NCPA - National Center for Policy Analysis

The Higher Education Labor Market

October 25, 2002

In the 1970s, projections of future university faculty shortages surfaced. Intrigued, scholars researched Ph.D. supply and demand. However, the supply studies failed to address issues such as retirement behavior of faculty, academic versus non-academic employment, and time factors to complete Ph.D. programs. And the demand studies failed to anticipate the growing university trend of part-time and adjunct faculty. Thirty years later, academic labor market issues are still in the early stages of study.

Now, researchers reveal more recent findings. For example, salaries of faculty in public institutions have declined relative to the salaries in private institutions over the last two decades

  • In 1978, the average salary of professors at public research and doctorate granting institutions was 91 percent of the average salary at private research and doctorate granting institutions.
  • By 1993, this ratio had fallen to 79 percent, where it has remained.
  • Between 50 and 60 percent of the change in the ratio of average public-to-private professor salary, at each rank, can be explained by differences in real tuition levels.
  • Private institutions' tuition levels have risen more in absolute terms than public institutions' tuition rates -- giving private institutions more resources (relative to public universities) to hire and retain top faculty.

Average faculty pay has become more unequal across universities, but the causes of the growing salary dispersion differ for private and public institutions. In private institutions it's attributable to the increasing dispersion of endowment wealth. Even if two institutions experience the same percentage increase in endowment growth, the university with the highest initial level of endowment per student will gain more absolutely in endowment per student and will be able to increase its average faculty pay by a greater percentage.

Source: Marie Bussing-Burks, "The Higher Education Labor Market," NBER Digest, October 2002; based on Ronald Ehrenberg, "Studying Ourselves: the Academic Labor Market," NBER Working Paper No. 8965, National Bureau of Economic Research.

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