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Trends
T R E N D S
HYGIENISTS, ASSISTANT SALARIES RISE CA R O LY N SCH N EID ER
hroughout the 1980s the growth rate of salaries paid by private practicing dentists to hygienists and assistants has closely approximated the growth rate of salaries earned by the dentists themselves. Data from the 1983 through 1989 Survey of Dental Practice, conducted by the ADA’s Bureau of Economic and Behavioral Research, have been re-analyzed to examine the rate of change in salaries paid to full- and part-time dental auxiliaries across the nation. Each year, survey data were elicited from between four and five percent of the national private practi tioner population. Response rates for the surveys var ied from approximately 43 to 60 percent. All dentists analyzed for this report were in private practice for over one year and owned their practice. Full-time status is defined as a work week of 32 hours or more. All work weeks under 32 hours are considered part-time. All auxiliaries who were not paid a salary for their services were excluded from this analysis. Over the seven-year period, 1982 to 1988, nominal auxiliary income (i.e., not adjusted for inflation) rose at an average annual rate of between 4 and 7 percent per year. The average annual rate of increase was 7.1 percent among full-time hygienists and 5.7 percent among part-time hygienists. Assistant wages rose at an average of 4.6 percent among full-time staff and 5.0 percent among part-time staff. For comparison, the primary practice net income earned by an independent dentist in these years rose at an average of 6.3 percent annually. This rate closely resembles the rate increases allotted to auxiliaries. Although nominal income does not reflect inflation ary pressures, the income figures adjusted to the
Consumer Price Index reveal a similar increase in wages across the ’80s. Adjusting for a 1982-1984 base value, annual net income to the dentist rose from $61,689 in 1982 to $72,434 in 1988. This represents an average annual increase of 2.7 percent in the dentists’real income. Over this same period, assistant salaries rose at a slightly slower rate; the average adjusted income increased 1.2 percent annually for full-time assistants and 1.6 percent annually for part-time workers. However, hygienists enjoyed similar or better increases than those experienced by the owner dentists. Although part-time hygienist real wages increased at an average of 2.2 percent, full-time hygienists received a 3.7 percent increase over the 1982 to 1988 period. Adjusted for inflation, the 1988 hourly wage paid to full-time hygienists averaged $12.57; in 1982 it averaged $10.20. In comparison, inflation adjusted income changed $1.67 for part-time hygienists (from $12.56 to $14.23), 61 cents for part-time assistants (from $6.66 to $711), and only 41 cents for full-time assistants (from $6.65 to $711). With only one exception, salaries to part-time staff have always exceeded salaries to full-time staff. Generally, full-time employees receive compensation through non-wage benefits such as insurance, paid vacations, sick days and pension plans. In the year in which salaries to part-time assistants did not exceed salaries to full-time assistants (1987), the average salaries were virtually the same between groups, with only a 30 cent difference in average hourly wages. (This analysis includes the recession year 1982. Interpretations of the income gains realized over this 1982 through 1988 period should account for the recession factor.) Ms. Schneideris research associate, ADA Bureau ofEconomic and BehavioralResearch
147
MEASURING DENIAL FEES
R O U T E T O A T R U E R P IC T U R E K E N T NASH, PH.D.
trying to determine whether dental fees have become too costly, it’s standard procedure to compare increases in dental fees with changes in the Consumer Price Index. Too often, the focus for such a comparison is on a single year, typically the most recent year. But is one year a good frame of reference? Generally, no. In 1989, for instance, the increase in dental fees was about 30 percent more than the increase in overall eco nomic prices as measured by the CPI, published by the U.S. Department of Labor’s Bureau of Labor Statistics. Should we stop here and conclude that dentistry is too expensive? No. To get a truer picture, it’s important to consider what the trends have been in both the CPI and dental fees. Since the recession of late 1981 and 1982, overall infla tion has slowed along with the average annual growth in dental fees. This slowing trend in overall and dental-fee inflation continued through 1989 when dental fees increased about 6.2 percent and the CPI recorded 4.8 percent growth. That dental fees outstripped the CPI throughout most of the past decade is not unusual. The same was true dur ing the 1960s, early 1970s and again in the mid-1970s. When overall inflation declines, it generally drops faster and farther than the inflation in dental fees. This edge over the CPI leads some to believe that dental fees may be going the way of other health care prices. But today’s circumstances are not out of line with history. DENTAL FEES & CONSUMER PRICES
Average Annual Changes for Different Length of Time, 1960-1989
1 9 6 0 -6 5
1 9 6 5 -7 0
1 9 7 0 -7 5
1 9 7 5 -8 0
1 9 8 0 -8 5
1 9 8 5 -8 9
Look at the period from 1960 through 1989 in terms of six five-year intervals. (Note, though, that the 198589 period consists of four years.)
