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This blog began on May 14, 2010 as an exercise in university outreach. As a professor of higher education organization and leadership I wanted to offer comments and observations to higher education leaders, based on my own research and experience. My subject was to be strategies, for higher education institutions, to survive and improve and for policymakers to read and consider.

Today higher education has taken many, varied and differentially effective approaches in response to the crises that surround them. There’s reduced public financial support, increasing tuition and fees in order to survive, competition from many different models of higher education and more.  Many authors in the field had commented about traditional institutions as living a paradox, being at once inefficient and effective. We can now see that this paradox, if it ever existed, has been replaced by another idea, less paradoxical, “become more productive or price yourself out of the market.” We are not talking about efficiency –doing things easier and less costly—we are talking about productivity, achieving greater outcomes at the same cost. This is much harder to achieve and is the challenge for today.

I hope you enjoyed the blog while it was being published and I thank all of those who missed it and asked me about it for your kind emails. Someday I will begin another and I promise I will let you now.

I wish you well in all your endeavors.

JR

 

Who are the job creators?

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President Obama calls them “the rich” and Representative Bohner calls them “job creators.” So who’s rhetoric is right? Or could it be that job creators and the rich are one and the same?

The rich, says Obama, make $250,000 or more per year. They pay social security tax on only $106,000 of those $250,000 but get full benefits. They own 76% of all assets held by individuals and when they sell them, they pay capital gains taxes, which are lower than salary income. They also get to deduct $500,000 per couple from the sale of their private residence and 75% of their gains from the sale of stocks, bonds, gold and other assets. They have big IRAs and 401k plans where none of the capital gains are taxed until retirement. The money in these plans came over a decade in which their wealth grew by 29% while for those below them it remained level or declined. Obama says, they deserve to be part of the solution to our economic problems, so fork-over an equal share, you guys.

“These are not rich people” resonates Bohner, “these are job creators. What, do we want them to stop creating jobs?” Make matters worse. If they do not have enough money to invest, they will invest nothing, confused by all this talk of taking some of their perks away.

Jobs are created by corporations (foreign and domestic), governments (Federal, State and local), and non-profits. Jobs are also created by small firms which, in order to avoid double taxation, are often owned by individuals. Immigrants are 3 times more likely to own one of those than U.S. born people. Some estimates say that they have nearly two trillion dollars in cash or cash equivalents and a similar amount is held by the corporations.

If we were to take some of what the stimulus package we gave them in 2009 and maybe some of what Bush gave them in 2006, Bohner says, they’ll panic and create fewer jobs. Well, how many jobs have they created since 2006 when we gave them the breaks. That number is 0. As a matter of fact small businesses have shed 1.7 million jobs since 1968. But Bohner says we should give them more breaks.

So why haven’t the job creators created jobs? They say they can’t create jobs until the economy improves, that is until demand is restored. “Give me more sales and I’ll hire more people”, they say.

If we were to take them at their word, the only way for them to work their job-creating magic, is to give those folks who are at the lower half of the economy table and now earn less than $29,000 for a family of four, some money so they can buy more things. Doesn’t that make sense to you? So then, the job creators say, it is the consumer who takes the first step in producing new jobs. So, the consumers are the job creators, no?

I’ve just spent three days in Silicon Valley and talked to three entrepreneurs in the high tech world who have jobs open in their companies and can’t find the right people. One is looking for wi-fi engineers and six other kinds of engineers, another is looking for programmers and trainers, the third is looking for management of production, sales, public relations. If you think they are not representative of what is going on in this industry, just check the employment rate for these categories of jobs in Santa Clara County. It’s 2.9%  The interesting thing is that if you could find these qualified people and hire them, each of these people would generate an average of 3 more jobs in the same company. So then, THESE are the job creators, no?

So if people buying more things and people with the right credentials graduating schools, wouldn;t policymakers say something like..Quick, let’s put our money there!

