Tuesday, January 22, 2008


The Gap

I had a lightbulb moment this weekend. Simply put, there's a basic gap between the dialogue in higher ed, and the dialogue outside higher ed. It goes like this:

In higher ed: “It's a shame how adjunct-heavy we've gone. We really need to hire more full-time faculty.”

Outside higher ed: “Tuition and taxes are too high, and going up too fast. Who do those people think they are?”

They're both right.

They seem contradictory, and in some sense, they are. How can costs keep going up at such astronomical rates when we keep turning to horribly paid part-time faculty? Isn't the upside of exploited labor supposed to be Everyday Low Prices?

Yes and no.

I'm not an economist, so I fully expect to get flamed in the comments by some folks who trot out Austrian names and multivariate calculus to demonstrate just how far up my ass my head actually is. That said, I'll go out on a limb and say that the problem is the relative difficulty of increasing 'productivity' in higher ed, as opposed to, say, manufacturing or retail.

It hit me when I heard a story on Marketplace last week comparing Skype to British Telecom. They serve similar numbers of customers, and provide similar services, but Skype has something like one percent of the number of employees that British Telecom has. (I don't remember the exact numbers, but it was something of that order of magnitude.) The tremendously lower labor costs for Skype make it possible for Skype to charge much less. Obviously, technology made that possible.

In many industries, technology makes increased productivity possible. My internet bank doesn't have bricks-and-mortar branches, which means it doesn't have to lease buildings, pay for heat and electricity, and pay tellers. Most of its operations are automated, allowing it to pass a fraction of the savings on to me. (I assume that some of it goes into profits, and some into continued innovation.) I've never seen a bank teller's blog complaining about internet banking, but it wouldn't surprise me.

As other parts of the economy become more productive, and higher ed doesn't, the relative cost of higher ed increases. (It still takes 45 hours of seat time for a 3 credit class, the same as it did twenty years ago.) Put differently, because our productivity increases more slowly than anyone else's, our (relative) costs increase more quickly. They increase so quickly, in fact, that even replacing full-time faculty with poorly paid adjuncts isn't enough to make up the difference.

This wouldn't be a problem, at least for a while, if the citizenry were feeling particularly undertaxed and eager to help. But that doesn't seem to be the case.

Most people don't devote much thought to the production processes of what they buy. They just want good products or services at good prices. When a particular sector (like higher ed or health care) seems out of whack with the rest of the economy, folks affected by it will notice. They probably won't understand, but they'll notice.

Annoyingly, they'll fill in the blanks of their understanding with guesses. Such is life.

Higher ed has it even worse than many labor-intensive industries, to the extent that we have to incorporate technologies that don't improve our productivity (so we can prepare students for jobs that require those technologies). So technologies that pay for themselves in other contexts are pure costs for us.

Higher ed administrators are caught in the bind of trying to bridge flat or declining public support with ever-spiraling costs, without doing violence to the reason colleges exist in the first place. Sometimes we can pick up an actual savings, like when my cc switched phone providers and went with VOIP. But those moments are rare. Since the overwhelming majority of most colleges' budgets are labor and utilities, there aren't many efficiencies to be had, especially without major structural changes. We could decouple 'seat time' from 'academic credit,' but that would take a really drastic, fundamental overhaul of what colleges do. I wouldn't expect that to come from the inside.


Any magic bullets out there?

Magic bullets? Yes. Heavy Subsidization (private or public).

Not that there isn't a lot of room for improvement in academia.

However in my humble opinion some things can't and shouldn't be run as a pure business. Education is one of them. It should be thought of as an investment which ultimately yields far more than it costs (even though those upfront costs may be high in both relative and absolute terms) and whose return cannot be measured over quarters or even annual statements. The atitude in the US is way to shortterm for its own good.

The building industry is reluctantly waking up to this fact. A high performance structure costs more upfront, but can pay for itself in very shortorder.
Get thee to a... um, er, download a 9-page article by renowned economists that explains why college is still a good investment and why tuition and fees are not the major cost of a college education.

