For virtually every vocation I’ve heard of, wages are higher in higher cost of living areas. You’ll earn more in NYC or LA than you will in a town of 20,000 people for virtually any job you can think of.
But my friend told me as a physician this isn’t the case, it’s the opposite. So how does the economics of that work? This seems to fly in the face of economic theory as I know it.
Is it because doctors make enough that asking for more to pay higher cost of living (higher rent, etc) isn’t an issue in a large city?
How can a smaller city with less gdp offer higher wages than a large city with more economic activity?
Is physician supply meaningfully higher in large, expensive cities? Is it fundamentally supply and demand, and supply is lower in small towns?
If this is actually true and not some misunderstanding, I can think of two possible reasons: 1: we’re comparing big cities to their richer suburbs, not to small/midsize towns or rural areas. 2: middle-of-nowhere areas have to pay a premium to entice some occupations to live there.
The answer is 2. BFE small towns in the middle of nowhere have to a pay a premium compared to locations like San Francisco and NYC; a couple of my doctor friends told me about the pay cut they took to live here in Denver. Classic supply and demand, very different from industries where labor is more of a commodity.
There’s no shortage of Doctors who want to live in big cities, but there is a shortage of Doctors who want to work in middle-of-nowhere locales. People in middle-of-nowhere locales still need doctors, so they end up having to offer more money to attract doctors. In some cases they get subsidies from state or federal programs to help entice doctors to move there, whether direct or indirect (I know there was a program that let doctors get a break on student loans for practicing in underserved areas).
Basic supply and demand just doesn’t fly in the face of economic theory, it’s econ 101.
I would imagine that veterinarians also make more money in small towns, since they’re treating more livestock, i.e., animals with higher economic value.
And pity the poor rodeo clown who tries to make a living in the big city. He’d wind up doing porn.
OBG (women’s health) is most infamous for really having to sweeten the pot. Health systems need OBGs and their salaries are a small drop compared to the charges they otherwise generate for the system. Traveling farther to deliver a baby is also considered a bigger than say traveling a bit farther to see a dermatologist. Primary care providers OTOH do not get their pots sweetened so much, if at all.
Physicians tend to be a highly educated bunch and have spent their last several years at least in an urban environment. They (and often their spouses) often like the more urban/suburban lifestyle. It does not matter how much you are paid, if you are not someone who finds small town rural life appealing you won’t be happy there. If quality of life for you (and if applicable, your spouse) is not having huge huge house and a very very expensive car, but being able to explore a variety of different ethnic restaurants, go to a variety of shows, have your kids educated in good schools and in a diverse community, and such, then location is worth more than a larger salary. And if no spouse at the point of the decision and you think you might want a relationship to occur, being where you think that might be more likely to occur is also a priority over a higher paycheck.
A friend of mine, who is a doctor, is moving from Rochester NY to Boston next year. He told me that he will be getting a higher salary on paper but taking what’s essentially a cut in pay because the cost of living is much higher in Boston. But he’s not a practicing physician (he teaches) so the situation might be different.
The person I talked to implied just living 2-3 hours ( 100-200 miles) outside a big city offers way more money than living in the city. I may have misheard him though because some of the locations he discussed are many hours from the nearest large city. He seemed to feel his schedule will involve a lot of 12 hour shifts combined with a lot of days off and on the days off he may do family trips into the city for activities. His goal was basically to work in a rural area, save a bunch of money and then move somewhere better.
It’s unrelated, but what do medical clinics do if it is a rural area without an obgyn? Do other medical practitioners take over the responsibilities an obgyn would do, or do they insist a person make the long trip to the nearest obgyn who could be quite a ways away.
Where I live, it’s not a big city, but an expensive area, san Luis Obispo, Medicare reimbursement is low, however, because they’re still paying on a cost of living assessment made when it was a much more sleepy ag area. So, even though it’s a desirable area to live, they have trouble attracting docs.
OTOH, Bakersfield, 9th largest in the state, pays well, I’m told.
Just to add some anecdata to what’s already been said:
My wife is an infertility doctor. She hasn’t done general OBG in years, and she still gets mail from recruiters advertising huge starting salaries to go practice in vaguely described locations with lots of opportunity for outdoor recreation.
Yeah two or more hours out is enough to not be able to live the lifestyle you desire if that lifestyle is not small town in nature.
In some locations FPs and General surgeons do deliveries (at significant malpractice rate increases), some hire contract OBGs (locum tenens) for shortish stints, but mostly pregnant women need to travel. Look at the circumstance in rural GA for example.
Now this area lucked out with a caring hard-working OBG who when coming into town witnessed a Bible-reading marathon taking place on the courthouse square and responded with “I’m gonna buy a house here, and I’m gonna stay.” Not everyone would have reacted to that the same way, y’know?