Some of these jobs creators are graduates of UC Berkeley and I was also up there attending a meeting of the University of California System Regents. They are facing a $650 million cut in their annual budget. Bottom line is that, in addition of raising tuition up to 16% per year over the next 5 years (that’s 80% uncompounded) they will only be able to take in 1,100 engineering students (a cut of 30%) in a market that already has 3,500 “job creators” fewer than there are jobs in the nearby industries. Doesn’t it seems to you that we are killing the goose that lays the golden eggs?

What about those pesky regulations that Obama has instituted and that prevents Bohner’s mythical job creators from creating jobs?  Sacrebleu!

There’s no more regulated industry than oil production. Oil companies spend billions lobbying against them, but in fact state and local have joined Federal regulators trying to keep disaster from happening in their backyard and it does cost more to dig for oil under these increased regulations. One would expect companies like Exxon-Mobil have all but stopped looking for oil. But the opposite is true, at no time in their history have they put so much money in a hole the ground. Why? Oil prices. Keep the oil prices high enough and even the troublesome regulations can be overcome. Exxon Mobil is responsible for a great deal of Perry’s Texas Miracle (the part that didn’t come from Federal stimulus dollars).

Let’s summarize. Who are the job creators.? A) People who have fewer things than they want and need and get money (from whatever source) to buy them, b) engineers who are being sought after and as soon as they are hired need to hire other people to help them do their jobs, and c) organization who deal in commodities, technology and some manufacturing companies that are getting a great price for their products. Given a reasonable immigration policy they’ll be able to do more here.  And who are those guys Bohner is looking to hand some of our tax money? They are simple spectators and fat political contributors to the economic drama known as, “Getting Re-elected in 2012.”

The rhetorical winner is definitely Bohner.

Rick Perry’s Texas Miracle

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Governor Rick Perry of Texas, who according to some polls is the leading Republican candidate for the nomination to President of the United States, and an Aggie, points to what he says is the success he created in Texas at attracting new industry and the jobs that go with it.

This is reminiscent of George W Bush’s Texas Miracle, his contention, discredited by subsequent studies, that his educational policies created a better education for Texans.

Look at Perry’s claim when you compare it to the total supply of jobs:

Forbes Magazine gave Rick Perry credit for the creation of new jobs and highlighted some research on the key factor in Texas success. “According to research conducted by the Praxis Strategy group, Texas has boosted mid-skill jobs — those that require two years or more of post-secondary education — by 16% in the past decade, That’s the third-highest rate in the nation (after much smaller Wyoming and Utah) and three times the national average.”

Mid-skill jobs exist only because “top-skilled” jobs demand it. Without a steady supply of advanced degree recipients, engineers and medical research staff for example, the mid-skill jobs would not exist. Forbes did not quote all of what Praxis had to say. Here from their web site is the reason for this economic expansion.

“Engaged Universities and colleges play a vital role in the economic competitiveness and quality of life in any region – promoting innovation, stimulating creativity and building the skills of the work force. These are key elements of success in today’s global economy, accentuating the need for education to build stronger and closer partnerships with business and government.”

Meanwhile Perry has been busy trying to kill the goose that laid his golden egg. Under Perry’s leadership Texas has been debating how to save money in higher education, beyond the cuts instituted already.

One idea is to link professorial pay to how many students instructors teach and how much research money they bring in. It’s been suggested that instructors would get annual bonuses (some have proposed $10,000 a class) if they rated highly on student satisfaction surveys. The Austin Statesman reports that under his plan even the assignment of faculty offices and parking spaces would be based on their performance in student satisfaction surveys.

The ideas come from a Republican “think-tank” called Texas Public Policy. They call their brainstorm The 7 Breakthrough Solutions (see http://texashighered.com/7-solutions). It’s more like the seven suicide methods.  If adopted they are sure to kill the quality of instruction taking place at Universities.

Hopefully universities will see ways they can survive by engineering around the “solutions”, in which case these solutions will end up being nothing more than a distraction in the face of other serious issues. These “solutions” exemplify the kind of thinking that is grounded on a total lack of knowledge of how universities work. It highlights the reason why universities must function independently and autonomously if they are to achieve high quality. Universities have been around for a thousand years and they have evolved into the current form of shared decision-making, after centuries of change and improvement.

