How much do orthodontists make per week
I deserve it!
- "It was always important to me that I belong to the best where I am," says Susan Levermann. She doesn't say this in a trumpet-like manner, but to explain herself, because in her job she doesn't just have to be good, but better. Her wages are directly related to the result of her work: someone like Susan Levermann earns between 50,000 and 100,000 euros per year as a senior fund manager at DWS in Frankfurt, as well as a bonus that depends on performance - he can between half and a multiple of the base salary. Measured against what top managers get for their work, that's little. But compared to what most people bring home, Susan Levermann's salary is hefty. What do you have to be able to do to earn so much?
Amazingly nothing special. At least studies by education and labor market economists suggest this. The length of the training period has repeatedly proven to be more relevant to the level of the wage than intellectual performance. According to Harvard economist Richard Freeman, different performance in intelligence tests hardly explains the large differences between salaries, especially in the United States.
Relevant specialist knowledge did not even play a major role in Susan Levermann's career. When she started at DWS after completing an apprenticeship in a bank, studying business administration and graduating in economics, shares were uncharted territory for her. "For DWS," she says, "it was important to have someone who could express himself and explain to end customers what he was actually doing."
Susan Levermann first had to find out what was important when managing a fund. “I was amazed at how many decisions were made that looked completely simple: This stock is technically overbought, I'll sell it now. When I heard something like that, I first thought: You're the fund manager for Susan three billion euros, the People look up to you. And you make a decision that everyone Hans and Franz could make? That can't be. But when I started managing funds myself, I noticed: It's not as difficult as it initially seems still as simple as it sometimes seems. A lot flows into the decisions that you hardly notice as an outsider. "
Susan Levermann works with a quantitative model that always selects stocks using the same checklist and looks for market inefficiencies. "You can only make real money on the stock market if you are disciplined," says the manager. "I'm always happy when I feel like buying a stock, but my model advises against it and then I stick to it strictly. That may be boring, but when it works, I feel like I've beaten myself. " Susan Levermann is very successful with this method: the funds she manages are among the most successful.
It is rare that wages depend solely on performance
There are not many employees who are paid strictly according to their performance, such as fund managers. Achievement and success are seldom the sole criterion for remuneration in a market economy. This is also confirmed by Jörg-Peter Domschke, who has been dealing with issues relating to the remuneration of specialists and executives for the management consultancy Towers Perrin for 25 years. What does he think of it when - as in the case of Deutsche Bank - high salaries and bonuses are justified with a view to the increase in value that a company has experienced under the direction of a manager? Domschke, a friendly, relaxed gentleman, leans back. "It's a clever distraction," he says. "Large sums are put into perspective with even larger sums."
In practice, however, the question of what benefit a person brings to a company plays a subordinate role in terms of salary. "We know what the market is paying for a certain service and we have an idea of what this service could contribute to the success of a company. But something like that cannot be quantified."
In his work, Domschke can fall back on a database which, according to Towers Perrin, is the largest international database in terms of remuneration. It records how the salary is related to training, age and years of service in a company, i.e. to individual characteristics. In addition, compensation consultants are also interested in other data: size of a company, structure of the internal hierarchy, industry and location. All of these are facts that are hardly related to the performance and personal abilities of the individual. But such factors are apparently important for the size of the salary.
On the one hand, this corresponds to the widespread opinion that prevails here with regard to the connection between wages and performance: In surveys of social researchers, a large majority, which has grown over the years, is of the opinion that not only performance, education and intelligence are important, but also nepotism , Corruption and own wealth - factors beyond the logic of the market.
We are now well informed about these factors: We are just as well informed about economic scandals and corruption as we are about the opportunities in our education system or how young people are primarily recruited from within our own ranks in business and politics. But that's not what compensation consultants are about. Rather, they are interested in the wage differentials that exist in functioning market segments. This also means that people in different professions, often even in the same profession, earn different earnings. Amazingly little is known about it - perhaps because it is not what it takes to be a scandal.
In theory, the question of how much someone earns two ideas in particular play a major role: the demand for "equal pay for equal performance" and the principle of supply and demand. And actually the two ideas seem to be wonderfully compatible. Because the market not only brings employees and employers together, but also ensures that unjustified differences in wage levels are evened out in the long term. Ultimately, every talent gets what it deserves. But does it really work that way?
The dentist depends on the location and personality
There's Hans-Ulrich Schrinner, for example. His profession is what he never wanted to be: an orthodontist like his father. He finally got it after first exploring the world and then the Berlin squatters scene, after training as a technical assistant for metallography and a few semesters of geography including a taxi license, as recommended to the students at the time. He says: "The job description offers something for the intellect, but also an opportunity to do handicrafts. You have to have fun doing handicrafts, otherwise this profession is not for you."
In principle, says Schrinner, what he does in his job is piecework. "We provide a service and settle it with the cash registers." If things go well, someone like Schrinner can earn around 100,000 euros a year with it. But it doesn't have to go well. An orthodontist or dentist who wants to take over or set up a practice has to invest 250,000 to 350,000 euros. That is far more than most other specialists have to spend when setting up as an internist, gynecologist or pediatrician.