There are two flies in the ointment of their analysis. One is the assumption of full-time attendance and a reciprocity between work and schooling. And that's not a valid assumption for a good chunk of students. (I'm sure we can both tick off the names of students who behaved as if there were a 35-hour day, and what happened to them.) To some extent, that's moderated by research that shows how the private payoff to community-college attendance is similar for younger students right out of high school and older students returning for additional school/retraining. Since the latter are far more likely to be working while attending school, that suggests that there is still that value for part-time students who work many hours. (I'd also argue that there's a real cost for students who try to burn the candle at both ends, but that's common sense, not economic research.)

The second fly in the ointment is the fact that tuition and fees are the visible cost, and as states consistently shrink their investment in higher education (relative to institutional costs), institutions have no choice but to shift the costs onto students. It's about cost-shifting, not total costs. But what most people focus on is the tuition.
I wish that someone would wake the public up to two important facts about higher ed in NA: first would be the enormous drop in the amount of higher ed costs funded by governments; second, the rising costs related to the demand for oversight and reporting.

We're responsible for a lot more information tracking than the universities even imagined were necessary or desirable when I was a youth. These new requests require more staff at both the government's end and in the university. I'm not saying that accountability is bad, but people tend to think it is a cost-free requirement and it's anything but!
For Anonymous 3:58: Heavy subsidization doesn't address DD's point about productivity...it just shifts the burden onto other shoulders. The total-cost-per-credit-hour-delivered remains the same.

It's also worth noting that, above a certain tipping point, improved quality may be more than the market can bear. (Otherwise, everyone would own superbly-engineered cars that sell for $75,000.) Given the average wage in this country, there is a maximum that the average individual student/parent or taxpayer can pay for a college education, and ignoring that does no-one any favors. I agree that education is a worthwhile expenditure for a society, but there are practical limits to how much can be spent. We still need roads, too.

DD: I've been thinking about this point quite a bit. It parallels trends in other labor-intensive fields, especially as the value of labor rises overall.

If sheer education delivery was the sole purpose of a college (it's not; social signaling and a certain amount of serendipity are important), a sort of hybrid teaching environment could work. A college could offer many classes in two formats: autodidactic and full instruction.

Autodidactic courses would be much cheaper than full instruction. The students would teach themselves, using online course materials and possibly occasional visits to a course advisor, and take certified exams at several points in the semester. If they demonstrate sufficient skills, they pass.

Full-instruction courses would be the traditional professor-taught course. It would cost more, but the student would get the benefit of personalized instruction---sort of like an "intellectual personal trainer". A student might choose to take easy courses as autodidactic to save money, and save their tuition money for a class that they need extra help for. As we all know, a superb teacher can make a huge difference when mastering difficult material.

This does have a certain whiff of scandalousness to it. However, I've noticed that employees get the best wages/treatment when they are seen as giving substantial extra value, either in increased productivity or in top-notch service. Since traditional college professors can't compete on productivity, seems like value-added is the way to go.
Seems to me that the main thing you're actually paying for, as a student, is someone to grade your work. Usually, auditing classes is much cheaper, right? And the internet these days is full of free lectures, if you don't even want to pay for that. Or you could theoretically just teach yourself out of the textbooks.

But being graded gives you deadlines to motivate you, feedback to show you what you need to work on, and something you can show potential employers to prove that you've actually learned the material... And that's what you're paying for.

Looking at it that way makes it seem like the logical move is to go to classes of hundreds with a bunch of student TAs to do the grading, like the big universities do. I don't know if this is worse or better than the "hire lots of adjucts" solution. Neither one results in more full time faculty.

I TA'd for a prof (actually, her title was "lecturer," and they didn't make her full time until she'd been there fifteen years) who had two sections of approximately 140 students each. She had two TAs assigned to her, plus some to teach the labs and help with exam grading. Still, this was not enough, so she had to stop grading homework. She still gave it, but the students weren't required to turn it in. She then chose two homework questions a week to make into a quiz, one of which was multiple choice -- and we, her TAs, graded the quizzes. Those plus the two midterms and the final constituted the students' grades. That's one route to lower costs. (The irony is, each of these students is paying $35,000 / yr in tuition alone. One of them just about pays the salary for the two TAs.)

That's how the most prestigious universities handle labor costs...

