NCPA - National Center for Policy Analysis

Workers At Universities With Big Endowments Want Higher Pay

April 26, 2001

At most Ivy League campuses this spring, organized groups of students have been protesting for increased compensation to university workers who prepare meals, tend grounds and clean dorms and classrooms.

Observers say the students have been reading reports of soaring school endowments and linking them to the issue of higher pay for those doing menial tasks.

  • Princeton University economist Alan B. Krueger says that his informal survey of 27 private colleges found student protests on behalf of workers are almost twice as likely at schools with endowments exceeding $500,000 per student as at schools with lesser endowments -- although other factors may contribute.
  • He says that so far as he can determine, the protests have not been instigated by labor unions.
  • Many students question the ethics of universities raising room and board charges and allowing the inflation-adjusted income of the workers to decline while endowments grow by record amounts.
  • The question arises as to how workers' contribution to the bottom line is determined -- so that their value can be rewarded appropriately.

Krueger sees a large "range of indeterminacy" in wages. He says salary surveys routinely find that wages vary 20 percent or more in the same occupation and geographic area.

He says universities tend to avoid paying high or low wages -- preferring to be "in the middle of the pack." This much is clear, he writes: "when an employer's ability to pay increases, workers and their allies expect pay to increase as well."

Source: Alan B. Krueger (Princeton University), "Economic Scene: At Colleges, As Elsewhere, Employers' Prosperity Lifts Workers' Expectations," New York Times, April 26, 2001.

 

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