4 ms·

Yes, I recently graduated from a PhD program and this is all absurd. Your cost as an employee is always more than your take home pay, this is overhead and is ba

by s0rce 9y ago

Yes, I recently graduated from a PhD program and this is all absurd. Your cost as an employee is always more than your take home pay, this is overhead and is basically what the "tuition" of a graduate student is akin to. It pays for the operational expenses of the university, land, maintenance, taxes, etc. No company/government lab would claim that your overhead expenses are somehow something you've earned/been awarded/gifted for the opportunity to work there. These overhead expenses can often approach the cost of your salary, especially when you make less money.

ejstronge 9y ago
You raise an interesting point - in fact, one hypothesis for burgeoning benefits offered to employees is that they hide your compensation in various tax-shielded pots of money. From this perspective, the overhead costs of an employee and the tuition/facilities fees of PhD students are not so different from what happens in the working world. One large exception is the teaching function of PhD programs, which is often underwritten by outside funders (or by scholarships that students, themselves pursue). I'm not aware of a situation in which an employee would herself need to secure money to pay her overhead outside of academia. Thus, the comparison is a poor one - companies 'pay' you more by covering your overhead, but universities assess a tuition that is either paid by the student (e.g., in humanities) or by a funding organization (e.g., in the sciences).
- SilasX 9y ago
  Yep. It gets to be pretty distortive. A highly paid employee might have an effective marginal income tax rate of 40-50%, so any untaxed benefit that the employer can expense is effectively being purchased at a ~45% discount (when you compare to what the employee would have to earn in order to buy it). That's the hole in the Amazon/Netflix HR philosophy of "lol why give you free stuff? we can just pay you more and you buy it yourself". When I eat the free food at an employer-paid conference I think, "wow, I am cheating the tax man" (because, under a proper accounting, that would be an after-tax expense but I'd being expensed by the employer and not treated as income).
xyzzyz 9y ago
Sure, but other employers won’t put their costs on employees W2. Universities obviously spend some money in the overhead, most likely way too much, but this is a topic for another discussion. The question here is why this overhead is in the form of tuition waiver, and the answer is so that they can take this money from federal grants, on top of the overhead they already take from these grants explicitly.
vonmoltke 9y ago
If my employer pays for me to get a PhD I am required to pay taxes on the value of that assitance. Why should you get a free pass just because your employer is also the university you are getting your PhD at?
- tabeth 9y ago
  I completely agree. I'm really not understanding the counter argument here.
- mattkrause 9y ago
  Actually those benefits are often exempt or deductible (at least partially): - From the feds: https://www.irs.gov/publications/p970 https://www.irs.gov/publications/p970 Furthermore, employers tend to pay for actual classes (with a professor and meetings and all that). A lot of the outrage around this is that the research portion of a PhD doesn't actually involve any of that.

by s0rce 9y ago

ejstronge 9y ago

You raise an interesting point - in fact, one hypothesis for burgeoning benefits offered to employees is that they hide your compensation in various tax-shielded pots of money. From this perspective, the overhead costs of an employee and the tuition/facilities fees of PhD students are not so different from what happens in the working world. One large exception is the teaching function of PhD programs, which is often underwritten by outside funders (or by scholarships that students, themselves pursue). I'm not aware of a situation in which an employee would herself need to secure money to pay her overhead outside of academia. Thus, the comparison is a poor one - companies 'pay' you more by covering your overhead, but universities assess a tuition that is either paid by the student (e.g., in humanities) or by a funding organization (e.g., in the sciences).

SilasX 9y ago
Yep. It gets to be pretty distortive. A highly paid employee might have an effective marginal income tax rate of 40-50%, so any untaxed benefit that the employer can expense is effectively being purchased at a ~45% discount (when you compare to what the employee would have to earn in order to buy it). That's the hole in the Amazon/Netflix HR philosophy of "lol why give you free stuff? we can just pay you more and you buy it yourself". When I eat the free food at an employer-paid conference I think, "wow, I am cheating the tax man" (because, under a proper accounting, that would be an after-tax expense but I'd being expensed by the employer and not treated as income).

xyzzyz 9y ago

Sure, but other employers won’t put their costs on employees W2. Universities obviously spend some money in the overhead, most likely way too much, but this is a topic for another discussion. The question here is why this overhead is in the form of tuition waiver, and the answer is so that they can take this money from federal grants, on top of the overhead they already take from these grants explicitly.

vonmoltke 9y ago

If my employer pays for me to get a PhD I am required to pay taxes on the value of that assitance. Why should you get a free pass just because your employer is also the university you are getting your PhD at?

tabeth 9y ago
I completely agree. I'm really not understanding the counter argument here.
mattkrause 9y ago
Actually those benefits are often exempt or deductible (at least partially): - From the feds: https://www.irs.gov/publications/p970 https://www.irs.gov/publications/p970 Furthermore, employers tend to pay for actual classes (with a professor and meetings and all that). A lot of the outrage around this is that the research portion of a PhD doesn't actually involve any of that.