Universities could be more productive, but the micro-managing of legislatures and governors will not do it. We have discussed many different ways to increasing productivity and there’s evidence, for example, that a suggestion we often repeated of scheduling for 3-year baccalaureates by using summers more productively, is being adopted by over 125 campuses this Fall, up from 12 campuses the year before.

No faculty in my campus has an assigned parking space, we call our parking permit a “hunting license,” and my office, after 38 years of being an academic now has windows.  But, as a professor who has not received a salary increase in 4 years, I could use an extra $10,000 per class and I know how to get it if this policy recommendation becomes the law of the land in a Perry presidency.

Student evaluations of faculty teaching are done using a paper and pencil instrument that has the student rate the professor in several areas. Some of the questions assume knowledge the student does not have, such as “how much did you learn on this course”, we know for a fact that if they knew nothing, they say they learned more than if they knew a great deal, so this is a measure of how much the student already knew.

Another question “how much does the professor know about the subject of this course” should only be answered by another professor in the same field. The student can only guess. But more significantly, the overall score a student gives is highly correlated with the grade they expect to get on the course, a question also asked the student. The higher the grade expectation, the better the professor evaluates. If I wanted the $10,000 I would tell all my students at the beginning of the course that they will all get an A and remind them just before they complete the survey.

Let me make a suggestion to legislators everywhere from my own experience. I post my student evaluations on my web site so that new students can know what previous students thought of my teaching and I invite legislators to mandate that as a consumer information measure.

See http://llanes.auburn.edu/3000Spring2010.pdf for an example of the instrument used and what 25 students thought about the course they were taking from me last year.  I also give my students a mid-semester questionnaire on how I can improve the course. All classes are different and each express different opinions in these questionnaires that’s why I do it mid-semester while I still have time to change my approach if necessary. (See http://llanes.auburn.edu/SO3000.html )

Students who want from me as a teacher the things other students say I’m good at will take my course, others will not. In an environment where the student is viewed as a customer, a little more information will go a long way.

Legislatures can also focus on “time to completion.” Providing funding incentives for students and universities that reduce this variable will save money for students and institutions and will provide a general economic benefit to the society as more graduates will be entering the workforce earlier.

But facts are less interesting than myths and the new Texas Miracle myth, I predict, will serve Perry as well as it served Bush.

Oxford’s shinny new tin cup

Oxford University is a survivor. It was founded around the year 1100, although no one knows for sure and began to cater to the needs of religious orders. It grew rapidly after 1167 when Henry II banned English students from attending the University of Paris. Oxford knows how to take advantage of opportunities.

Next year, Oxford will face the biggest fiscal challenge, of its long and trying history. For nearly a century Oxford’s budget has come from the British government and its services were free for students. Education had always been considered a public good in England and Oxford, with the most distinguished alumni (or as they are called old members) in the English speaking world, was free of charge until 1998. That year they began to charge students £1000 a year.

Slowly, government support for this cultural icon continued to diminish and the recent economic crisis has completed the job. In 2012 Oxford will loose an estimated seventy eight percent of its government support. It can increase its tuition to a maximum of £9,000 a year and if it does, it will have shifted its cultural role, from a public good to a private good.

Oxford is trying to remain open to all economic classes who qualify to attend. Their strategy to do this is to raise a bigger endowment. Oxford is no stranger to this activity. For a thousand years it has rattled its tin cup in front of medieval courts, peers of the realm and cathedrals. It now has around £5 billion in its kitty, but like all endowments, theirs is committed, long term, to the donors’ objectives. Comparatively speaking Oxford’s endowment is small, a fifth of Harvard’s, a third of Yale’s.

In order to do this, they hired themselves a new Vice Chancellor, an Englishman with American academic experience and convincing fundraising skills. Quickly they charted a path toward increasing their endowment by £1.95 billion (because, I guess, two billion pounds sounds like a lot more), through its old members.

