Research Subcommittee: Compensation Recommendation



Section 152 of the Dodd Frank Act grants the OFR authority to set its salaries and includes the OFR in the group of agencies that must abide by compensation and benefit rules prescribed in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The OFR should take all possible steps within the restrictions of government pay scale to assure that its compensation offers are competitive for researchers in finance.


We investigated the OFR hiring process as it currently exists and also explored salaries available for other organizations which compete with the OFR for personnel. In doing so, we found that currently the OFR salary offers are not competitive. We also found out a bit about other government agencies structure their salary offers and include that information as background that might help the OFR going forward.


Our subcommittee spoke with the OFR staff regarding its recruiting process and experience in attempting to hire new PhDs with expertise in finance. The OFR follows the standard practices of interviewing candidates at the Allied Social Sciences Annual meeting and then inviting the most promising candidates to spend a day at the OFR. During the visit the candidate presents a seminar based on their dissertation research and meets with OFR staff. However, in cases when the OFR decides to extend an offer to its compensation package appears to be below the market level. Through discussions with former candidates and by reviewing publicly available information, we know that for a new PhD with no work experience, the typical salary offer would be below $120,000. This is not a competitive level of pay.

As a benchmark, here are some representative salary offers that new Phds received this year; this sample purely reflects data was easily collected by members of the subcommittee by talking to students at our universities.

  • This year, top 15 business schools were offering 12 month compensation packages of $240,000 to $250,000 per year.1

  • The Federal Reserve System puts together pay packages that are expected to average between $190,000 and $200,000 for the first three years of employment for new PhDs in finance. These deals involve a combination of a base salary (of perhaps $160,000 to $175,000) plus a signing bonus and a promised bonus for the first couple of years of employment.2

  • Finally, private sector pay for people with a PhD in finance, but who choose to work at economic consulting firms appears to be paid roughly $165,000 to $190,000 sometimes with signing bonus of $10,000 to $30,000.3

It is obviously critical that the OFR find the best available talent to support its efforts. We do not expect the compensation package to mirror Wall Street or even the very best business schools. But it must have the ability to compete with other policy institutions and more typical businesses.

It is also important to recognize that the staff spends a non-trivial amount of time recruiting and if the compensation packages are uncompetitive not only is this time wasted, but the process can reduce morale.

To meet the Dodd Frank mandate on compensation arrangements, the OFR should explore the strategy used by the Federal Reserve (and other relevant parts of the government and private sector) to make its offers closer to market levels. It would be appropriate to create special classifications for finance PhDs so that they are on a different pay scale than economists. It would also be reasonable to create bonus pools that could be used at the start of a career to boost salaries. Absent steps like this, it is doubtful that the OFR will be able to attract the talent that it needs to fulfill its research mission.

Harvard Business School. The salary consists of a 9 month base salary and then an extra 2/9 supplement for the period before tenure.

  1. These numbers are based on offers at the University of Texas Austin, the Kellogg School of Management, and 

  2. These numbers reflect practices at the Board of Governors and the Federal Reserve Bank of Chicago. 

  3. This quote comes from a partner of litigation consulting firm; the firm prefers to remain anonymous.