A Financial Study of Civil Engineering Professionals and Paraprofessionals. King To Hung

Transcription

1 A Financial Study of Civil Engineering Professionals and Paraprofessionals King To Hung A project submitted to the faculty of Brigham Young University in partial fulfillment of the requirements for the degree of Master of Science Fernando S. Fonseca, Chair E. James Nelson Paul W. Richards Department of Civil & Environmental Engineering Brigham Young University December 2011 Copyright 2011 King To Hung All Rights Reserved

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3 ABSTRACT A Financial Study of Civil Engineering Professionals and Paraprofessionals King To Hung Department of Civil & Environmental Engineering, BYU Master of Science ASCE is currently considering requiring all those who would like to become civil engineering professionals to complete a master s degree in civil engineering. This research studied the earning differences between professionals and paraprofessionals of six other professions legal services, physicians, dentistry, accounting, teaching, and land surveying along with civil engineering with the assumption that master s degrees are mandatory. This research used three scenarios: 1) earnings from salary only, 2) earnings from salary and return from investing 5% of annual income, and 3) earnings from salary and return from investing 10% of annual income, where the investments were assumed to be some secured long-term investments that can yield about 12% growth on average. Then, civil engineering was compared to the rest of the other professions in terms of percentage, dollars amount, and break-even time. This research shows that civil engineering professionals can earn significantly more than its paraprofessionals. When comparing earnings directly, civil engineering ranks below average in both percentage and dollar amounts, and in all three scenarios studied. However, its rankings (both percentage and dollars in all three scenarios) improved to above average when results were adjusted based on how many extra years are spent in school to become professionals. Therefore, the results confirmed that spending the extra time, efforts, and money to become civil engineering professionals makes sense financially. Civil engineering professionals break even faster than average in age and years after school only if no investments are made. However, it takes longer than average to break even in both age and years after school if 5% or 10% of annual income is invested. Keywords: professional, paraprofessional, master s degree

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5 ACKNOWLEDGEMENTS In the beginning of May 2011 I was terminated from my master s degree program. This was a result of not being able to finish my final project report for Dr. Travis M. Gerber, which was in part due to some unforeseen difficulties. Dr. Fernando S. Fonseca was kind enough to become my new advisor, provide me with a new project, and help me throughout the petition process in order for me to be reinstated back into the civil engineering master s program. Dr. Fernando S. Fonseca has been very supportive throughout the completion of this project. I would like to thank him for being a mentor as well as a friend. I would like to also thank Professional Service Industries, Inc. (PSI), Chris Garris in particular, for providing me with work so that I could pay for parts of the associated costs of my studies while attending Brigham Young University. PSI has given me employment each summer for the past 3 years. I would also like to thank Dr. Fernando S. Fonseca for hiring me as his teaching assistant during the school year. I would like to specially thank my parents who have always been willing to provide financial support for this and many other noble endeavors which I have pursued in my life. Writing my final project report has been very challenging at times, especially as English is not my native language. I would like to thank my good friends, Rolando Velasquez and Zac Whitaker, and my advisor, Dr. Fernando S. Fonseca, who have eased the burden by editing my work on multiple occasions. They have provided me with needed insight that has helped me present a better report. Finally, I would like to also thank my previous advisor, Dr. Travis M. Gerber, for the opportunity he gave me to work for him during the start of my master s program and for teaching me a great deal in report writing.

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7 TABLE OF CONTENTS LIST OF TABLES... vii LIST OF FIGURES... ix 1 Introduction Background Objective Organization of Report Literature Review PETC (2008) Walesh (2000) Lyons (2000) Research Methods Data Collection Educational Cost Data Collection Salary Method of Analysis Simple Cash Flow Legal Services Physician Dentistry Accounting Teaching Land Surveying Civil Engineering % Investment v

8 4.2.1 Legal Services Physician Dentistry Accounting Teaching Land Surveying Civil Engineering % Investment Results and Discussion Percentage Comparison Direct Comparison Year of Extra Schooling Comparison Money Comparison Direct Comparison Per Year of Extra Schooling Comparison Break-Even Comparison Break-Even Age Comparison Break-Even Year after School Conclusions Summary Finding REFERENCES vi

9 LIST OF TABLES Table 3-1: Summary of the Median Tuition for Undergraduates and Graduates (NCES, 2010)... 8 Table 3-2: Summary of Required Higher Education for Professionals and Paraprofessional Table 3-3: Adjustment Values Used in Civil Engineering Paraprofessional s Salary Table 3-4: Summary of Median Salary for all Professions with Respect to Working Experience vii