One of those is my favorite “Oxolean”, the television chef Nigela Lawson (Lady Margaret Hall), walked its halls as did two British kings and twelve monarchs of ten other sovereign states, twenty-five British prime ministers, and thirty-five presidents and prime ministers of nineteen other countries. There are twelve saints, ten blesseds, and an antipope; twenty-five princes and princesses, thirty-four dukes, nineteen marquesses, eighty-two earls and countesses, forty-six viscounts and viscountesses, and 188 barons and baronesses; 246 bishops (Anglican and Catholic); 291 Members of Parliament (excluding MPs who were subsequently peers), eleven Members of the European Parliament (excluding MEPs also serving at Westminster), twelve Lord Chancellors, nine Lord Chief Justices and twenty-two law lords; ten US Senators, ten US Representatives (including a Speaker of the House), three state governors, and four associate justices of the US Supreme Court; as well as six puisne justices of the Supreme Court of Canada and a chief justice of the now defunct Federal Court of Canada. According to Wikepedia.

Not all of those Oxoleans are alive but of those who are, Oxford wants to double their participation in giving to the University, from the current fifteen percent to thirty percent, more along the lines of Yale.

This shift in funding constitutes a major culture-change, not just for Oxford, but for all universities in England. Unfortunately for the others, none can match Oxford’s list of endowment prospects. For major colleges and universities there is little choice but to streamline its operation and shift the burden to the students. It is easy to imagine, although hard to calculate, the eventual economic and social impact of this massive shift. We imagine that the uncertainty of living on the dole, will effect a dramatic change in the way the universities plan and grow. Some new things, which donors are willing to support but may not be the highest priority for the universities, will take root and this will lead in unpredictable directions.

There will be fewer opportunities to grant access to the children of the poor. They, the untitled and unconnected, once formed a great community of learning at Oxford and are among its highest achievers. The Rhodes scholars to whom the world owes much, will continue to come to Oxford, but the question is, who will they find there? What will they find there? No one knows for sure, but I imagine the experience will include a close look at that shinny new tin cup.

I’ve been holding my breath

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As Congress argued and the President kept on redrawing his line across the sand, it was obvious that a cut in the U.S. budget was inevitable, held hostage by the credit ceiling issue, that had nothing to do with future spending. I feared that Federal support for higher education, particularly the Pell grant, would be part of the sacrifice this strategy would extract from the American people.

When the dust settled and the enabling legislation was passed to avert a national default, we learned that the Pell Grant Program will receive $17 billion over two years, allowing the maximum award to remain at $5,500 for next year. I exhaled and began to breath normally.

Currently, about two thirds of the cost of College is borrowed and another 5 percent is covered by grants coming from Pell program funds. Even a small decline in the maximum allowed to be borrowed will take thousands of potential students out of the realm of potentiality and toss them into the grip of unemployment

In the last hours before the August 2 deadline an old economic argument made its way toward the media pundit circle and I heard the familiar two-sides of a classic debate in macroeconomics.  Some students of the Great Depression argue that Roosevelt’s budget cuts in 1938 were responsible for a second “dip” of employment and income, which prolonged the Depression. Democratic pundits brought up the argument to caution about the budget cuts and Tea Party Republican pundits argued the opposite, that the government deficit in those days was not large enough to make a difference. I think I first heard those two sides when I was in school.

Tea Party Republican pundits argued further that had it not been for the Second World War, our unemployment would never have returned to normal, in spite of all the efforts of the New Deal. This means, according to them, that wars and not government spending brings about employment. I remember my old mentor pointing out that this is true only if you view the Second World War as a war and not a government spending program, which is all it is when considering its effect on the American economy of the 1940′s.

I was going to suggest that, if Tea Party Republicans prefer, we can end this long lasting recession by having a new war. Have the Pentagon do as it did in 1940, hire one million soldiers, build them a million uniforms and other gear, transport them around the world a million times, and order a million other things to equip them and make it look real. We keep that up for four years and guess what, our economy recovers as it did in 1942.

Instead of attacking anyone, this military force can be sent to study in schools and colleges around the world. Maybe those who are vocationally inclined can be taught the trades and used to restore our infrastructure to world-class levels. Some can be detailed to populate empty classrooms and unstaffed social programs and such other activities. We can still salute them and have parades and flags to rally the morale, it is just that they wouldn’t shoot anyone.

