Sunday, March 06, 2016

Explaining wage increase when productivity slowdown is for real

The faculty union at the university where I work delivered to its members, and the rare non-members like me, significant salary raises.

Despite the large increase, some aren't happy, apparently.  The other day I heard a full-professor complain to another full-professor about the salary compression at the top of the scale.  I wanted to ask them: if we all do the same work then shouldn't we receive the same pay?  As "comrades" shouldn't they, therefore, complain about the unequal pay?  But, I did not.

Meanwhile, Oregon's legislature has decided to increase minimum wages in the state.

The student newspaper on campus had a front page story on whether student jobs were now at risk.  I took a copy of the paper with me to class and asked students whether any of them had read the student newspaper.  None had.  I held up the paper, and then read out the following from the report:
Western Oregon University may be affected by this bill, especially those student workers who are employed on-campus.
“Based on my early calculations, I believe it [Senate Bill 1532] could add up to 3-5% on student employee costs next fiscal year in my area,” stated Patrick Moser, the Director for Student Leadership and Activities.
“How that affects student employment in my department is highly dependent on how the Incidental Fee Committee chooses to address the budget issues of minimum wage increases,” Moser continued.
I reminded them that every business will have to engage in such calculations.  And also pointed out the uniqueness of the university--fees can be increased in order to account for the higher wages and that the fees will come from students.  Businesses with a profit bottom-line cannot simply increase prices, which means a different kind of decision-making.

The campus economics seems to be in alternate universe that is disconnected from the real world in which the vast majority complain--legitimately--about not having had any real increase in earnings.  While the super-rich have certainly added to their Richie Rich lives, the rest of the folks have to deal with stagnation or worse.  Tyler Cowen, who is by no means any friend of the left, writes:
American middle class wages haven’t been rising as rapidly as they once were, and a slowdown in productivity growth is probably an important cause.
Cowen cites recent research and points out that the tech sector hasn't delivered on productivity.
Information technology is still one of the most dynamic sectors of the American economy, and it probably will remain so, and grow yet more influential, even if its absolute impact is not as large as the optimistic revisionists suggest.
That still leaves us with a big productivity problem. We need to acknowledge that while many Internet entrepreneurs are economic heroes, statisticians are also pretty good at what they do, and we may simply need to accept some of the lessons embedded in their numbers. America’s productivity crisis is real and it is continuing. 
I wonder what my faculty colleagues and students think about that essay by Tyler Cowen.  Students can be excused if they don't read it; but, what excuse do faculty have if they don't read such essays and think about it, especially when it is not from the manically pro-business Wall Street Journal but from the publication that is dear to liberals?


Ramesh said...

Yes this sort of gallopping wage inflation is a real issue for businesses. Its the season here for wage increases and I am dreading this exercise for my company - everybody believes they deserve a 100% hike.

Universities must demand higher productivity from its staff for sure - a Prof works nowhere near as hard as what people in other professions do (yes, I know I am waving a red rag) Get them to double their teaching hours, double their research hours and then take home the pay hike.

Sriram Khé said...

Well ... we need to keep in mind that pay is not about how hard one works. If so, then ditch diggers will be one of the highest paid in the world. Making sure we recognize that the market that you--yes, you--champion always does discriminate among the kinds of work that we engage in.
Now, having clarified that aspect, I will agree with you that salary increases in teaching and research have to be tied to some measure of productivity. Especially the kind of "research" that we recently discussed:
How to measure productivity in higher education is an issue that has confounded experts and lay people alike ... but, just because we can't quite figure that out, it does not mean faculty can do whatever they want either ... it will require faculty--not outsiders--to engage in sincere and constructive conversations, similar to how we engage scientific research. But, that will never happen because, well, the reason is in the title of this blog ;)

Mike Hoth said...

I'm not even on campus any more and I knew about the wage increase (or at least the movement, I didn't know it had passed) but perhaps that has something to do with my yearning for knowledge. That yearning makes me a minority, unfortunately, since the stack of papers detailing your earnings was quite tall and undisturbed when I grabbed one.
I do find it concerning that with the minimum wage hike now in place, cashiers are on their way to earning more than school teachers in Portland. Maybe the geriatric faculty would complain less about my generation being stupid and lazy if they realized their favorite politicians agreed to pay us extra to be stupid and lazy!

Sriram Khé said...

Hey, who you calling geriatric? ;)
I should clarify--the students were aware of the increase in min wage. But, they hadn't known about how even WOU was being forced to rethink its budget as a result. And that rethinking was in terms of on-campus jobs for students!

I have no hassle if cashiers earn more than teachers. Or, if garbage truck drivers earn more than teachers. Or if programmers earn more than teachers. Unlike the "comrades" I don't assume that those who went to school for a gazillion years in order to earn credentials deserve to be paid more than cashiers or garbage truck drivers or programmers. It has always been that way, throughout history--teachers have always been lowly paid. I would think that compared with the historical past, on an average teachers are paid quite well now. Would I like teachers to be paid more? Sure, especially if society thinks that we teachers contribute something more valuable than entertainers do. But, society increasingly makes it clear that they value entertainment more than they value teachers, even society apparently respects teachers more than they respect entertainers. We people, who make up society, are stupidly crazy about entertainment ;)

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