So, did your job make it onto the list of the 50 highest-paying jobs in Australia? The Australian Tax Office released the list last week. You can check on their website if you made it onto the list – although if you have to check, you probably didn’t.
We love these lists. They always give you some interesting things to chat about over dinner. For example:
The top 12 best-paid occupations for men are all in medicine.
But the best-paid occupation for women is a judge. This comes 13th for men – even though male and female judges get the same pay.
A male neurosurgeon earns $577,000 a year. This is the highest paid profession for men.
A female neurosurgeon earns $323,000 a year. This is only the second-highest paid profession for women.
A male member of Parliament does not make the top 50 in terms of pay. Female MPs come in 23rd.
Australian cricketers (male) earn more than paediatricians.
This list should help you make a few better decisions. For one thing, if you need neurosurgery, look for a female surgeon. She is either (i) cheaper; or (ii) less busy than a male one. Either of those things is probably a good thing.
What’s more, you are probably better off voting for a woman than a man. Women are far less likely than men to earn more working elsewhere. That means that Parliament is a good option for a smart woman. But for a smart man, not so much. Australia’s current Parliament is 71% male. Just saying.
You can see how lists like this can be good fun – but they can also be useful in more serious ways. Especially if we are running our own business, or looking to make a successful investment. The list has much to teach us about economics.
For example, almost every one of the highest paid jobs would be described as ‘necessary.’ In the top 20 for men, there are 18 types of doctor, a judge and a securities dealer. For women, there are 17 types of doctor, two types of judge and one futures trader. So, doing a job that people really need is good for your income.
That said, simply being needed is not enough. If it was, then teachers and nurses would also be paid a fortune. To really earn the big bucks, a job must also have a high ‘barrier to entry.’ A barrier to entry is anything that makes it harder to enter a particular profession. Think of that neurosurgeon: he or she had to get the very highest marks at high school simply to make it into medical school. He or she then spent more than a decade slogging it out in really difficult training before they were even allowed to start practice. Very few people can get through all that and qualify to perform neurosurgery.
High barriers to entry reduce the supply of people who can do a given job. Combine low supply with high demand (being needed), and prices rise. This is true for neurosurgeons (where the surgeon’s income is the ‘price’), small to medium businesses or investments. It’s called ‘relative scarcity’ and it underpins decent economic performance in any sphere. High demand, low supply.
In business, if there are lots of people who can do what you do, and/or there is not much need for what you do, success will not follow. Conversely, if your business has some special capacity that few share, and people need it, then you can expect to succeed.
The same goes with investment. For example, take property. You know the saying: ‘the thing about land is that they are not making any more.’ That is, low supply. (Remember, we are talking land here. The supply of apartments is much less fixed, especially high rise ones). Combine limited supply with high demand and you get high prices. That’s why land where lots of people want to live – for Australians, this usually means near (i) the city and (ii) the water – has long proven a good investment. And land where no one wants to live is never a good buy, no matter how cheap.
So when you are thinking about your business, or your investments, or even what your kids should study at Uni, keep relative scarcity in mind. Not many of us can be a neurosurgeon. But we can all learn from them.