Brasil

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It is huge, fifth in the world both in land mass and population, in both cases just behind the United States, but unlike the United States Brasil’s population is not aging quickly. It is instead moving at a sustainable gait into productivity that is, becoming over the age of 18 and under the age of 65, at a rate that could be sustained for another 50 years. If Brasil had an adequately educated population, it would surpass all but China and the US in its GDP in 10 years.

My interest in Brasil peaked when I read somewhere that the “inflation basket” (the goods and services that are priced every month to determine the rate of inflation) contained, in Brasil, a “bikini wax.” Last month a bikini wax was $11 in Rio and $75 in NY but in NY it was not part of the inflation basket. Men and women in Brasil love to show their bodies at beaches and carnival, but that was not what caught my eye, it was for sure a sign of more than culture, it was a sign of a youthful population.

I went to Brasil last week to learn about their higher education system, its characteristics, challenges and opportunities. In Brasil, if you are smart enough to score very high in the Vestibular (the university qualifying exam) you can go to a state university or federal university and pursue the career of your choice, free of charge. Unlike the U.S., the talented are concentrated in public institutions, while some private institutions are expensive and prestigious; the flagship state institutions are prestigious and free.

Unfortunately for Brasil, the numbers of places available in these institutions are not nearly enough and in a climate of increasing college-age populations, private (less prestigious and not as well staffed institutions) provide 71% of the degrees, which leaves out many talented but poor or middle class individuals, without legitimate options.

The Berlin-based Corruption Perceptions Index showed Brasil coming up from 79 to 77 in the world last year, while the U.S. ranked 22nd on the list, down from 19th last year, with a score of 7.1 out of 10, compared with 7.5 in 2009. There are government efforts on their way to improve transparency and through it curtail corruption.

In the transparency department they seem to be doing very well. The first Revenue Watch Index has been released. The report evaluating 41 countries with oil, gas and mining resources was released by U.S-based Revenue Watch Institute and Transparency International. It ranks Brasil in the top position, and Turkmenistan at the bottom.

In some of their attempts at transparency, we could envy their diligence, as there’s nothing like that in this country. Google created the 2010 Brasilian Elections platform, which includes interactive maps that track candidate movements across the country and shows the results of previous elections. It also includes a YouTube channel where citizens can pose questions – the best of which are voted on by users and answered by candidates on TV.

The No Criminal Record Campaign, created by the Movement against Electoral Corruption, monitors whether candidates are following the Criminal Record Law, which says those convicted of serious crimes like corruption cannot run for office.

The Excellencies project, created by Transparency Brasil, puts information online about more than two thousand lawmakers, using government and newspaper data. Conscientious Vote tracks the performance of politicians in the São Paulo state legislature and in the state’s city councils. Vote on the Web translates legislation into clear and simple language, allows users to say whether they support or oppose it, and then compares their votes to the candidates’ positions.

Elector 2010 allows users to submit complaints about electoral irregularities, which are then placed on an interactive online map. (Read this Knight Center interview the with project’s creators.)

Open Congress offers a variety of information about politics and elections, including data on parliamentary votes, presence at legislative sessions, proposed laws, and information on political parties. Democratic City is a space for citizens to discuss municipal politics and elections. Adopt a Politician helps citizens blog about the legislative activities of a lawmaker.

Other projects include: 10 QuestionsI RememberHow Much Is Your Candidate Worth?, and Vote Right. (For more information, see the full Global Voices Online post in English.)

Brasil is a fertile climate for foreign institutions to enter the higher education market. The economic and social needs of Brasil are huge and the people are willing to tackle them with creativity and energy. Insofar as universities thrive in a climate of transparency, Brasil’s efforts are laudable.

It is probably more rewarding to create a Brasilian/German or a Brasilian/British or a Brasilian/American campus there than anywhere else in the world, where having a bikini wax is not nearly as important.