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11 LIST OF FIGURES Figure 4-1: Cumulative of Simple Cash Flow for Attorneys and Paralegals Figure 4-2: Cumulative of Simple Cash Flow for Physicians and Physician s Assistants Figure 4-3: Cumulative of Simple Cash Flow for Dentists and Dental Hygienists Figure 4-4: Cumulative of Simple Cash Flow for Accountants and Accounting Clerks Figure 4-5: Cumulative of Simple Cash Flow for Teachers and Teacher Aides Figure 4-6: Cumulative of Simple Cash Flow for Professional and Paraprofessional Land Surveyors Figure 4-7: Cumulative of Simple Cash Flow for Professional Civil Engineers and Paraprofessional Civil Engineers (Civil Engineering Technologists) Figure 4-8: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Attorneys and Paralegals Figure 4-9: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Physicians and Physician Assistants Figure 4-10: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Dentists and Dental Hygienists Figure 4-11: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Accountants and Accounting Clerks Figure 4-12: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Teachers and Teacher Aides Figure 4-13: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Professional Land Surveyors and Paraprofessional Land Surveyors Figure 4-14: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Professional Engineers and Engineering Paraprofessionals Figure 4-15: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Attorneys and Paralegals Figure 4-16: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Physicians and Physician s Assistants ix

12 Figure 4-17: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Dentists and Dental Hygienists Figure 4-18: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Accountants and Accounting Clerks Figure 4-19: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Teachers and Teacher Aides Figure 4-20: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Professional Land Surveyors and Paraprofessional Land Surveyors Figure 4-21: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Professional Engineers and Engineering Paraprofessionals Figure 5-1: The Direct Earning Percentage Comparison of Simple Cash Flow of Different Professions Figure 5-2: The Direct Earning Percentage Comparison if Investing 5% Annual Income of Different Professions Figure 5-3: The Direct Earning Percentage Comparison if Investing 10% Annual Income of Different Professions Figure 5-4: The Earning Percentage Comparison per Extra Years of Schooling of Simple Cash Flow of Different Professions Figure 5-5: The Earning Percentage Comparison per Extra Year of Schooling if Investing 5% Annual Income of Different Professions Figure 5-6: The Earning Percentage Comparison per Extra Year of Schooling if Investing 10% Annual Income of Different Professions Figure 5-7: The Direct Money Earned Comparison of Simple Cash Flow of Different Professions Figure 5-8: The Direct Money Earned Comparison if Investing 5% Annual Income of Different Professions Figure 5-9: The Direct Money Earned Comparison if Investing 10% Annual Income of Different Professions Figure 5-10: The Money Earned Comparison per Extra Years of Schooling of Simple Cash Flow of Different Professions x

13 Figure 5-11: The Money Earned Comparison per Extra Year of Schooling if Investing 5% Annual Income of Different Professions Figure 5-12: The Money Earned Comparison per Extra Year of Schooling if Investing 10% Annual Income of Different Professions Figure 5-13: Break-Even Age Comparison of Simple Cash Flow of Different Professions Figure 5-14: Break-Even Age Comparison if Investing 5% Annual Income of Different Professions Figure 5-15: Break-Even Age Comparison if Investing 10% Annual Income of Different Professions Figure 5-16: Break-Even Year after School Comparison of Simple Cash Flow of Different Professions Figure 5-17: Break-Even Year after School Comparison if Investing 5% Annual Income of Different Professions Figure 5-18: Break-Even Year after School Comparison if Investing 5% Annual Income of Different Professions xi

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15 1 Introduction 1.1 Background Many professions, such as law, medicine, and dentistry, require additional education beyond the attaining of a baccalaureate degree. For example, three additional years of study in law is required for a person to become an attorney-at-law. In the profession mentioned above a paraprofessional option exists to those who would like to pursue a career in one of those fields but do not want the extended schooling. For example, those who would like to be involved in the law profession but cannot afford or do not want to go through those extra years of schooling can become paralegals. The ASCE Vision for Civil Engineers in 2025 (ASCE, 2006) states that in order to keep pace with new technologies and rapidly changing current practices, there is a need to cooperate and partner in the delivery of baccalaureate, post-baccalaureate, and lifelong learning educational activities. The ASCE vision may include the requiring of an education component and a master s degree to all those who want to become licensed civil engineers. Implicitly this means that the paraprofessional option in civil engineering will exist to those who do not want, cannot afford, or do not have the intellectual capacity to obtain a master s degree in civil engineering. Foreseeing this and other issues, the ASCE Executive Committee formed a Paraprofessional Exploratory Task Committee (PETC) in March 2008 and changed the 1

