Orthotown January/February 2018 - 8

embrace progress

Human Capital
by Dan Grob, DDS, MS, editorial director, Orthotown magazine

In a recent news report, the headline proclaimed, "The economy's biggest mystery: Paychecks
just aren't growing." It doesn't take much for anyone who provides a service for a living to
agree with that statement. Unless you're employed within some state-supported venture like
government or public safety, where job security and pensions can be based on taxation or the
printing of money, this statement rings true. How is it that this happened? What is one to do?
And, what is the future?
My last column generated many comments-or as one of the categories in the message
boards is so aptly named, "bitching and moaning."
Some clarification to explain some of the statements I made: In addition to attempting
to stimulate discussion, I wished to alert the readership that the "person" in the practice and
the "business" in the practice are two distinct entities. In the past, practices ran by having the
doctor provide a service, charge a fee, pay overhead and then keep what was left over. Many
kept a lot; some, not so much.
Successful practitioners were often those able to charge higher fees and manage overhead.
Corporate entities reduced the perceived value of services, and providers employed by them are
paid what the market will bear.
The large debt required for one to become a provider has changed the mentality of the
provider, as well as business models, so salaried positions are created to allow these providers to
earn a living and, hopefully, also reduce loan debt. Investing in one's self was often the reason
to justify the large debt burden. Is one's self the same entity as it used to be?
Those salaries, in my estimation, are what orthodontists and dentists are "worth" in today's
marketplace. Anything above that becomes the reward for business acumen or creativity that
involves the use of leverage, imagination or some creative enterprise that will allow you to break
free from the restraint of debt and loan payments.
This is all explained by the concept of human capital. Yes, it is becoming less valuable unless
you employ one of the attributes just mentioned.
Just look around and reflect on history.
* During the 1950s, Ward and June Cleaver were pretty much capable of surviving
without a working spouse, and the house payment, if any, was manageable.
* The 1960s brought the expansion of entitlements and women's rights, leading many
women into the workforce. Yet, for many families, the standard of living didn't double.
* The 1970s brought the repeal of the gold standard to help pay for entitlements and keep
the federal budget's ever-increasing number solvent.
* During the 1980s, the Rust Belt formed as the result of manufacturing being lost
overseas to cheaper labor.
* The 1990s continued offshoring of manufacturing while large trade deficits formed,
placing more downward pressure on our dollar.
* The new century brought a number of financial crises all solved with printing of more
money, reducing the value of same.

JANUARY/FEBRUARY 2018 // orthotown.com

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Table of Contents for the Digital Edition of Orthotown January/February 2018