 

 

Focus on overall productivity

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A Chronicle-Moody’s survey of nearly 500 college CFO’s published last Wednesday in The Chronicle tells us that CFO’s are very worried about the fiscal future of their institutions “Fewer than one-third of college chief financial officers are more optimistic about the state of the U.S. economy today than they were a year ago…”

Economic uncertainty is rampant and any human being living in this world would be seen as hallucinating if they thought things were going well or getting better. But the same report tells us that “60 percent of the CFO’s said it was “very unlikely” that their institutions would make layoffs in the coming year—and an additional 18 percent said layoffs were “somewhat unlikely” So in the short term, the massive layoffs of state and local public employees, CFOs don’t think will affect their colleges.

The survey seems to reveal that the CFOs lack a practical solution to the problem of continuing uncertainty.  Although some States are doing better, it is self evident to the CFOs, that they will get fewer subsidies from state local or federal sources. Their solution to the problem is to look for productivity in the usual place –faculty costs per student credit hour.  The report says that “asked in the survey last month to select the one strategy they would use to cut costs or raise revenue if they didn’t have to worry about the consequences, nearly 38 percent of the CFOs chose “increase teaching loads.”

If they are talking about increases of 10-15 percent in enrollment per course (a very decent productivity increase compared with any other organization not exporting jobs) that’s what has been happening in State universities. This productivity increase has taken place over the last 3 years, as universities have not been filling positions that are vacated and the remaining faculty take up the slack. This condition is beginning to change this year as universities are hiring once again.

According to the same survey, CFOs are looking at an old foe of CFOs, an item that adds not one dollar of cost. Fortunately only 17 percent of those responding are being deluded by it. They think they will increase productivity by eliminating tenure. Eliminating tenure simply increases turnover, which while costly to a for-profit corporation, it is lethal to a university.

Like state legislatures that are going about eliminating collective bargaining while eliminating jobs, tenure is the target of choice for some budget cutters. The collective bargaining straw man translates into tenure in the college campus, although tenure does not mean the same thing as collective bargaining. Tenure does limit administrative flexibility and thus hypothetically, this lack of flexibility may increase costs, assuming university administrators would use the flexibility to improve productivity. If they only knew how.

I think it is time we discuss once again the path to productivity in higher education. There are three ways. Universities could increase the number of students each faculty member teaches. Or they could lower the cost of faculty by offering smaller salaries or benefits. Or they could make better use of the resource and cut the time to graduation back to 4 years for a baccalaureate. The first two are obvious and their negative impact is well documented even though universities are doing that.  But in the long run, bigger classes result in greater number of dropouts and thus productivity gains are short-lived.

The Chronicle notes the focus on the faculty. “That the CFO’s focused on faculty productivity is a “really good window into the reality of the business model of colleges,” said John C. Nelson, who heads the higher-education practice at Moody’s Investor Service. “That’s the last big area where there are really material efficiencies” to be had, noted Mr. Nelson. “

“Material efficiencies” is another way of saying “saving money” and this is a proper concern for a CFO, but not all of their ideas are sustainable. Even a Capitalized University (CU) focusing on teaching, that can keep up the effort for a longer period of time, eventually they too will be affected by drop-outs and disaffected students, two of the outcomes of greater faculty-student ratios, or less qualified faculty.

What we need to do, and what we seem to be moving to, is to use facilities year-around, schedule students to finish their programs in time and spread the cost over less time. The University of Massachusetts Amherst and my own campus Auburn University, will be offering a number of their regular baccalaureate degrees scheduled to be completed in 3 years.

Not only does it cost less do it this way, but the savings accrue to both the consumer and the provider and thus is a true productivity achievement, sustainable over time and resulting in (according to data from the OECD) a greater number of graduates, another productivity measure which impacts the society as a whole.

I’m back!

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My last post was on April 25th and while my intent was to do a weekly blog , it has become a 60-day blog. I apologize, but I have been busy.  In writing for this blog while at the same time teaching and writing academically, I needed to pause for new research. The interesting thing is that while I have posted nothing in 60 days, people keep on visiting the blog and re-reading the old stuff.

Over the past 60 days or so I have been reviewing data from OECD and other groups who have shared their findings with me.  I’ve been collecting the thoughts of students and parents about higher education, interviewing employers about what they expect and what they think they are getting from higher education. I have been visiting campuses that are planning to make significant changes in their operations in expectation of raising their productivity and I have also been speaking to groups at conferences.