16 committee to define a possible role of civil engineering paraprofessionals. A report (PETC, 2008) was written and submitted to the executive committee in September One key aspect missing in the report is an economic analysis of the possible financial pros and cons that the civil engineering paraprofessional opportunity presents. 1.2 Objective In each learned profession, professionals can earn a higher salary than their respective paraprofessionals, which may make the cost of the extra years in school worth it. The objective of this research is to conduct a financial analysis to determine if it makes sense financially for someone to spend the extra time and money to earn a master s degree and become a licensed professional engineer. In this research, civil engineering is compared with law, medicine, dentistry, accounting, teaching, and land surveying. 1.3 Organization of Report This report has six chapters: introduction, literature review, research methods, method of analysis, results and discussion, and conclusions. Introduction contains background information, identifies the objective of the research, and presents an outline of the report. Literature Review presents a summary of the literature. Research Method presents a summary of how the data was gathered. Method of Analysis reports how the financial situation compares between professionals and paraprofessionals in each profession. Results and Discussion compares the financial differences between professionals and paraprofessionals in civil engineering and to other professions. The final chapter presents conclusions based on this research. 2

17 2 Literature Review 2.1 PETC (2008) In the spring of 2008, the Paraprofessional Exploratory Task Committee (PETC) was formed to define the role of paraprofessional in civil engineering and identify issues that ASCE should address related to the integration of paraprofessionals into the civil engineering design and construction team and the civil engineering community. PETC (2008) defined a professional as an individual in an occupation that applies specialized skills gained from formal education and training; a paraprofessional is an individual supporting a professional in the respective field. A paraprofessional may be required to demonstrate knowledge and skills through certifications and formal education, and/or experience. A paraprofessional is usually under the responsible charge of a professional. Professionals are capable of solving complex problems and engaging in complex activities and are required to comprehend and apply advanced and fundamental engineering principles underpinning good practice. Paraprofessionals are capable of solving broadly defined problems, engaging in broadly defined activities. They are also required to comprehend and apply the knowledge embodied in widely accepted and applied procedures, processes, systems, or methodologies. 3

18 PETC (2008) also presented a summary of the qualifications to become professionals or paraprofessionals in different professions. This research uses the above summary as a supporting tool (mainly relating to timeline) to determine the financial position of professionals relative to paraprofessionals when beginning each of the professional practices. This research will then compare the final financial position at retirement for each profession and then compare that to civil engineering based on the scenario that a master s degree is required to become a civil engineering professional and a two- to four-year degree is required for a civil engineering paraprofessional. 2.2 Walesh (2000) Walesh (2000) suggested the need of education reform for civil engineering. Walesh (2000) argued that civil engineering education needs to be reformed because civil engineers today do not get the same respect as civil engineers of the past. Walesh (2000) pointed out that no one can ask for respect from others but that respect has to be gained through results and accomplishments. Another problem that Walesh (2000) pointed out is that it is relatively easy to become a civil engineer, which put too many civil engineers in the market. Therefore, civil engineers have relatively high startup salaries but relatively low long-term salaries. As a result, the civil engineering profession can be better served if there are more civil engineering technology programs and fewer civil engineering programs. Comparing civil engineering programs, programs in the 1950s require an average of 150 credits while today s civil engineering programs on average require 133 credits and are moving towards 120 credits. With the technology explosion and greater demand in communication, leadership, teamwork, management, and financial skills, the current civil engineering programs 4

19 cannot satisfy the technical and nontechnical skills that civil engineers need. Therefore, some civil engineers may go through one or two half-life losses in their careers. Walesh (2000) concluded that a four-year program is simply not enough and he proposed to lengthen the civil engineering program to a six-year program, which would include nontechnical skills, internship, cooperative education, etc. Compensation of civil engineers would increase as a result of enhanced graduates economic values. To help with this change of education, Walesh (2000) suggested that employers hire graduates with master s degrees and cooperative education experience, and hire graduates of technology programs for technician work. This research follows the suggestion of having more civil engineering technologists, fewer civil engineers, and for civil engineers to have earned a master s degrees. Finally this research will determine if the movement of hiring graduates with master s degrees in civil engineering for engineering work and graduates from technology programs for technician work make sense financially. 2.3 Lyons (2000) The current British civil engineering program requires a three-year BS degree plus a practice or industrial apprenticeship period. The French and other Continental European nations civil engineering programs require six years of formal engineering education to gain a diploma in an engineering degree. In contrast, the US s civil engineering program only requires graduates to have completed a four-year college program. Therefore, civil engineers in the US are less competitive in the global market. In fact, the U.S. international companies that have hired both 5