148
In four of the six intervals, inflation in dental fees exceeded the CPI. Only during the 1970s, when general economic inflation was out of control and a national wage-price freeze was on, did overall inflation exceed that of dental fees. Still, the statistics beg the question, “Are dental fees too high?” During the past decade, growth in dental fees con sistently beat the CPI primarily because of the signifi cant decline in general inflation rather than significant increases in dental fees. DENTAL. FEES & CONSUMER PRICES
Average Annual Change Over Six Year Period 1960-1989
1 9 6 0 -6 5
1 9 6 5 -7 0
1 9 7 0 -7 5
1 9 7 5 -8 0
1 9 8 0 -8 5
1 9 8 5 -8 9
Dental fees increased an average 6.4 percent from 1985 to 1989, while overall inflation averaged 3.3 per cent. All this shows, though, is that the CPI is more spo radic than the growth in dental fees. Since 1970, dental fees increased at an average rate of 7.6 percent, near the 1985-89 average. But the aver age overall inflation rate for 1985-1989 is less than half its average growth rate of 7.1 percent since 1970. Examining fee increases for dentistry over differing lengths of time provides a more appropriate perspective on year-to-year changes. Average changes in dental fees compare better with changes in the CPI the longer the time being examined. Average changes in dental fees and overall prices are very similar for 20-, 25- and 30-year trend periods. Greater differences occur with shorter periods. The CPI tends to be more volatile over time while the average annual changes in dental fees tend to be more stable. This is partly due to the varied prices of prod ucts and services in the index. The average annual change in the CPI has ranged from about 3.3 percent over the past five years to 7.2 percent over the past 20. Growth in dental fees, meanwhile, has ranged from 6.2 percent in the past year to 7.9 percent over the past 15 years. Dental fees tend to be more stable, regardless of the time period, and more predictable. Dr. Nash, an economist, is directoroftheADA Bureau ofEconomic and Behavioral Research
HYGIENISTS, ASSISTANT SALARIES RISE CA R O LY N SCH N EID ER
hroughout the 1980s the growth rate of salaries paid by private practicing dentists to hygienists and assistants has closely approximated the growth rate of salaries earned by the dentists themselves. Data from the 1983 through 1989 Survey of Dental Practice, conducted by the ADA’s Bureau of Economic and Behavioral Research, have been re-analyzed to examine the rate of change in salaries paid to full- and part-time dental auxiliaries across the nation. Each year, survey data were elicited from between four and five percent of the national private practi tioner population. Response rates for the surveys var ied from approximately 43 to 60 percent. All dentists analyzed for this report were in private practice for over one year and owned their practice. Full-time status is defined as a work week of 32 hours or more. All work weeks under 32 hours are considered part-time. All auxiliaries who were not paid a salary for their services were excluded from this analysis. Over the seven-year period, 1982 to 1988, nominal auxiliary income (i.e., not adjusted for inflation) rose at an average annual rate of between 4 and 7 percent per year. The average annual rate of increase was 7.1 percent among full-time hygienists and 5.7 percent among part-time hygienists. Assistant wages rose at an average of 4.6 percent among full-time staff and 5.0 percent among part-time staff. For comparison, the primary practice net income earned by an independent dentist in these years rose at an average of 6.3 percent annually. This rate closely resembles the rate increases allotted to auxiliaries. Although nominal income does not reflect inflation ary pressures, the income figures adjusted to the
Consumer Price Index reveal a similar increase in wages across the ’80s. Adjusting for a 1982-1984 base value, annual net income to the dentist rose from $61,689 in 1982 to $72,434 in 1988. This represents an average annual increase of 2.7 percent in the dentists’real income. Over this same period, assistant salaries rose at a slightly slower rate; the average adjusted income increased 1.2 percent annually for full-time assistants and 1.6 percent annually for part-time workers. However, hygienists enjoyed similar or better increases than those experienced by the owner dentists. Although part-time hygienist real wages increased at an average of 2.2 percent, full-time hygienists received a 3.7 percent increase over the 1982 to 1988 period. Adjusted for inflation, the 1988 hourly wage paid to full-time hygienists averaged $12.57; in 1982 it averaged $10.20. In comparison, inflation adjusted income changed $1.67 for part-time hygienists (from $12.56 to $14.23), 61 cents for part-time assistants (from $6.66 to $711), and only 41 cents for full-time assistants (from $6.65 to $711). With only one exception, salaries to part-time staff have always exceeded salaries to full-time staff. Generally, full-time employees receive compensation through non-wage benefits such as insurance, paid vacations, sick days and pension plans. In the year in which salaries to part-time assistants did not exceed salaries to full-time assistants (1987), the average salaries were virtually the same between groups, with only a 30 cent difference in average hourly wages. (This analysis includes the recession year 1982. Interpretations of the income gains realized over this 1982 through 1988 period should account for the recession factor.) Ms. Schneideris research associate, ADA Bureau ofEconomic and BehavioralResearch
147
MEASURING DENIAL FEES
R O U T E T O A T R U E R P IC T U R E K E N T NASH, PH.D.