Speaking to groups is also an “input” function for me, providing I listen carefully to those who comment and question. Over the next few weeks I hope to have some responses to some of the commentary that has been going around.

There’s a hypothesis out there made by a credible source, (Peter Theil) that we are in an education “bubble”, in many ways, just like the “dot-com” bubble and the “mortgage bubble, whereby people are persuaded through greed or ignorance to pay more for an item purchased as an “investment” than that item’s true worth. Thus, when the bubble explodes and values decrease, they loose a lot of money.

If indeed, a person invested years of his or her life and tens of thousands of dollars pursuing a degree only in the expectation that they would get it all back and more, then, for the time being, those who have completed their education this year, may get less that they had anticipated they would receive in return. But there’s little evidence that this condition will persist beyond the current crisis.

The value of a baccalaureate is set by the employer, following their understanding of the value of the education and the market for graduates in which they must compete. Right now employers are not hiring enough people at any price. The projection is (by Pew Research) is that when they resume hiring the salaries they will be offering will be 20% less than they were offering before the crisis.

I can’t buy that. The realities of the U.S. demographics and global competition will guarantee a stable demand over supply for graduates at both the undergraduate and graduate level which will maintain the price (wages) the employer will pay. The cost side is another matter. There’s no doubt that the cost of education to the student is inflated, but (recently at least) that has less to do with the increase in operating costs at institutions of higher education than at the decline in state support of higher education which acted as a subsidy.

Higher education needs to increase its productivity, if not to avoid a bubble, certainly to remain competitive worldwide. I’ve been reviewing all the productivity schemes that are out there and very few of them make any sense.

The dream of “packaging courses” (this time the digital packager is Carnegie Mellon University) to be offered by less expensive faculty at other campuses has been resuscitated but it does not work to increase value (quality) and eventually it will die as did the previous attempt by the Annenberg Foundation.

Most universities are currently processing a “bubble” of their own as the population demographics are seeing the retirements of a greater number of professors than in the previous decade. This will lower teaching costs as the new faculty is likely to cost less and may be persuaded to teach more, but teaching is only one of the duties of faculty and without as much knowledge creation and community service, universities are less valuable to the culture.

Thus by another measure of productivity, universities with large turnovers this decade, will produce less value for our economy. These productivity schemes are also likely to do nothing about the two major issues facing higher education that is, what percentage of the students who enter college ultimately graduate and how long does it take for them to complete a baccalaureate.

Is graduate school economically productive?

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Before you read this you should know that I am a faculty member teaching graduate students, so as they say in the sports metaphors of the big money people, I have some “skin in the game.”  But I am not feathering my nest, for it happens to be true now and likely to be even more so in the future, that if you hold a graduate degree, you are less likely to be unemployed and get paid significantly more than if you did not. Here’s the data:

Source: Bureau of Labor Statistics 2010 Current Population Survey All earnings for over 25 year-old full-time workers only

The best degree to hold in economic terms (security and income) is a professional degree, an MS or an MBA, targeted to a particular profession –accounting, administration or health.With one of those degrees you make just as much as a Ph. D. and do not have to do that pesky empirically valid research project or write a dissertation the size of War and Peace which might involve engaging in both, war and peace. Your unemployment rate is about 2.3% and you make $1,529.00 weekly.

A run-of-the-mill MA, say from a top online Master’s degree program,will make your unemployment rate 3.9 (half the national rate for over 25 years olds – 7.9%) and will earn you an average of $1,257.00. Not bad. A BA will place more of you closer to the unemployment window (5.2%) and will earn you 20% less ($1,025.00).

This does not apply to all fields. An MS in almost all of the Health Sciences will nearly guarantee you a job and pay you more for each hour you spent in class or doing homework than just about anything else.

A Ph. D. in English, the weakest of the employment and salary categories, is likely to get you a job twice as easily as a BS in Business, but it will pay you about half as much. That’s right, a 22 year old with a BS in Business working at your average entry-level job for that category is likely to be making twice as much as a 28-year old, newly minted Ph.D., working as an Assistant Professor. And the Business major had at least 5 years of income ahead of the Ph.D.