20 U.S. - and continental European-trained engineers have found that the six-year formal engineering education system better prepares graduates in the commercial world. The U.S. engineering community is considering changing the entry-level education to professional master in engineering with six years of formal education so that engineering graduates in the U.S. can better compete in the global market. ASCE s board of direction meeting, in October 1998, approved a policy to make the master s degree in civil engineering a requirement for entry-level engineering positions. There are concerns that increasing education requirements will decrease the number of graduates pursuing civil engineering. However, Lyons (2000) pointed out that many professions had faced and survived the change of their curricula. This research studies the earning power of professional civil engineers and civil engineering technologists. The civil engineering profession will more than likely survive the change if there is incentive for the extended time spent in education. 6

21 3 Research Methods The internet was the primary source of the data collected for this research. Several websites were used to collect information on median cost of tuition and salaries for different professions. 3.1 Data Collection Educational Cost The data collected and used for determining the cost of education was from the National Center for Education Statistics (NCES, 2010), and Median Academic Year Tuition was used. The National Center for Education Statistics published data for four types of tuitions: instate, out-of-state, private-for-profit, and private-not-for-profit. Under each of the tuition types, it lists the median cost of tuition for undergraduate (less than two years, two years, and four years) and graduate (graduate [general], dentistry, law, medicine, and pharmacy) degrees. Table 3-1 shows the summary of cost of tuitions. To estimate the cost of education, the number of years required in school for each profession is also needed. The PETC (2008) presents the requirements to become paraprofessionals and professionals for each of the professions studied in this research, including the number of years in school and what degrees are needed. Table 3-2 shows the summary of years in school required for each profession. 7

22 Table 3-1: Summary of the Median Tuition for Undergraduates and Graduates (NCES, 2010). Median Academic Year Tuition ($1,000), Type of Education In- State Out-of- State Private not-forprofit Private forprofit Less than 2-year Undergraduate 2-year year Graduate General First Professional Dentistry N/A Law (L.L.B. or J.D) Medicine (M.D.) N/A Pharmacy (Pharm.D.) N/A Table 3-2: Summary of Required Higher Education for Professionals and Paraprofessional. Profession Job Title Years of Higher Education Law Medicine Dentistry Accounting Teaching Land Surveying Civil Engineering Attorneys 7 Paralegals Pathway 1 4 Paralegals Pathway 2 2 Physicians 8 Physician Assistants 4 Dentists 8 Dental Hygienists 2 Accountants 4 Accounting Clerks 0 Teachers 4 Teacher Aides 2 Professional Land Surveyors 4 Paraprofessional Land Surveyors 0 Professional Engineers 5 Paraprofessional Engineers Data Collection Salary The majority of the salary data was collected from with the exception of salaries for civil engineering paraprofessionals, which were collected from 8

23 Two other sources, the Bureau of Labor Statistics and were also considered. However, the Bureau of Labor Statistics only provides one median number regardless of working experience, and requires very detailed background information, which can only apply to individual cases. For these reasons, was used for this research. The site provides median salary values for different levels of experience in most of the professions that were studied in this research. There were a few professions for which only provides one or two values with little regard to experience. As mentioned above, civil engineering paraprofessional (also stated as civil engineering technologist in PETC) is the only part of the salary data that was not collected from There are not many sources that provide salary information for civil engineering paraprofessionals, as it is not a well-established position. The site was the only website that provided information on civil engineering paraprofessional salaries (civil engineering technologist in this case), with a range of values instead of just one median value. Because the values were collected from different sources, some assumptions and adjustments were made in an attempt to make the values more comparable. It was assumed that the lowest value represents civil engineering technologists who have no related work experience and the highest value represents civil engineering technologists with eight years of related work experience and is the maximum salary that a civil engineering technologist can attain. The values collected from were adjusted based on the ratios between and in civil professional engineers. The ratios were calculated by dividing the minimum and maximum values from by the minimum and maximum values from respectively. 9

24 Then the calculated ratios were applied to civil engineering technologists. Table 3-3 shows the adjustment on civil engineering technologists salaries and Table 3-4 summarizes the salary for each profession that is studied in this research. Table 3-3: Adjustment Values Used in Civil Engineering Paraprofessional s Salary. Civil Engineers Civil Engineering Technologists Minimum Maximum Salary from Allengineeringschools.com ($1,000) Salary from Salary.com ($1,000) Adjustment Ratio Salary from Allengineeringschools.com ($1,000) Adjusted Salary Based on Salary.com ($1,000) Table 3-4: Summary of Median Salary for all Professions with Respect to Working Experience. Profession Job Title Year of Attorneys Experience 0 to 3 2 to 5 5 to 8 8 to Salary ($1,000) Law Year of Paralegals 5 to 8 8+ Experience Pathway 1 Salary ($1,000) Year of Paralegals 0 to 3 2 to 5 Experience Pathway 2 Salary ($1,000) Year of Physicians - 2 to 4 Experience Hospitalists Salary ($1,000) 178 Physicians - Year of Family Experience 2 to 4 Practitioners Salary ($1,000) 173 Medicine Year of Physicians - 2 to 4 Experience Generalists Salary ($1,000) 165 Year of Physician N/A Experience Assistant Salary ($1,000)

