Even when colleges and universities are not facing budget cuts and imposing massive tuition hikes, the salaries of those in charge have always been a sensitive topic. While a report in last week's Chronicle of Higher Education, entitled "Closing In on $1 Million," has further stoked the controversy, the issue is not as clear-cut as it might initially seem. Put into proper perspective, while the highest university executive compensation might be excessive, by and large, the salaries at most universities seem just about right, even if they still raise a few eyebrows at first blush.
According to the Chronicle report, the highest paid university president last year was Shirley Ann Jackson of New York's Rennselaer Polytechnic Institute, who raked in close to $900,000. The high rollers at Vanderbilt, the University of Pennsylvania, and Rockefeller University bagged more than $800,000 each. Among public universities, the ten highest paid presidents brought home more than half a million dollars each. And for those keeping tabs on our own, the University's President John T. Casteen, III earned a cool $290,000, not including other perks like free housing, a tuition allowance for a child, several club memberships, and a $40,000 endowed chair.
With Chronicle-reported average salaries ranging from$49,505 to $83,282 for professors last year (depending on their ranks), the generous payments to presidents seem to clash with the academic ethos. While those entering academia are not asked to take a vow of poverty, it is clear that they take a pay cut from the private sector. But to compare academia with business and academics with administrators is like comparing Legos to Eggos and widgets to sprockets -- which is to say, there is no comparison at all.
Whether we like it or not, in our society, the market sets wages. That is why the "comparable worth" movement, popularly known by its slogan "equal pay for equal work," is so fundamentally flawed. While a professor with a Ph.D. may have just as much education as an engineer with a Ph.D., at the end of the day, nobody is going to pay six digits for an expert on comparative literature or political theory. Moreover, given the fundamentally different nature of the work done by most academics, there is not much career cross-shopping with the business world. On the other hand, the modern role of university presidents is sufficiently similar to other executive positions that, in order to attract the most qualified individuals, universities need to compete with what the private sector lavishes.
In this respect, the pay for university presidents isn't that far out of kilter. According to Fortune magazine, the median executive compensation for the 100 largest American companies was $13.2 million last year. Those companies also have annual revenues of many billions of dollars. ("Despite Poor Performance, Ceos Get Paid More Than Ever," April 14, 2003.)
In comparison, according to its financial report last year, the University's annual revenue exceeded $1 billion. Now, assume that the University is typical of most medium to large universities. Further assume that executive pay should correlate with the significance of an enterprise, and that revenue is a rough proxy of significance. Given these assumptions, it then seems fair for a university president responsible for $1 billion in revenue to make even as much as $1 million if his counterpart in business is making $10 million for handling revenues of $10 billion. Even when compared to other non-profit enterprises, the high executive compensation in academia is not unusual; according to the United Way's website, its president makes $375,000.
To further put things into perspective, executive salaries in academia are only high when compared to salaries for liberal arts faculty. Looking at The Cavalier Daily's faculty salaries report, I was more than a little surprised at how much my professors at the Law School were making, until I realized that they would likely have earned even more in private practice. Teaching at the Medical School is even more lucrative, with many of those professors making far more than the University president. The point is, without salaries that are competitive with the private sector for these fields and positions, universities would quite simply be unable to find many qualified individuals to fill them.
Thus, rather than carp about excessively high salaries for university presidents, critics should instead address the excessively low compensation for university pundits -- which is to say, donations are welcome.
(Eric Wang's column appears Wednesdays in The Cavlier Daily. He can be reached at ewang@cavalierdaily.com)
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