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The Review of Higher Education 24.2 (2000) 113-129

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The Silent Crisis:
The Relative Fiscal Capacity of Public Universities to Compete for Faculty

F. King Alexander


In his inaugural lecture as London's new director of the Institute of Historical Research, the former Cambridge historian David Cannadine stated that "the capacity of Oxford and Cambridge to compete on equal terms with Harvard or Yale or Princeton dwindles and diminishes by the day" (Targett, 1999, p. 25). Cannadine's observation reflects three primary developments in the evolving academic labor market. First, in today's global economies the pursuit of quality academic scholars is not limited to state, region, or national borders. Second, disparities in the abilities of institutions to expend educational resources are widening between public and private universities, and these trends directly correlate with a university's ability to compete for quality faculty. Third, current institutional expenditure patterns demonstrate that many of the world's best public universities are in danger of declining in relative academic and research quality, status, and prestige. [End Page 113]

For many public university leaders in the United States, Cannadine's statement is more than a cursory comment about how the current academic market for quality faculty is detrimentally impacting Oxford and Cambridge. Similar concerns are being expressed by a growing number of public university leaders in the United States who fear that the increasing disparities in faculty compensation favoring private universities are leading to an academic "brain drain" emigration from public universities. As the findings in this study indicate, the relative fiscal compensation of private university faculty has increased much faster than the benefits of public university faculty since 1980. The relative compensatory disparities shown in this study reflect similar trends in per student expenditure disparities that have developed during the last two decades. This development has forced public university leaders to seek ways of decelerating the decline of their market competitiveness for top quality faculty. In most cases, these efforts have resulted in the pursuit of additional revenues in the form of higher student tuition or greater taxpayer assistance.

This study provides insights into the changing academic labor market by analyzing rising faculty compensatory disparities between public and private universities since 1980. To achieve this objective the study compared differences in faculty salaries and benefits between public and private research and doctoral universities at each academic rank to better ascertain national patterns in academic compensation. After presenting the longitudinal findings from a series of public and private university comparisons, the study identifies which public universities have retained their faculty salary competitiveness and which are no longer competitive with comparable private universities because of nearly insurmountable average salary disparities. These findings not only provide useful insights into the ability of certain public research and doctoral universities to maintain salary competitiveness with private universities but also demonstrate the effectiveness of various state legislatures in addressing these growing market pressures.

After a brief historical review of the changing nature of the faculty labor market, this study explores the comparability of public and private university faculty salaries at three levels: assistant professor, associate professor, and full professor. I used faculty compensatory data generated by the American Association of University Professors (AAUP) from 1979-1980 to 1997-1998 to determine average differences in research and doctoral public and private university faculty salaries at each academic level.

I compared faculty salary data at 84 public research and 55 public doctoral universities to faculty salary data at 39 private research and 36 private doctoral universities to ascertain changes in the academic labor market since 1980. I also compared the financial value of faculty fringe benefits for full professors to determine differences between public and private universities during the same period. After presenting the composite and individual institutional [End Page 114] data, the study further analyzes some of the external and internal consequences of the expenditure trends for public universities.

The Globalization of the Academic Labor Market

One of the distinguishing characteristics of universities is that faculty are semi...


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