>So, are professors really underpaid?
In general I think that when one hears complaints about people being
underpaid it is because their earnings are low compared to what other
people with similar credentials are being paid. In my experience most people
don't think in terms of markets setting salaries. They think in terms of
employers deciding what to pay and they think that employers can pretty much
pay whatever they want. Pay is viewed as unfair if it doesn't reward the
things that are supposed to be rewarded according to norms (talent,
education, and experience). Economists have very different views of the
reasons why people are paid for these things having to do with their
scarcity and the cost of acquiring the characteristic. Our view would have
little to do with fairness.
On one level, I think many claims about "fairness" are just whining. I also
think a society does less well than it might by rewarding whining.
On a more exalted level, we have no consensus on the meaning and proper
application of concepts like fairness or merit. We have a reasonable and
objective way of determining a person's value to society. We have no such
way to determine the fairness of their wages or general situation. The
political process? I deny we can distinguish "fair outcomes" from "dead
weight rent seeking."
2) Public schools do seem to set wages in a way which is typical of a price
leader (quality adjusted pay is lower than the private sector unless there
is a union).
What is the evidence for this? Are there public schools without teachers
unions? I find it hard to believe that this is true once parochial schools
are included. Are there studies of wages in nonunion public schools and
comparable private schools?
Are professors underpaid? If one thinks that there is chronic excess supply
this hardly seems arguable. The argument against this view is that there is
also an oversupply of aspiring NBA players, but that doesn't mean that
current NBA players aren't being paid the value of their marginal revenue
product. Those who aspire may not be able to perform at the level of the
incumbents.
The NBA example would be relevant to my original post if the stars of one
era were granted permanent employment. We would thus be enjoying the efforts
of Bill Russell and Wilt Chamberlin (until he died). My original point was
that we cannot know in universities that those who aspire may not be able to
perform at the level of the incumbents because the incumbents have locked in
their jobs and prevent any and all competition.
My other point was that the chronic excess supply of PhDs grew out of the
original monopoly. Freed from competition, tenured professors continued to
admit and credential many more PhDs than the market could handle. Had there
been a functioning market for professors, the number of new PhDs would have
roughly matched the number of new jobs. In such a functioning market, the
wages of professors would also be somewhat lower than than now. Thus tenured
professors are overpaid.
The market for nurses and teachers is largely local because of career
co-location decisions while the market for Profs is national. The local
nature of the nurse and teacher markets makes monopsonistic coordination
possible (the Personnel director I talked to didn't take seriously the
notion that high wages for nurses in her city would attract more nurses
"They're all married and they can't move." even while she was willing to
allow that there would be an increase in supply from "burnt out" nurses
reentering the field). -- Bill Dickens
Even if we grant the monopsony argument, I don't see how it could apply to
universities which number in the thousands and compete in a national market.
Wouldn't a monopsony be highly unstable? On the other hand, the supply side
is clearly fixed.
All of this raises three questions for me:
1. How do professors maintain their cartel? I remember reading a few years
ago about a professor at Columbia who refused to accept tenure when it was
offered. I don't recall that he was punished in any way. Are sanctions aimed
largely at buyers?
2. Tenure protects an older generation from competition from a younger
cohort. How does this fit into larger evolutionary theories?
3. Why have so few people on this list bothered to defend tenure?
John Samples
Cato Institute
Washington, DC