The income situation of dentists in Germany is similar: a quarter of them earn 100,000 euros and more, but a good twelve percent only earn an income of 25,000 to 50,000 per year. "Among my former fellow students and colleagues," says Hans-Ulrich Schrinner, "there are some who have been in the job for 15 to 20 years and who will never get back from their debts."
What does it depend on whether someone is successful as a dentist? First of all from the location, because among other things the number of private patients is related to it. "You still earn significantly better from them," says Schrinner. "In affluent districts like Berlin-Zehlendorf you get a share of 30 to 40 percent of private patients. In Wedding, on the other hand, we only have five to seven percent. The share of private patients is of course also reflected in the price for one Practice takeover is paid. "
However, politics is more decisive than the location about income. "In 1973, when a crooked tooth was recognized as a disease and orthodontics became a health insurance benefit, orthodontists received a relatively large amount of money for their work from one day to the next. Until today, what was determined at the time has been reduced bit by bit. If you take inflation into account, we now get less than 40 percent of what the health insurers used to pay for our services. That means that my father got more than double what I did for the same work. "
In addition, the competition has become tougher. "In the past 25 years, the number of practices has increased roughly sevenfold." According to Schrinner, the consequence of the tougher competition is not that good doctors now earn more and bad doctors less. "Patients judge the doctor according to how personable he is, how they like the practice, whether the treatment has hurt. It is only years later that it becomes clear how long, for example, a filling lasted." Is that right? "It's not just about manual dexterity. There is a person attached to every tooth. You have to create satisfaction, that's very important."
So it's about performance, but not necessarily medical. The location also plays a role, the personality of the attending physician, the equity and such unpredictable things as politics. Can you really say that the remuneration is based on the performance?
The lawyer had a child and has earned less since then
At Manja Barth, specialist lawyer for labor law, her daughter decided on her career. After completing her studies, Barth was one of the more than 10,000 lawyers who enter the job market every year. In surveys, almost a third of them say they want to start their careers in a large law firm. No wonder: young professionals there receive an average of around 55,000 euros a year. In fact, however, more than 90 percent of all young lawyers in Germany end up in small and medium-sized law firms - a quarter of beginners have to be content with an income of 1,250 euros per month when starting their own business.
When studying in Frankfurt, the 38-year-old recalls, "many were of the opinion that they would have a great career very quickly after graduating. That was actually possible in Frankfurt: You just had to be able to speak English and start at one of the large law firms that were used at the time just started to settle in Europe in the early eighties. Many of my fellow students worked in law firms during their studies, which later became part of international law firms. "
After the first state examination, Manja Barth moved to Paris, then to Berlin. "In 2001 I started at the Berlin law firm Coudert Schürmann. One of our largest customers was in the World Trade Center at the time. Before September 11, I had written programs for stock options for our clients, always following the motto: How can I get more money for my employees?" So they stay? Two days after the attack on the Twin Towers, my colleague came in and said, 'Can you make me a checklist for a mass layoff for a client?' The economic crisis made itself felt so quickly after the attack. While people were being laid off everywhere, we labor lawyers had a lot to do after September 11th and we didn't know where our heads were. "
Then Manja Barth became pregnant. Their daughter was born in November 2004, and in July of the following year she wanted to start working again. "But my boss said: 'Manja, don't start until August, it's easier with the daycare space.' 14 days before it happened, he called me and said: 'We're closing down the German operation.' Two weeks later, Coudert was disbanded. "
As a single, part-time mother, Manja Barth was unsuitable for another major law firm. Instead, she started at the Berlin law firm Hummel und Kaleck, where she had already completed her legal clerkship. "At Coudert," she says, "I mainly had employers as my clients, at Hummel and Kaleck I looked after Hartz IV recipients. Now I'm switching to an association where I will again be on the side of the employees." She will earn less at the association than before at the law firm, where she had relatively good conditions, which is why there were internal disputes. "Compared to what you can earn in a big law firm as someone with unlimited time, what I get is a joke. But if you compare it to a normal legal income, it's still on the lower limit. For that I hope that I will make the money a little less stressful. "
With a little luck, Manja Barth could have got a job with a management consultancy in Frankfurt. She was invited for an interview. "They offered 85,000 euros straight away. I would have loved to have had this job."
Manja Barth chose some of the circumstances under which she works. Others don't. For example the fee schedule of 1879: According to this guideline, which is still valid today, the fee of a lawyer is based on the amount in dispute. The idea behind this was that wealthy clients should compensate for the low pay from poorer clients. Actually a good idea. However, this regulation has now led to the fact that small law firms mainly oversee processes that involve a lot of work and bring in little fee, while the large law firms, with their good reputation, secure the processes with higher earning opportunities. The lawyer and orthodontist are professions whose remuneration is not only determined by the market, but also by politics. How does it look elsewhere? What role do supply and demand, for example, play in the remuneration of managers such as the CEO of Deutsche Bank, Josef Ackermann?