Or you could hire people on a full-time basis but pay them less, like maybe the same wages that a high school teacher makes. The job isn't really that different -- probably easier, really. And that way more people could make a living teaching the subjects they love, even if it wouldn't be a great living. Are the costs of a high school education rising dramatically in relation to everything else, and we just don't notice because they're state supported? If they're not rising dramatically, why not? Shouldn't they be suffering from the same problems you mention?

Haven't you just transported into the academic world Wal-Mart's argument for why they can't pay higher wages and benefits to its employees? To keep prices down, we can't afford to pay people a living wage. And, it's up to you the consumer, by the way, to determine if you are receiving "value" for your money.

The real reason why academic administrators hire so many part-time adjuncts is simply because they can. No one calls them on it. Except, perhaps, the adjuncts.
Just a note to Mary in response to the pay... I work at a CC (as an instructor with a Ph.D.) and make almost $5000 less a year than my baby sister who has a B.S. and teaches high school. From where I sit, less pay isn't a working solution. I'm already thinking of going to industry because I'm stuggling with student loans that don't understand that I took a job I love at pay that I don't.
Ah, DD, as a card-carryikng economist, I must point out that you have discovered for yourself Wiliam Baumol's argument about the "cost disease" of some services. (He wrote his seminal paper on this in the 1950s.)

But the question is, what to do. I suspect there are answers, but we have yet to see what they are. Baumol, for example, argued that, however good they were, it still took a string quarter 45 minutes to play one of Beethoven's quartets. But, recording technology, you see, mattered. As did TV and movies for drama/comedy/musicals.

For higher education, the real question, I think, is when and how the technologies we have, or will develop, will change the cost calculus. I feel sure that it will happen, and soon. What form it will take, I have no idea...and I expect to be retired (4 more years!) before I personally have to figure out how to deal with the changes, which will be wrenching.
I think it's more that universities and colleges don't want to make some of the changes that other people are making to save on productivity costs.

Physical infrastructure is a big one; in the age of websites and email do professors REALLY need offices on campus, or could they not work from home via laptop and simply book joint conference rooms when meeting (by prearranged time via email) with students or other professors? Do students REALLY need to attend lectures as often as they do, or could they do 1/3 of the work via online delivery and only attend classes 2/3 of the time (saving 1/3 on classroom space), etc.

Because those are the choices a lot of businesses are making.

And that's before you get into the question of whether a professor who has all the tools for research and communication on a laptop really needs a department assistant or even the same amount of research time as s/he once did.
Since someone already pointed out that your economics is perfect, I want to add some tangents.

First, this is exactly the same phenomenon you see in medicine, for exactly the same reasons. As far as I know, they've patched the system by hiring low cost substitutes and raising prices. So that's not really helpful.

Also, I think you hit on the something with the fact that academic productivity is harder to measure. If you get paid the same no matter what your output (because the effects of the output won't be felt for years and it's hard to figure out how much you're responsible for), more productive people will tend to move to industries that do pay for performance (where they will earn more), while the less productive stick around, because it's better than they could do elsewhere.
Wait a minute. Aren't rising drug prices (patents, etc) also behind the medicine price increases? I don't really know much about that area. Also I'm Canadian, so I already have health insurance.

It's not like students all attend class. It seems that for 33% of students in my classes, it's already a self-study. They just pay full (government-subsidized) tuition.

It seems to me that people hate not having their own offices, for the most part; there are some exceptions, perhaps like Google. I read an article yesterday about that: it was tried before and people hated it; but companies are trying again. The main benefits might be the ability to customize one's space to maximize productivity and in having books around.
I think that office space for profs will still be necessary, but they can be smaller offices, simply because more and more of the information is in electronic format.

In terms of content delivery, I see a bifurcation coming. For those students who are picking up a serious professional skill (engineers, chemists, (hopefully) economists), group work and the interaction of a classroom will be vital to their understanding and thus retained. For those students who need a piece of paper to get a job that requires nothing they didn't have when graduating from high school, I see a move toward content delivered at home with relatively little instructor interaction.