But if you have a BA or a BS and you are in a “career” and by that I mean have a job in an area of the economy that is likely to be here for a while, you should look into graduate school.

Your situation is good now and is likely to get better. The Baby Boomer’s retirement over the next decade is likely to produce around 10 million new jobs a whole bunch of which will require a graduate degree. I can’t see that far into the future but I can see farther if I Iook back.

Here’s the data for that.

Source: Bureau of Labor Statistics Civilian noninstitutional population by age, education (2009)

As you can see above, from 1988 to 1998 the number of Americans aged 65-74 increased by 413,000. Of those 10% remained employed full-time in 1998, but the other 90% moved to the Sun Belt and started drawing social security. Of those about 8,260 had a graduate degree. Universities had no trouble replacing them.

From 1998 to 2008 the number of Americans aged 65-74 increased 1,934,000, that’s 4.68 times more than the decade before. This demographic phenomena not only took Social Security and Medicare projections back to the drawing board, but it increased the number of those with a graduate degree 11.7 times to 96,700. So far, so good, universities can still produce enough new ones to cover the need, but largely because 20% of them were still working at 74.

But in the decade when I will enter the group, from 2008 to 2018 the number of Americans aged 65-74 is projected to increase by 9,987,000 (that’s 5.16 times greater than the decade before) and those with a graduate degree are expected to be 499,350 but only 30% of those are expected to be working, leaving us about 350,000 jobs once filled by people with a graduate degree who have retired.

This level of production (depending on discipline of course) is nearly impossible to replace given our current graduate production numbers. Therefore, not only will we need more people willing to enroll in graduate programs, we need more graduate programs.

Very many people pursue graduate work because they enjoy the challenge these provide and have little or no expectation that their degree will increase their salary or make them more employable, but it will nonetheless. If you are one of those, lucky you, you can have your cake and eat it too.

Sports, Academia and the AGB

This was one of the best Association of Governing Boards of Colleges and Universities Conference I have attended, if not because of the program speakers, definitely because of the level of participation of its attendees. A great number of student-trustees contributed sharp and important questions, one usually does not hear from the 60-something typical university trustee. Being one of the latter, I take my hat off to the former.

The AGB meeting raised more than a few eyebrows (and some fists) with its analysis of the cost of NCAA sports on campuses and its suggestion that eliminating NCAA Sports would save institutions of higher education a pretty penny. I can’t agree with that.

Viewing it from the perspective of an Auburn Tiger, our football team’s National Championship brought in new funds to Auburn University, new applicants for its academic programs, and monetary support helping to financially float other sports with a lesser fan base. It brought revenue to our community, which relies on sales taxes to make up the difference lost to sinking property values.  Additionally, the base of scholarship support increased, serving the needs of athletically gifted students whose opportunity to attend college would be compromised without it.

Our culture has come to expect higher education to groom future leaders from the ranks of these athletically gifted students.  But, what about the tuba players?  While football, baseball, soccer, basketball and even swimming some years cost more than what they bring in, so do concerts, plays and museum exhibitions. Universities have rightfully, perceived as an important part of their cultural development mission, to offer its students an opportunity to exercise their talents for the benefit of their community. This is education via another venue.

What the AGB conference did not bring us was new insight into the puzzling array of Federal policies threatening our institutions. In spite of many questions raised at plenary sessions, we still don’t now how Obama’s vision of restoring the US to its leading position in higher education degree holders is going to be accomplished by limiting student assistance, for example.  Certainly not the AGB’s fault that answers were not forthcoming.

What it did bring (for me) was a widely attended Roundtable discussion I was assigned to lead with inquiring minds that brought me new ideas and perspectives on my research I would not have gotten otherwise.

It also brought me a lot of questions, about football. Was Cameron Newton a good student, will he be the San Francisco 49ers 7th Round pick, will it take another 56 years before the Tigers are the national champions again? (That last question from an Alabama trustee.) I can only respond, War Eagle to you guy.

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