25 Profession Dentistry Accounting Teaching Land Surveying Civil Engineering Job Title Dentists Dental Hygienists Accountants Accounting Clerks High School Teachers Teacher Aides Professional Land Surveyors Paraprofessional Land Surveyors Professional Civil Engineers Structural Engineers Geotechnical Engineers Environmental Engineers Transportation Engineers Paraprofessional Civil Engineers Table 3-4 Continued Year of Experience 2 to 4 Salary ($1,000) 133 Year of Experience 2 to 4 Salary ($1,000) 61.8 Year of Experience 0 to 2 2 to 4 4 to 6 6 to 8 Salary ($1,000) Year of Experience 0 to 2 2 to 5 5+ Salary ($1,000) Year of Experience 15 Salary ($1,000) 53.8 Year of Experience 15 Salary ($1,000) 19.9 Year of Experience 3 to 5 Salary ($1,000) 68.2 Year of Experience 0 to 2 2 to 4 5+ Salary ($1,000) Year of 8 to 0 to 2 2 to 4 4 to 6 6 to 8 Experience 10 Salary ($1,000) Year of Experience 0 to 2 2 to 4 4 to 6 6 to 8 Salary ($1,000) Year of Experience 0 to 2 2 to 4 4 to 6 6 to 8 Salary ($1,000) Year of 8 to 0 to 2 2 to 4 4 to 6 6 to 8 Experience 10 Salary ($1,000) Year of 8 to 0 to 3 3 to 5 5 to 8 Experience 10 Salary ($1,000) Year of Experience 0 8 Salary ($1,000)

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27 4 Method of Analysis The objective of this research is to determine if spending extra years in school to obtain a professional degree makes sense financially. The financial situation was projected to retirement: 65 years of age. The analysis used a timeline from year zero to 47. Year zero represents the beginning of a person s 18 th birthday who just graduated from high school. Year 47 represents the end of a person s 65 th year of age and the end of a person s career. As there is no information available for more than ten years of experience, salary was assumed to stay constant as the last available value. Three sets of analyses were performed in this research: 1) simple cash flow, 2) 5% of annual income was invested in some low risk investment, such as mutual fund, and yields 12% overall annual return, and 3) 10% of annual income was invested in some low risk investment, such as mutual fund, and yields 12% overall annual return. All values used in this analysis were present values; therefore, time-value-money adjustment was not considered. Extreme cases were used in determining the cost of education. The most expensive scenario was used for full professionals and the least expensive scenario was used for paraprofessional. The financial situation would be more favorable to paraprofessionals, which makes it a definite case should the results show that it makes sense financially for one to obtain a professional degree. The salaries for most professions were presented based on a range of experience. To make a salary rise gradually rather than staircase-like, the salary was assigned to be in the middle of the experience range. Then the unassigned years were linearly extrapolated based on 13

28 the immediate values before and after each assigned year, the two immediate data value after the unassigned value, or the two immediate data value before, depending on data availability. It was assumed that the salary stayed constant after the end of the last experience range until year 47. There were a few professions that had only one available data point. Therefore, that salary value was applied to the whole career life span. Many professions have even higher salaries when becoming managers. However, salaries of managers were not considered since the majorities would not become managers. 4.1 Simple Cash Flow In this section, the cost of education and income through basic salary were considered. Thus, no other forms of income such as bonuses, investments, gambling, saving interests, etc, were considered Legal Services Attorneys and paralegals were the two major professions in legal services. An attorney needs to complete a four-year degree and three years of law school (total of seven years in school). The most expensive scenario for an attorney is to attend a private not-for-profit school for both undergraduate degree and law degree. There are three pathways to become a paralegal: 1) complete a four-year college degree plus passing the national NALA exam, 2) complete a two-year college degree plus passing national NALA exam, and 3) earn high school diploma plus 20 hours continuing legal education in the two years preceding the exam, seven years of related work experience, and passing the national NALA exam. Only paralegal pathways 1 and 2 were considered in this research and the least expensive educational scenario was used in both 14

