The real cost of low pay for therapists

You dedicated years to your education and training to help others. You manage complex cases, navigate intense emotions, and provide life-changing support. Yet, for many therapists across the United States, the compensation doesn’t match the commitment. Stagnant wages, rising student debt, and heavy administrative loads are pushing many to their limits.

This isn’t just an individual problem; it’s a systemic issue threatening the entire mental health field. In our Future of Therapy survey of more than 1,300 therapists, 56% said their biggest stressor is low or unfair pay. Low pay affects who stays in the profession, the quality of care that clients receive, and whether a new generation of therapists will be able to join your ranks. Let’s break down what the data shows and explore real solutions to build a more sustainable future for your profession.

Therapists are leaving the field in droves

High turnover is one of the most visible symptoms of inadequate pay. When therapists can’t afford to live in the communities they serve or are crushed by student loan debt, they often have no choice but to leave their jobs, particularly in public sector and community settings.

Recent data paints a stark picture. Turnover in behavioral health facilities averages around 37% for mental health workers and psychiatric aides, but can go as high as 60%. Non-profit centers aren’t faring much better, with a 26% vacancy rate in 2023. A systemic review found that turnover in behavioral health is far above what’s considered stable: 30% to 60% a year compared to the ideal 10%.

There are a few factors driving this exodus.

For one, wages aren’t keeping up. Ben Caldwell gathered 15 years of data from the U.S. Bureau of Labor Statistics to show therapist salaries rose less than $10,000 from 2007 to 2021. Meanwhile, soaring inflation has led to cumulative price increases of 56.25%. In simple terms, your paychecks buy less than they did five years ago. A survey by the National Council for Mental Wellbeing found that nearly all members (97%) reported it difficult to recruit employees, with the primary obstacles being a lack of qualified applicants, and their inability to offer a competitive salary.

Then there’s crushing student debt. The 2024 counseling workforce survey report found that the average student loan debt for counselors is a whopping 113% (not a typo, 113!) higher than the national average. And with the Department of Education’s reclassification of professional degrees, this problem may get worse.

We can’t forget about endless paperwork. 52% of the therapists we surveyed say administrative complexity is burning them out. Therapists report spending nearly 20% of their time on documentation, time that isn’t compensated.

So organizations don’t have enough therapists, and many who are hired quit quickly. Low pay and tough conditions make new hires burn out fast, creating a cycle of stress and high turnover. When seasoned therapists leave, clinics and communities lose vital care. This creates “service deserts,” with more than half of the U.S. population living in a Mental Health Professional Shortage Area.

How low pay impacts the quality of care

Financial strain contributes to burnout, which directly impacts client outcomes. It’s difficult to be fully present and effective when you’re worried about making rent or grappling with emotional exhaustion. 

Our Future of Therapy report found that most therapists are burned out. 82% feel worn down or exhausted by their work. Even worse, 31% face extreme burnout, with exhaustion hitting several times a week or even every day. Other studies back up these results. Studies have shown that pay below the national median is linked to more than double the odds of experiencing emotional exhaustion.

Therapists working multiple jobs or managing high caseloads to compensate for low pay often experience diminished capacity for empathy and clinical effectiveness. Burnout leads to weaker therapeutic relationships. Research shows that when a clinician is burned out, the therapeutic alliance suffers, which can lead to worse treatment outcomes for clients. Turnover caused by burnout also disrupts care. Young clients were 86% more likely to miss a future therapy session after their therapist left a practice, according to this study.

That leads to disparities in underserved areas. Clinics in underserved communities already face higher staff turnover. This instability leads to worse outcomes for clients, widening the gap in mental health care.

The system-wide ripple effect

The problem of low pay creates a negative feedback loop that harms the entire mental health ecosystem, from graduate schools to insurance policies.

A shrinking pipeline of new therapists

A study found that for every 10 clinicians that enter the profession, 13 are leaving. Despite the increased demand and interest, 54% of people who graduate from therapy training programs don’t make it to licensure.

It’s also getting harder to get licensed. First-time pass rates for the clinical social work exam have fallen, partly because candidates are juggling multiple jobs and can’t afford test prep, and depending on the state, they only have a few years to get licensed. That license only works for that state, so any therapist moving would have to do it again. Students with low starting wages need to start paying back student loans and supervision, so it can be cost-prohibitive.

This also impacts the diversity of the field. With low pay, the profession is becoming less accessible for people from lower-income backgrounds, which threatens the ability to provide culturally competent care for all communities.

The role of insurance and reimbursement

Insurance reimbursement rates are at the heart of the pay problem. Our report found that 53% of therapists pointed out that insurance and reimbursement rules are major drivers of their burnout. Medicaid and Medicare effectively set the floor for what therapists are paid. Since private insurers often base their rates on Medicare’s, this keeps wages artificially low across the board.

In addition, insurers use cost-containment strategies aimed at maximizing profits. By keeping reimbursement rates for mental health services low, insurers can reduce their overall expenses. This issue is compounded by the undervaluation of mental health care compared to physical health care and the limited transparency around how reimbursement rates are determined. These practices not only affect therapists’ financial stability but can also limit access to quality mental health care for clients.

This economic reality pushes clinicians toward private pay models, reducing accessibility for low-income clients.

Even though laws require insurance plans to cover mental health on par with physical health, a 2023 analysis found that commercial plans still reimburse behavioral health clinicians 22% less than medical providers for visits of a similar length.

Real solutions for a sustainable profession

Fixing this problem requires a coordinated effort from policymakers, employers, and therapists themselves. To make therapy a sustainable career, systemic reforms are essential:

Policy and reimbursement reforms

• Enforce parity laws: Holding insurance companies accountable for unfair reimbursement practices could raise rates.

• Increase reimbursement rates: Advocate for higher insurance payouts to reflect the complexity of mental health care.

• Loan forgiveness programs: Expand federal and state initiatives for behavioral health professionals working in underserved areas. Programs that offer significant student loan debt relief in exchange for service in high-need areas have been shown to cut turnover.

• Salary benchmarks: Establish minimum wage standards for therapists employed in community mental health settings.

Smarter ways to work

• Collaborative care models: Embedding therapists in primary care settings can improve access and reduce the burden on specialized clinics.

• Reducing administrative work: Using AI scribes or other tools to help with documentation has been found to cause a significant drop in burnout.

Organizational changes

• Retention bonuses: Offering bonuses tied to the local cost of living can help retain staff in expensive areas. 

• Create career paths: Establishing clear advancement tracks with higher pay for experienced clinicians can reduce the number of therapists leaving for private practice.

• Workforce investment: Fund training pipelines and retention programs through federal grants and state-level incentives.

You are part of the solution

The data is clear: low pay is undermining the mental health profession. But it doesn’t have to be this way. The National Council’s Workforce Sustainability Plan emphasizes policy advocacy and funding as critical levers for addressing these challenges. By advocating for fair reimbursement, supporting policy changes, and pushing for better practices within our organizations, you can create a system that values our work. Supporting professional organizations that lobby on your behalf, talking to state representatives, and demanding fair contracts are all steps you can take.

Low pay is not just an individual hardship; it’s a structural threat to the mental health system. Without immediate action, the U.S. risks deepening provider shortages and compromising care quality. Sustainable compensation, policy reform, and workforce investment are non-negotiable steps toward ensuring that therapy remains a viable and impactful profession. Your work is essential. It’s time your compensation reflected that, not just for your own well-being, but for the health of the clients and communities you are dedicated to serving.