Once Obama’s “pay czar” takes on the bloated bonuses of Wall Street, writes David Grant in the Christian Science Monitor, he should begin prowling the halls of higher education. Grant’s recent article, based on data from the Chronicle of Higher Education and the AFL-CIO, makes a compelling case that because university endowments have dwindled due to the recent recession, university presidents should face the kind of pay cuts that most people have begun to demand of CEOs.
Consider the following evidence: Between 2007 and 2008, he writes, the 25 highest-paid college presidents saw their total compensation rise roughly 25 percent while the compensation of the 25 highest-paid CEOs receiving government bailout money fell nearly 17 percent. He continues:
What accounts for the discrepancy? First, college presidents didn’t engineer the near collapse of global commerce. Second, the argument is often made that many university presidents could be or have been executives at much higher compensation levels and gradual pay increase [sic] make universities more competitive against the private sector.
But while corporate bottom lines have taken a historical beating, so have college endowments, with a much slighter effect on executive pay during the years in question.
Personally, I have mixed feelings about the verbal pitchfork-brandishing inherent to arguments about executive compensation, particularly because economists have made some pretty compelling cases that the lucrative pay of corporate honchos is a justified means of encouraging middle managers to remain productive, a framework that would also seem to apply to universities. But in light of the sad state of higher ed funding, Grant’s argument seems to have some traction.