One solution, in my opinion, lies at the 11th grade level, moving from our current system to a system of co-ops and apprenticeships for students who elect not to attend college. This would take a lot of the pressure off the local CCs and state universities, who don't charge enough tuition to cover their costs.
Separately, raise the dang tuition at your nursing school already -- and use the extra money to hire more faculty. If I'd decided to enter the field, I would far rather pay an extra $1k per year tuition than have a 10% chance of not getting in, thus delaying my career plans for a year.
Hey ya'll, I'm sitting on the floor in the library because I only get a part time office - and that's not really that cool. I don't have all my resources online, it would be nice to have access to a printer (with ink and paper that I don't have to pay for myself), a telephone, a bookshelf, a place to meet with students more than one hour a week. I do work at home quite a bit, but why should I pay for light and heat and all of that stuff, shouldn't my employer kick in for something?

Students pay tuition for me to grade their work?! Oh no, I don't do any actual TEACHING or anything. I don't help them understand complex theory, or how to set up a research project, or ask and answer a good question, I just deliver content and grade work.

Really, this kind of misunderstanding of what teaching is really about, and what resources might be needed to do it right, pisses me off.
I agree with you dbm. It pisses me off, too.

We are on the brink of de-humanizing higher education.

More technology is NOT the answer.
How about REDUCING the number of enrollees? I know this goes against the mission statements of many institutions [such as CCs], but if there are too many students to match with the number of full-time instructors, then why not, you know, stop enrolling every little nitwit who applies?

Having more stringent admission standards might allow a better opportunity to min-max the infrastructure with educational gains.

As a former adjunct who finally left higher ed in disgust at the blatantly unqualified student populace littering my classrooms, I wonder if the gains in tuition that would be lost with stricter standards might not actually leverage against the already available operating funds.

The result might be better working conditions for everyone!

Just a thought...and probably a bad one.
Dictyranger said: For Anonymous 3:58: Heavy subsidization doesn't address DD's point about productivity...it just shifts the burden onto other shoulders. The total-cost-per-credit-hour-delivered remains the same.

Yes I understand that to be the case. At some point productivity reaches it's peak. Any given professor can only teach and grade assignments for so many students. Period. Yet, as DD points out the costs to retain that professor increase over time, regardless, while little or no further productivity gains can be squeezed out of that professor. At some point those costs reach a point beyond what a particular market is willing or able to bear. Since not much can be done to realistically reduce those costs, my point is that the burden does need to be either shifted or spread around more, so that it doesn't solely rest on (crush...?) a particular population segment.

And yes, obviously, there are limits to what can/should be spent on something, but in my opinion that can often come down to a matter of will (political or whatever), rather than an actual lack of funds.
Well, I have two questions. I'm not an academic, or an academic statistician, so I could be wildly wrong.

First, don't full-time professors make much more than they did 2 generations ago (relative, say, to median wage)? My impression is that a "normal" professor needed external income to support a family until fairly recently.

Second, what does the ratio of professors/college employees look like over time? My impression is that administration, management, fund-raising, and research consume a greater proportion of college resources than they did in the past.

And I agree with dictyranger--a good credentialling system for self-learning would help a lot. Then "paying for knowledge" would be a bigger component, and "paying for credentials" a smaller one.

For SamChevre, on academic salaries:

I wasn't able to come up with a single comprehensive link, but several pages I was able to find suggested that academic salaries in the English-speaking world reached their maximum in the early 1970's.

Hypothesis: Solid middle-class salaries for college professors are an artifact of the economy post-WWII. Increased demand for college degrees, partially fueled by the GI bill, increased demand for professors. Said demand took a couple of decades to fully satisfy, given long training times for faculty and availability of other well-paid work for highly educated people, especially in large corporations.

The tenure system had locked in the new expanded professoriat by the mid-1970's. By 1980, college enrollment was shrinking rapidly as the Gen-Xers reached college age. Market value of faculty began to drop. Because tenured professors could not be dismissed or have their pay cut, wage adjustment occurred through adjunctification.

Corollary: Ability to attract external funding in some fields (engineering, medicine, sciences, law) became important for overall college budgets. Demonstrated ability to generate external funding became a driver in higher salaries for academics in those fields, which may have also increased salaries in other fields in "powerhouse" colleges. The range of salaries for theoretically-equivalent teaching posts widens, with assistant professors at R1's often earning multiples of the salaries of full professors at small schools.

Discuss. :)
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