29 paralegal pathways 1 and 2, for which in-state tuition was assumed. Figure 4-1 shows the cumulative of cash flow for attorneys and paralegals from finishing high school until retirement. The dip observed for the attorney is due to the higher cost of tuition and the extra years spent in school. The break-even point for attorneys is year 13 and 15, or at 31 and 33 years of age compared to paralegals 1 and 2, respectively. The cumulated wealth for attorneys is significantly higher than for paralegals, which makes perfect sense for people to spend the extra money, time, and hard work to become an attorney. Figure 4-1: Cumulative of Simple Cash Flow for Attorneys and Paralegals Physician There are three major types of physicians: hospitalist, family practitioner, and generalist. All physicians are required to complete a four-year college degree and a four-year medical degree. The most expensive education cost scenario to become a physician is studying in a 15

30 private not-for-profit institution for undergraduate degree and an out-of-state public medical school. The paraprofessional considered in this profession is physician s assistant. The educational requirement for becoming a physician s assistant is four to seven years of college studies. A four-year college degree in an in-state public college was assumed for the least expensive scenario to become a physician s assistant. The only data available from for physicians is three years of experience, and the years of experience were not specified for physician assistants. Therefore, the only available salary value was applied for the whole career lifetime in each of the positions. Figure 4-2 shows the cumulative of cash flow for physicians and physician s assistants from finishing high school until retirement. Once again the dip observed for physicians is due to the higher cost of tuition and the extra years spent in school. The break-even point for physicians is year 15, 16, and 16 for hospitalists, family practitioners, and generalists, respectively. Therefore, the break-even points for hospitalists, family practitioners, and generalists are at age 33, 34, and 34, respectively. The cumulated wealth for physicians is significantly higher than for physician s assistants, which makes it worth spending the extra money, time, and hard work to become a physician Dentistry The positions that were considered in dentistry in this study were dentists and dental hygienists. The educational requirement for becoming a dentist is completing a four-year college degree and four additional years for a dentistry degree. The most expensive educational cost scenario is private not-for-profit college for both undergraduate and dentistry degrees. Only a two-year college degree was required for a person to become a dental hygienist. The least expensive scenario is completing the education through an in-state public institution. The site 16

31 Figure 4-2: Cumulative of Simple Cash Flow for Physicians and Physician s Assistants. only has data available associated with three years of work experience for both dentists and dental hygienists. Therefore, the only available data was applied to the whole career lifetime for both dentists and dental hygienists. Figure 4-3 shows the cumulative of cash flow for dentists and dental hygienists from finishing high school until retirement. The dip observed for dentists is due to the higher cost of tuition and the extra years spent in school. The break-even point for a dentist is year 18, which is at age 36. The cumulated wealth for dentists is significantly higher than for dental hygienists at retirement, which makes it worth spending the extra money, time, and hard work to become a dentist Accounting Accountants were used as the professionals, and accounting clerks as the paraprofessionals in this research. A person needs to complete a four-year college degree in 17

32 Figure 4-3: Cumulative of Simple Cash Flow for Dentists and Dental Hygienists. accounting and pass the Certified Public Accountant (CPA) examination in order to become an accountant. There are no specific requirements after high school graduation for persons to become accounting clerks. There is another type of paraprofessionals in the accounting field, which is someone who has completed a four-year college degree in accounting but not CPA. Such a scenario was not considered in this research because of the potential of becoming an accountant. The most expensive scenario in becoming an accountant is to attend a private notfor-profit institution. There is not a least educational scenario for accounting clerk, as it does not require any college education. Figure 4-4 shows the cumulative of cash flow for accountants and accounting clerks from finishing high school until retirement. The small dip for the accountant is due to the cost of college tuition and the extra years spent in school. The break-even point for an accountant is year 13, which is at age 31. The cumulated wealth for accountants is 18

33 significantly higher than for accounting clerks at retirement, which makes sense financially for someone spending the extra money, time, and hard work to become an accountant. Figure 4-4: Cumulative of Simple Cash Flow for Accountants and Accounting Clerks Teaching High school teachers and teacher s aides were considered in this research as professionals and paraprofessionals, respectively, in the teaching profession. To become a high school teacher, one must have completed a state-approved educator preparation program, which is a four-year college program. There are no additional requirements needed after graduated from high school for one to become a teacher s aide. The most expensive educational scenario for high school teachers is to attend a private not-for-profit institution. There is not a least educational scenario for teacher s aides, as it does not require any college education. Figure 4-5 shows the cumulative of cash flow for high school teachers and teacher s aides from the time of 19

