What you should know before entering a PhD programme
Doing a PhD can be very rewarding intellectually; it provides a unique opportunity for in-depth investigation of a question that interests you and allows you to immerse yourself in an academic world that many people greatly enjoy. The material rewards, however, can be more elusive. In most subjects the PhD is designed as pre-professional training for a career as an academic; it is not necessarily an asset, and may even be a drawback, in the non-academic job market. And since there are far more PhDs than permanent academic jobs, the non-academic job market is likely to be relevant.
The academic employment prospects for people with PhDs vary by subject, but in most Humanities and Social Science subjects the situation is grim even for the very best students. Not only are there very few permanent jobs, but those that do exist often have very specific requirements by research topic, to fit in with the specialisms of current members of the department. This means that no matter how good you are, you may be unlucky if your topic happens not to be among those desired by hiring institutions when you land on the job market. If that happens you are unlikely to get a real job that year even if you are very good. Those who do not land permanent jobs often get short-term teaching positions; such positions frequently require so much teaching that the people in them have no time for research and therefore do not publish. After a few years of not publishing you will be unable to get a permanent job even if one does come up in your area. Moreover even the short-term jobs are not numerous enough for the applicant pool, so a significant number of PhDs end up with part-time teaching (which is so badly paid that it is almost impossible to live on) or, not infrequently, with nothing at all. In the US alone there are more than 33,000 PhDs on food stamps (http://chronicle.com/article/From-Graduate-School-to/131795/), and in the UK many are ‘employed’ on zero-hours contracts (http://www.theguardian.com/education/2013/sep/16/zero-hours-contracts-at-universities).
Estimates of the percentage of PhDs that end up with permanent academic jobs vary, but most figures put it between 20% and 40% (see e.g. http://www.economist.com/node/17723223 and http://www.mitacs.ca/sites/default/files/policy/Beyond-Labs-and-Libraries_FINAL_2013.pdf). Since PhD students are already a carefully-selected group of high-achieving students, the result of this lack of academic jobs is that many people who had previously unbroken records of success fail to land good jobs; this results in a sense of failure and shame that can make matters even worse.
Furthermore, even the lot of those who do get permanent academic jobs is not as desirable as it often appears. A tenure-track job can be very unpleasant, as one may have to please everyone in one’s department in order to get tenure and some colleagues demand a high price for their approval. Many tenure-track faculty do not get tenure; this can happen even to those with excellent records. Even tenured faculty do not usually have the life of high-paid leisure described in the media; except at a few elite institutions, the pay is much less and the workload often higher than the same people could have expected had they entered other careers. It is thought (see http://alexandreafonso.wordpress.com/2013/11/21/how-academia-resembles-a-drug-gang/) that the alluring prospect of this ideal life causes people to slave away in temporary positions; before falling for this illusion see http://platform-hnu.nl/wp-content/uploads/2015/05/gill-breaking-the-silence-2.pdf.
Many PhDs have successful careers in areas associated with academia, such as library work and publishing, and others find a good life entirely outside academia (see e.g. http://versatilephd.com/). But such careers can also be achieved without a PhD, and sometimes it is actually easier to obtain them that way. A person with a PhD who enters the non-academic job market substantially older than entrants with only a BA, who may have significant debt from paying for the PhD and/or a feeling of exhaustion and bitterness after several years of trying and failing to obtain an academic job, may find himself/herself with the additional handicap of being considered overqualified. In fact, recent research indicates that people with PhDs in certain subjects earn on average less than they would if they had only a BA or MA (Bernard Casey, ‘The Economic Contribution of PhDs’ in the Journal of Higher Education Policy and Management 2009, available via JSTOR). In other subjects the PhD does bring an increase in earnings, but that increase is often modest. (See summary of Casey’s research in The Economist at http://www.economist.com/node/17723223).
See also these pieces: http://www.macleans.ca/work/jobs/phds-realize-they-wont-be-professors-now-what/, http://chronicle.com/article/Graduate-School-in-the/44846, https://chronicle.com/article/The-Big-Lie-About-the-Life-of/63937/, http://www.theatlantic.com/business/archive/2014/03/what-can-you-do-with-a-humanities-phd-anyway/359927/
Despite all these problems, it is worth noting that the vast majority of unemployed and underemployed PhDs who answered our survey did not regret doing a PhD. Respondents, even those in very difficult employment situations, felt that the intangible intellectual benefits gained from PhD study were valuable in themselves. Many people enjoy being part of the academic community and appreciate having had that experience even if they are later forced to leave academia: one respondent even said that he would never regret his time as a part-time faculty member. So if you want to do a PhD for that type of reason, in other words for its own sake, it is likely to give you what you are after. But if you are looking at a PhD as a means to an end, and that end is secure employment or a good standard of living, then in many subjects it is unlikely to deliver what you want, no matter how well you do academically.