plumbers by me make 55 an hour, before beneifts lol.
Where do you get your info is extremely inacurate when i was an apprentice i made 16 my first year than 23 dollars an hour my 4th year of trainig after that make 30percent commisi9n on labor ive worked with many plumbers who easily make 200k a year
Yeah, my husband is a 3rd year apprentice and makes $35 an hour (doing commercial plumbing.. not even service plumbing). But maybe his numbers are right for different states? Idk. We live in Washington State and as a first year he even made over $20.
One thing that this article doesn’t take into consideration is that as a plumber, you could start retirement investing much earlier than your average doctor. Sure, it won’t be much in the beginning at an estimated $18 per hour, but you could potentially put away money starting at age 18. That’s at least a 15 year head start over a doctor and most can’t even begin to think about retirement until well into their thirties or later even (due to loan repayment). With the power of compounding interest, I would say the breakeven point would probably be even later than the 41 years that you estimated.
Travis Hornsby says
Great point Edward. Plumbers also have a lot less societal expectation to live in a big house and drive a fancy car, so plumbers probably have an easier time maintaining a high savings rate.
AJ Garcia says
haha this article is hilariously accurate. As someone who went to university on the pre-med track, graduated, got accepted to medical school and realized the cost. I actually decided not go. My dad is a plumber and I just did what he told me. That was 4 years ago when I was 21, now I am 25 and work for my father making an average of 90,000$ annually in the state of AZ, which NEEDS DESPERATELY plumbers. My dad wants to get ready for retirement too and I will take over, in the next 4 years at the age of 29 when I will be most likely making between 250,000$ to 350,000; which is still an average as we don’t know how population growth will affect us yet. That is at most 60 hours of work a week and much of it is simple pipe replacements or clogs that have to be snaked. Maybe the occasional sump pump replacement or even septic tank fixes. But personally these things generally take no more then an hour and because there is little that go into the plumber businesses here, my labor is worth a lot more then it was in my dad’s time.
I do understand my situation is not a typically one as I had my dad and a already built business to piggy back off of, but I think the profession doesn’t get enough credit and people honestly underestimate us dirty jean, semi – back crack exposed rear, shit stained workers.
Travis Hornsby says
Thanks for sharing your story AJ. You’d probably do even better if you could recruit more plumbers into the business.
AJ Garcia says
I agree, problem is no one wants to do the work. They take one ride along and can’t make it through the day normally.
I actually have attempted to recruit about 50 different people into the plumbing buissness and none of them were up for it as they thought it was too disgusting and “degrading” work for someone to deal with people’s shit, literally.
So, we will see what happens. Once plumbers make an average of six figures in just 3 years instead of the 5 to 6 it takes normally; I think people will change their minds.
Most jobs like plumbers, farmers, garbage collectors, etc. are underpaid.
Well, maybe not plumbers, but still.
They are very important jobs, and should get paid more.
Think about it, if there were no garbage collectors, our houses would be flooding with garbage.
We get pretty much all our food from farmers too.
Comment “Agreed” if you agree.
I dont know where you live, but I cannot find a plumber who will work for less than $80/hour. In fact I had some plumbing work done and the plumber worked for exactly 1 hour and 39 min (reviewed sec cam footage), and presented me with a bill for $470. I complained bitterly with the bill and they sent me invoice for parts and deducting parts the plumber charged $187/hour. I have never been paid that much in my career. I had an electrician come to give a bid, and I asked if you could bill on hourly rate plus parts and offered $100/hour. He refused and said he normally charges $125/hour plus parts. I offered him $125/hour and he refused. So clearly he was anticipating making more than $125/hour to refuse the hourly rate. I am simply sick and tired of plumbers and electricians making way more money than I do.
Travis Hornsby says
Sounds like you live in an area with a shortage of labor, so supply demand is probably deciding it.
Maudy K says
Hi. I’m a physician and I have to say, very interesting article. There is so much that a doctor has to go through. So much that many people don’t get to see. The fatigue, the mental abuse, and shaming that can cause a lifetime of wounds.
Some people may not understand why we get paid the way we do. Let me tell you, some days the pay is just not enough.
Travis at Student Loan Planner says
My wife is a physician totally agree
I never thought Plumbers made so much until I was talking with my plumber one day. I had to make a run to his house and pick up some parts he had for me. Wow, his house is one of the biggest homes in the state we live in. And a Gorgeous beach front home, and of course several luxury cars and 2 daughters he puts through law school. I was blown away when he told me he made more than most of his successful Doctor friends. He does own his own company and he is very good at his job. Still, fascinating. No degree, no student loans. And has been working since a teenager and now in his mid 40’s.
Travis at Student Loan Planner says
Id bet he has people working for him too, and thats the power of being a business owner
I am a plumber still working at 80 years old not a single heath issue keeps me fit not sat on my backside on a computer.all day never the same thing everyday is differant
Travis at Student Loan Planner says
That’s truly an amazing story! I wish I didn’t sit in front of screens so much.
Being in the medical profession with 6 figure debt (acupuncturist) and not making anywhere near 6 figures (most don’t), AND being with a plumber now, this article checks out. The incomes listed are a bit high- here in NJ, according to my bf who has been in the field for 23 years now, and his dad owned a biz, more like 50-70k for a journeyman plumber who wasn’t managing or owning a biz. Still a huge advantage over someone in my position tho. Unfortunately, he didn’t start investing until the same age I did (38) so it is a friendly competition now…I’m at least armed with the knowledge from this site, and qualify for PAYE.
P. Foote says
Travis, if a plumber showed up at my house in a t-shirt and ratty jeans I probably would not let him into my house. I expect them to wear decent clothes, maybe even a work coverall. Also, I don’t know any poor plumbers or even unemployed ones. When you can find one, you keep him because getting on their schedules is difficult.
No one can go wrong entering the Trades. It is just that the academic propaganda machine is very strong, but it is also being sold to us by teachers… and THAT is the problem.