34 finishing school until retirement. The dip in the high school teacher data is due to the cost of college tuition and the extra years spent in school. The break-even point for a high school teacher is year 8, which is at age 26. The cumulated wealth for high school teachers is significantly higher than for teacher s aides at retirement, which makes sense financially for someone spending the extra money, time, and hard work to become a high school teacher. Figure 4-5: Cumulative of Simple Cash Flow for Teachers and Teacher Aides Land Surveying Professional and paraprofessional land surveyors were considered in this research. To become a professional land surveyor, one must have completed a four-year college degree in land surveying. However, there are no educational requirements for one to become a paraprofessional land surveyor through apprenticeship. The most expensive educational scenario for becoming a professional land surveyor is to attend a private not-for-profit institution. There 20

35 is not a least expensive educational scenario for paraprofessional land surveyor, as there are no educational requirements. Figure 4-6 shows the cumulative of cash flow for professional and paraprofessional land surveyors from finishing high school until retirement. The dip for the professional land surveyors is due to the cost of college tuition and the extra years spent in school. The break-even point for a professional land surveyor is year 24, which is at age 42. The cumulated wealth for professional land surveyors is slightly higher than for paraprofessional land surveyors at retirement. Due to how little the difference is between professional and paraprofessional land surveyors, an additional analysis was conducted for professional land surveyors based on the least expensive education cost scenario. The break-even point happened four years sooner with the least expensive scenario. However, the improvement on professional land surveyors financial situation compared to ones who went to a profit not-for-profit institution is not significant Civil Engineering In the civil engineering profession, five common types of professionals were considered in this research: general civil, structural, geotechnical, environmental, and transportation engineers (to simplify, professional engineers is used in this report). Water engineers were not considered due to lack of data. Civil engineering technologists are the paraprofessionals in the civil engineering profession. To become a professional engineer, it was assumed that one must have completed a four-year college degree plus a one-year master s program in civil engineering, since this research is to study the financial effect if master s degrees were to be required to become a professional engineer. To become a civil engineering technologist, one must have completed a four-year college degree in civil-engineering-related studies. The most expensive 21

36 Figure 4-6: Cumulative of Simple Cash Flow for Professional and Paraprofessional Land Surveyors. educational scenario for professional engineers is to attend a private not-for-profit institution for an undergraduate degree and an out-of-state public institution for a master s degree. The least expensive scenario for civil engineering technologists is to attend an in-state public institution. Figure 4-7 shows the cumulative of cash flow for professional engineers and civil engineering technologists from finishing high school until retirement. The slight dip for the professional engineers is due to the additional cost of college tuition and the extra years spent in school. The break-even point for a professional engineer is between year 10 and 11 (depending on the specific field), which is between ages 28 and 29. The cumulated wealth for professional engineers is significantly higher than for civil engineering technologists at retirement, which makes sense financially for someone spending the extra money, time, and hard work to become a professional engineer. 22

37 Figure 4-7: Cumulative of Simple Cash Flow for Professional Civil Engineers and Paraprofessional Civil Engineers (Civil Engineering Technologists) % Investment This section considers that some people invest some of their earnings rather than just putting it in the bank or spending it all. The analysis in this section assumed individuals in each of the studied professions would invest 5% of their annual income into some secure, long- term investment, such as a mutual fund, and retain the remaining95% of annual income. It was assumed that no investments were made until the individuals had completed all the required education and the investments were made at year ending. Therefore, there would not be any investment growth at the end of the following year. The long-term growth rate was assumed to be 12% annually. The investment growth is compounded annually. Equation was used to calculate the total capital (equity and earning). 23

38 A = ( E + I) *(1 + i) (4-1) where A = total (cumulative) assets at the end of current year E = equity (or retain of earning) from previous year I = the portion of annual income invested at the end of previous year i = interest rate Legal Services Figure 4-8 shows the cumulative assets for attorneys and paralegals, from finishing high school until retirement, who invest 5% of their earnings into some secure long-term investment. The dip for the attorney that is due to the higher cost of tuition and the extra years spent in school became very small as the return on investment led to significant increase in total assets earned. The break-even point for attorneys is year 13 and 15, or at 31 and 33 years of age to paralegals 1 s and 2 s break-even point, respectively. The cumulated wealth for attorneys is significantly higher than for paralegals, which makes perfect sense for someone to spend the extra money, time, and hard work to become an attorney Physician Figure 4-9 shows the cumulative of cash flow for physicians and physician s assistants, from finishing high school until retirement, who invested 5% of their earning into some secure long-term investment. The dips for the physicians that are due to the higher cost of tuition and the extra years spent in school became quite small (but still obvious) compared to the large amount of earned assets through investment. The break-even point for physicians is year 15, 16, and 16 for hospitalists, family practitioners, and generalists, respectively. Therefore, the break- 24

