An alert reader sends along this story from The Economist, on the price of talent in China versus the West. Talking about the steep rise in the stock of WuXi PharmaTech on the Chinese stock market, which is insane even by the impressive standards of the Chinese stock market, they point out that:
”. . .as in so many other industries in China, labour is cheap. Starting salaries for a PhD are $23,000 a year, compared with $200,000 a year in America, according to UBS, an investment bank.”
Well, that explains it! If that’s a real salary figure, I’m at a loss to explain where it came from, let me tell you. I’ve been doing this for 18 years now, and all I can say is that I’m driving down the average for what is supposed to be a starting salary? Something is seriously awry.
Real numbers are to be found, among other places, at the American Chemical Society. These are self-reported, of course, and surely have biases in them – but not all those biases point in the same direction, and if anything, they might lean a bit toward the high side. (People feel better answering surveys about their salary when it’s a number that they’re happy with). According to the most recent ACS numbers, entry-level PhD chemist salaries in industry were between $70,000 and $75,000 in 2003 and 2004. Unless something bizarre has happened since then, I think we can take that as a reasonable starting point.
So basically, the UBS figures are deranged, and if anyone there would like to tell me where they got them, I’d be obliged. But those ACS numbers still show a large cost difference between hiring a PhD in China and hiring one here, of course. And those numbers leave out a number of costs on the employer’s side, which just might make up a lot of the difference toward the UBS figure. I’m talking about benefits, retirement plan contributions, mandatory FICA and insurance payments, etc. I don’t know what the figures are for these costs in China, but I feel safe in assuming them to be much, much lower on both a currency-adjusted and percentage basis. (I realize that the UBS figure is billed as a salary, which isn’t supposed to include these costs – if this really is the explanation, then someone at the Economist was asleep at the keyboard).
The thing is, the costs in China are increasing. The increase no doubt looks gaudiest on a percentage basis, since it’s starting from a lower number, but the price of a PhD employee there is has been heading nowhere but up the last few years, if what I’ve been hearing is any guide. Supply and demand cannot be escaped merely by traveling to Shanghai. If the global research environment stays healthy, the trend will continue, which will lead to shifts into the less-globalized inland parts of China. (I already know of some good stuff from Chengdu, for example). And after that, it’ll lead to other countries entirely. Which is the whole idea.