For outrageous executive earnings, don’t look to Wall Street – look to academia.
High pay for CEOs attracts annual attention and recitations about the immorality of capitalism, but when the focus is on average CEO pay, they make less than half the annual earnings of college presidents, according to CBS News.
The average CEO earns $176,840 annually, an amount that would make a university president into a pauper. In academia, college presidents earn $377,261 annually.
Americans outraged and indebted by high college costs will be quick to draw the parallel between college president pay and their tuition bill. Correlation, though, doesn’t imply causation. Often, college presidents aren’t even the highest-paid college employees; athletic coaches earn more.
Regardless, college presidents “are well into the 99th percentile of compensation for wage earners in the United States,” Peter L. Hinrichs and Anne Chen noted for the Federal Reserve Bank of Cleveland.
The median cost of presidential salaries per student is $138.85. Slashing presidential pay could free up some money for student scholarships or additional staff hiring, but students aren’t over-burdened by presidential salaries, as easy a scapegoat as it might be.
Overall staff salaries, however, might be a different story.
“To the extent that colleges employ other administrators or support staff and to the extent that salaries and compensation for such employees are high, reducing salaries or the number of employees more broadly might help contain college costs,” Hinrichs and Chen wrote.
It’s important to remember that the higher costs of higher education don’t come from one source. It isn’t only lavish buildings, expanded campuses, staff salaries, athletic programs, or on-campus entertainment. It’s all of the above, sometimes driven by (popular) federal mandate, other times by the students and their parents desiring certain amenities. Presidents and college bureaucrats have become a popular target of populist angst, but they can’t account for the surprising costs of a college degree.
As Megan McArdle wrote for Bloomberg, “Most of those administrators have been hired for two much simpler reasons: The faculty wanted to outsource their administrative responsibilities to professionals so they could focus more on teaching and research; and the demands placed on a university are much greater than they used to be.”
College costs run amok because what Americans expect from higher education in 2016 is a drastic change from what Americans expected in 1970. Many colleges make questionable decisions in how to deliver an education and “the college experience,” but the rot is systemic, not limited to top executives.