39 Figure 4-8: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Attorneys and Paralegals. Figure 4-9: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Physicians and Physician Assistants. 25

40 even points for hospitalists, family practitioners, and generalists are at age 33, 34, and 34, respectively. The cumulated wealth for physicians is significantly higher than for physician s assistants, which makes it worth spending the extra money, time, and hard work to become a physician Dentistry Figure 4-10 shows the cumulative of cash flow for dentists and dental hygienists, from finishing high school until retirement, who invest 5% of their earning into some secure long-term investment. The dip for the dentists that is due to the higher cost of tuition and the extra years spent in school is still apparent even compared to the amount of earned assets through investment. The break-even point for a dentist is year 18, or 36 years old. The cumulated assets through investing 5% of annual income for dentists is significantly higher than for dental hygienists, which makes it worth spending the extra money, time, and hard work to become a dentist Accounting Figure 4-11 shows the cumulative of cash flow for accountants and accounting clerks from finishing high school until retirement. The dip for the accountants line that is due to the higher cost of tuition and the extra years spent in school became very small as the return on investment led to a significant increase in total asset earned. The break-even point for an accountant is year 13, which is at age 31. The cumulated assets through investing 5% of annual income for accountants is significantly higher than for accounting clerks at retirement, which 26

41 Figure 4-10: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Dentists and Dental Hygienists. Figure 4-11: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Accountants and Accounting Clerks. 27

42 makes sense financially for someone spending the extra money, time, and hard work to become an accountant Teaching Figure 4-12 shows the cumulative of cash flow for high school teacher and teacher aides from finishing high school until retirement. The dip for the teachers line that is due to the higher cost of tuition and the extra years spent in school became very small as the return on investment led to a significant increase in total assets earned. The break-even point for a teacher is year 8, which is at age 26. The cumulated assets through investing 5% of annual income for teachers is significantly higher than for teacher s aides at retirement, which makes sense financially for someone spending the extra money, time, and hard work to become a professional teacher Land Surveying Figure 4-13 shows the cumulative of cash flow for professional and paraprofessional land surveyors from finishing high school until retirement. The dip for the professional land surveyors line that is due to the higher cost of tuition and the extra years spent in school became very small as the return on investment led to a significant increase in total assets earned. Figure 4-13 shows that paraprofessional land surveyors are slightly better off financially than professional if 5% of annual income was invested regardless of whether the professionals went to the most or least expensive schools for their education. Therefore, the only way to make the extra time, money, and hard work payoff is to become a land surveying manager, which has the same educational requirements as a professional land surveyor with five to seven years of related 28

43 Figure 4-12: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Teachers and Teacher Aides. Figure 4-13: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Professional Land Surveyors and Paraprofessional Land Surveyors. 29

44 work experience. The break-even point for a person who could become a land surveying manager is year 15, or at 33 years old Civil Engineering Figure 4-14 shows the cumulative of cash flow for professional engineers and civil engineering technologists from finishing high school until retirement. The dip for the professional engineers line that is due to the higher cost of tuition and the extra years spent in school became very small as the return on investment led to a significant increase in total assets earned. The break-even point for a professional engineer is between year 10 and 12 (depending on the specific field), which is between ages 28 and 30. The cumulated assets through investing 5% of annual income for professional engineers is significantly higher than for civil engineering technologists at retirement, which makes sense financially for someone spending the extra money, time, and hard work to become a professional engineer % Investment To take another step further in investment, individuals were assumed to invest 10% of their annual income at the end of each year instead of 5%. The calculation method and all other assumptions were the same as stated in section 4.2. Figures 4-15 to 4-21 show the cumulative of cash flow of professionals and paraprofessionals of each of the professions from finishing high school until retirement. The figures show that 10% investments provide similar results as 5% investment that the cumulated assets through investing 10% of annual income for professionals is significantly higher than for 30

45 Figure 4-14: The Cumulative Assets Earned Based on Investing 5% of Annual Income into Some Secure Long Term Investment for Professional Engineers and Engineering Paraprofessionals. Figure 4-15: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Attorneys and Paralegals. 31

46 Figure 4-16: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Physicians and Physician s Assistants. Figure 4-17: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Dentists and Dental Hygienists. 32

47 Figure 4-18: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Accountants and Accounting Clerks. Figure 4-19: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Teachers and Teacher Aides. 33

48 Figure 4-20: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Professional Land Surveyors and Paraprofessional Land Surveyors. Figure 4-21: The Cumulative Assets Earned Based on Investing 10% of Annual Income into Some Secure Long Term Investment for Professional Engineers and Engineering Paraprofessionals. 34