It doesn't help the company if the manager earns a lot
The again astonishing answer is: almost none. Among economic researchers who deal with the topic of top pay, hardly anyone believes that there is an extreme shortage of good managers and that this is one of the reasons for the high pay. Rather, the researchers agree that the top salaries are mainly related to the recently increased share of performance-related pay, which was introduced as a performance incentive. To a lesser extent, the standard market basic remuneration of a Management Board has also increased.
Hundreds of case studies that have been evaluated by scientists at US universities in recent years have shown that there is no question of effectiveness when it comes to the remuneration of executives. Neither paying with stock options nor increasing senior executive pay has made companies more productive. However, there are hardly any incentives to change the inefficient practices. In a study by the consulting firm Kienbaum, the main goal of remuneration was to strengthen the performance and success orientation, the loyalty to the company and the satisfaction of the employees. The point "cost efficiency" plays the least role, says Christian Näser, compensation advisor at Kienbaum.
There is also hardly any control by the shareholders: the remuneration of a board member does not appear anywhere in the fund manager's checklists. "It is only ensured that the incentive effect of the bonus is based on the profit development and not on the dividend, which can be distributed even if the company is not making any significant profits," says fund manager Susan Levermann from DWS.
This phenomenon is called the "winner takes it all" effect. It can be seen particularly strongly in the markets for artists, athletes and top managers, and to a lesser extent in the world of large international law firms. In all of these areas, stars and top executives achieve extremely high incomes, while the second row has to be satisfied with significantly less money.
Some scientists, such as the US economist Robert Frank, claim that "the winner takes it all" effects are increasing and affecting more and more areas of society. In fact, for example, the gap between the executive board's salary and that of his direct subordinates has grown significantly and steadily in recent years. At the beginning of the eighties, a study by the US economist Carola Frydman shows, a chairman of the board received one and a half times the remuneration that the other two most important members of the management team received. Since the turn of the millennium, the CEO has pocketed more than two and a half times as much - more than ever before.
Within Europe, German top managers with an average total remuneration of 1.7 million euros are now at the top together with their Dutch colleagues. At the same time, the number of millionaires and multimillionaires in Europe increased from 2.5 to 2.8 million people between 2003 and 2005. The social consequences of the increasing concentration of wealth are difficult to foresee.The US economist Paul Krugman claims that top earners appropriated economic growth at the expense of the rest of the workforce, whose wages, in relative terms, stagnated. But that cannot be proven.
If, for example, the immense salary increase that was granted to the board of directors of Deutsche Bahn in 2006 was only passed on to the train drivers employed by the company, an amount of around 370 euros per year would come about. The wage increases demanded by the train drivers could not be denied.
Otherwise, there is hardly any connection between high top salaries and the rest of the income distribution. Economic researchers blame the decreasing influence of the trade unions for the fact that low-wage earners (such as house painters, movers, cooks) keep falling behind. Demographic changes, on the other hand, such as those that have taken place as a result of reunification, play a role in the growing gap between the middle and lower income groups, but hardly between the middle and upper income groups. So it may seem strange when salaries in the executive suite rise immeasurably while hairdressers or employees in call centers have to top up their salaries with Hartz IV. But it cannot be proven that the top earners are responsible for this.
Even so, the winner-takes-all phenomenon can be detrimental to society. Because in the race for first place, the competitors invest in services that could be used with greater income elsewhere. That being said, extreme inequality in earnings morally offends many people. It is legitimate for skills to be rewarded accordingly. Only: What should be the factor with which the differences are weighted? What criteria should be used to judge how much more a manager can earn than an ordinary employee?
It's a shame: justice and the market don't always go hand in hand
As a co-owner of the Carl Zeiss company, the German physicist, entrepreneur and social reformer Ernst Abbe had a passage added to the statutes of the Carl Zeiss Foundation he founded in 1896: Contractual service is provided, may not exceed ten times the average annual wage of the (...) workers at the time of the determination. "
The regulation was in effect until 2004. Then the foundation was converted into an AG and the rule was deleted. At Zeiss, the employees supported this reform. For them, other questions were in the foreground when the foundation was converted into a working group.
However, internal differences in salary usually play a major role in ensuring that employees perceive their pay as appropriate. Once you are part of a company, studies by Domschke and his colleagues have shown that fairness is more important to many than the absolute amount of income. The remuneration consultants have also observed, however, that in recent times employees are increasingly orienting their internal position to what is customary on the market - which is becoming the benchmark for fair pay.
However, this leads to contradictions that can hardly be resolved. The fact that the colleague in the branch in Hamburg or San Francisco earns more for the same work than you do in Berlin or Jena may be explained in terms of market economy - but it is far from being perceived as fair by those affected. Here the ideas of fair performance and regulation by the market contradict one another.
Or maybe the problem isn't relevant to everyone. "Remuneration is not just a question of numbers," says Domschke. "It starts with numbers. It is just as important which cultural environment I create with how I structure remuneration. If I offer a fixed salary, I'm interesting for a different type of employee than if I rely more on variable types of remuneration. " He cites judges or other officials as an example: "The principle of alimentation prevails. A judge should be independent. It has nothing to do with performance or even with supply and demand," says the consultant. "But if the principle is lived right, it's a strong story." -
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