College Presidents Are Being Paid Like Fortune 500 CEOs
Universities today are looking more like Fortune 500 companies.
Aman Banerji, Senior Program Associate and Sarah Manney
Education is the cornerstone of the American dream: Study hard, earn a degree, and your work will be rewarded. Lee Hall, a university professor who holds two law degrees, is still waiting for his rewards. Teaching five undergraduate and law school courses per semester, Hall makes an annual salary of $15,000 — less than a pet-sitter, he calculated. Rather than a pointed exception to the popular image of a respectable middle-class professor, Hall’s predicament is concerning because it is so common.
Hall belongs to a swelling underclass of university professors known as adjuncts: mobile, non-tenured faculty paid on a per-unit basis, yet responsible for the same duties as regular faculty. Averaging roughly $2,700 per class at six to seven classes per year, many of these adjuncts have found themselves below the poverty line and even, in extreme cases, homeless. They are denied basic workplace amenities such as an office and mobile phone, leaving them to pay out of pocket for costs associated with student correspondence and after-class work.
Yet, in spite of their vulnerability, adjuncts are being deployed as direct substitutes for formerly full-time positions. Despite the obvious detriment to teacher and student, adjunct professorship has been increasingly adopted by universities as a cost-cutting measure, such that adjuncts now make up over three-quarters of instructional staff across U.S. higher-education institutions.
At the same time as universities are trimming their instructional budgets, student tuition is increasing. With lower costs and higher prices, who is reaping the benefits? One group stands out in its evident immunity from austerity measures, with steadily rising wages even through the 2008 financial crisis: College presidents, like their CEO counterparts in the financial world, stand apart from virtually all other employees. The median public college president in 2014 made an annual salary of $428,250; among private institutions, 36 individuals laid claim to over $1 million every year. Next to a university’s overall workforce, the proportions are towering: presidents make roughly four times the salary of full-time professors, ten times that of office administrative staff, 20 times more than adjunct professors, and 50 times median student tuition.
It is difficult to claim that recent pay hikes are the result of improved performance; often, they may represent exactly the opposite. For instance, Penn State president Graham Spanier received $1.2 million in severance after being fired to face potentially criminal charges in a student abuse scandal, a scheme not unusual among major colleges. In other cases, refusing to be fired may be even more profitable than such a severance package. When Rensselaer Polytechnic Institute’s faculty senate returned President Shirley Jackson a vote of no confidence in 2007, she simply suspended the body and continued her tumultuous rule. Despite having plunged the school into over $800 million of debt and overseen a doubling of student tuition as the graduate school’s national ranking fell from 17th to 38th, Jackson continues to bring in $7 million a year, making her the highest-paid U.S. college president.
A stronger explanation for the presidential pay hike is that universities today tend to look less like institutions of higher education and more like Fortune 500 companies. Columbia University, for example, pays its President an annual salary of $4 Million, holds a host of financial derivatives, invests in hedge funds through its endowment, and boasts a strong anti-union drive. Such corporate practices should come as no surprise considering the central role that financiers, and corporates more broadly, play in the administration of the University. A whopping 56% of board leadership positions today are held by people with a professional career in finance. Examining the university through this corporate lens helps us understand the widespread adoption of financial derivatives like interest rate swaps at universities; or the deployment of endowments in private prisons, fossil fuel companies, and hedge funds; or, even, the desire to build the latest amenity- whether hot tub or climbing walls– at the cost of spending on student instruction. No wonder then, that the over-inflation of college presidential pay comes at a time when CEO pay in the economy has hit the ceiling. In 2015, for example, the top 500 executives in the country earned an average total compensation of $32.6 million setting the CEO to worker pay ratio to 335:1 for the year by some estimates. When a college stops being an institution designed to provide an equitable and accessible education for the many to an exclusive country club for the families of fellow financiers, who better to be at the helm than an extravagantly compensated CEO?
College presidents are certainly not the sole cause of the striking inequality sweeping institutions of higher education across the nation. Yet, if higher education is to play a role in addressing economic inequality and accessibility, surely their Presidents ought to look less like Fortune 500 CEO’s. College presidents can no longer command salaries in the millions while on-campus workers, faculty, and part-time staff continue to fight for a living wage. Any serious commitment to building more equitable structures of compensation at universities will need not just a vast rethinking of the rules governing wages and incentives at universities, but an equally harsh analysis of the processes of transparency, and corporatization across higher education.
Originally published at rooseveltinstitute.org on May 2, 2017.