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?