trying to determine whether dental fees have become too costly, it’s standard procedure to compare increases in dental fees with changes in the Consumer Price Index. Too often, the focus for such a comparison is on a single year, typically the most recent year. But is one year a good frame of reference? Generally, no. In 1989, for instance, the increase in dental fees was about 30 percent more than the increase in overall eco nomic prices as measured by the CPI, published by the U.S. Department of Labor’s Bureau of Labor Statistics. Should we stop here and conclude that dentistry is too expensive? No. To get a truer picture, it’s important to consider what the trends have been in both the CPI and dental fees. Since the recession of late 1981 and 1982, overall infla tion has slowed along with the average annual growth in dental fees. This slowing trend in overall and dental-fee inflation continued through 1989 when dental fees increased about 6.2 percent and the CPI recorded 4.8 percent growth. That dental fees outstripped the CPI throughout most of the past decade is not unusual. The same was true dur ing the 1960s, early 1970s and again in the mid-1970s. When overall inflation declines, it generally drops faster and farther than the inflation in dental fees. This edge over the CPI leads some to believe that dental fees may be going the way of other health care prices. But today’s circumstances are not out of line with history. DENTAL FEES & CONSUMER PRICES
Average Annual Changes for Different Length of Time, 1960-1989
1 9 6 0 -6 5
1 9 6 5 -7 0
1 9 7 0 -7 5
1 9 7 5 -8 0
1 9 8 0 -8 5
1 9 8 5 -8 9
Look at the period from 1960 through 1989 in terms of six five-year intervals. (Note, though, that the 198589 period consists of four years.)
148
In four of the six intervals, inflation in dental fees exceeded the CPI. Only during the 1970s, when general economic inflation was out of control and a national wage-price freeze was on, did overall inflation exceed that of dental fees. Still, the statistics beg the question, “Are dental fees too high?” During the past decade, growth in dental fees con sistently beat the CPI primarily because of the signifi cant decline in general inflation rather than significant increases in dental fees. DENTAL. FEES & CONSUMER PRICES
Average Annual Change Over Six Year Period 1960-1989
1 9 6 0 -6 5
1 9 6 5 -7 0
1 9 7 0 -7 5
1 9 7 5 -8 0
1 9 8 0 -8 5
1 9 8 5 -8 9
Dental fees increased an average 6.4 percent from 1985 to 1989, while overall inflation averaged 3.3 per cent. All this shows, though, is that the CPI is more spo radic than the growth in dental fees. Since 1970, dental fees increased at an average rate of 7.6 percent, near the 1985-89 average. But the aver age overall inflation rate for 1985-1989 is less than half its average growth rate of 7.1 percent since 1970. Examining fee increases for dentistry over differing lengths of time provides a more appropriate perspective on year-to-year changes. Average changes in dental fees compare better with changes in the CPI the longer the time being examined. Average changes in dental fees and overall prices are very similar for 20-, 25- and 30-year trend periods. Greater differences occur with shorter periods. The CPI tends to be more volatile over time while the average annual changes in dental fees tend to be more stable. This is partly due to the varied prices of prod ucts and services in the index. The average annual change in the CPI has ranged from about 3.3 percent over the past five years to 7.2 percent over the past 20. Growth in dental fees, meanwhile, has ranged from 6.2 percent in the past year to 7.9 percent over the past 15 years. Dental fees tend to be more stable, regardless of the time period, and more predictable. Dr. Nash, an economist, is directoroftheADA Bureau ofEconomic and Behavioral Research