Salary Comparisons and Value Judgments in the UC System

"You might make more money than me, but it doesn't make you a better person."

Last week, an op-ed by Professor Laura Nader appeared in the Daily Cal decrying the current state of the UC budget and how its misplaced allocations are leading to a decline in the quality of undergraduate education at the University of California.  Now, I happen to agree with many of the sentiments she's expressing here.  In particular, the goal of providing a quality education to all California residents, regardless of financial means, is a noble one, and watching educational dollars shrink even as administrative and athletic budgets expand has got to be a frustrating position.

Still, her idealism seems to belie a lack of consideration for, or perhaps an unwillingness to consider, the financial realities facing public universities today.  It's all well and good to lambaste the administration for having priorities contrary to your own ideals, but I think it needs to be done with a proper understanding of what the Universities true choices are.  Underlying Professor Nader's arguments are a couple of erroneous assumptions about how salaries are determined, assumptions that "sound" true but are, in fact, subtly, insidiously false.

First, there is her assumption that because UC is a not-for-profit entity whose mission is to serve the people of California, its financial decisions shouldn't be subject to regular market forces, and should be made entirely on the basis of merit (leaving aside who gets to make the value judgments to define "merit").  This is the kind of thinking that tells us "Teachers are the most important part of a school, so they should be paid the most."  Sure, OK, but try and put such a philosophy into practice, and you'll run headlong into the practical realities of the educational job market.  Instructional faculty are not paid according to their "value" to the students, whatever that may be, but according to each teacher's market value.  UC is in competition for quality staff with every other prestigious university in the U.S., and faculty salaries are determined mainly by balancing what UC can afford to pay those professors with what the market for quality professors has determined that their services are worth.  Pay too little, and you'll attract an inferior grade of professor, as all the best talent accepts superior, competing offers, but pay too much, and you'll have to raise fees to the point where students can't afford to attend your school full of prestigious, highly qualified professors.  These are the forces that determine teacher salaries, not any sort of judgement on their value made by out-of-touch administrators and politically-motivated regents.

It's also important to understand that the market for teachers is not the same as the market for administrators is not the same as the market for football coaches.  Schools need both teachers and administrators, and if you want to build and sustain a quality university, you need to pay market rate for both, even if the market rate for quality administrators is much higher.  Now, a school doesn't need a football coach (just ask the University of Chicago), but if the school does decide to have a football program, market forces dictate not only that the going rate for quality is much higher than even that of administrators, but that it is actually more wasteful to spend less money on a mediocre football coach (whose program will lose money) than it is to spend more on a quality coach whose program might bring in lots of money to support the rest of the athletic department.  In a recent White Paper study (caution:  PDF) done by the University of Wyoming, in which the University considered the financial implications of dropping down and playing football at a lower (Division I-AA) level, it was determined that the cost savings in lower coaches' salaries and fewer athletic scholarships would be more than offset by a loss of more than $2.5M in lost revenue from ticket sales and television deals.  Moreover, it was determined that, in dropping down, UW would be missing out on more than $12.5M worth of FREE national television exposure that their athletic teams earned.  You don't have to play the game, but if you do, coming to the table with half the stack of everyone else is a pretty surefire way to lose it all.

Moreover, it's interesting to note that part of the reason that college football coaches' salaries are so high is that, more than almost any other endeavor, the difference between 'great' and merely 'very good' is not only incredibly noticeable, but it has vast financial implications as well.  A great teacher might inspire a few more students than a merely very good one, and a great professor might product more and better research, but the financial gains realized by one as opposed to the other are not vast, certainly not orders of magnitude greater.  The measurements that might be used to separate 'great' from 'good' are imprecise, and often the time-lag between 'performance' and 'measurement' can be great enough to further impair efforts to tie compensation to performance.  College football coaches (and athletes in general), however, produce fairly precise measurements of success on an annual basis, and given the financial windfall that may result in the difference between 'superior' and 'excellent' performance (such as reaching vs. just missing a BCS bowl), it should really come as no surprise that the most successful coaches are so handsomely rewarded.

Of course, not all college football coaches make obscene amounts of money; most, in fact, draw quite modest salaries.  When the University of Alabama agrees to pay Nick Saban $4M per year, it is not (just) because it is desperate to win at football, but because the school considers that his coaching will (hopefully) bring at least that much revenue back to the athletic department through his team's success.  Compare this to most other levels of college football, where revenue opportunities for Divs. I-AA, II, & III are exceedingly scarce, leading to the relatively meager salaries for the coaching staff at those schools.  While the ruthlessly Darwinian process of sorting great coaches from good ones pushes the best of the best to the top, the obscene salaries found there are not driven wholly by boosters' desperate desire for gridiron victory, but also supported by the vast revenue opportunities found at the pinnacles of success, the great majority of which are lucrative television contracts.

Compare this salary structure to the one faced by college faculty.  First off, there are no lucrative television contracts to be found for excellent classroom instruction; their funding comes primarily from students and state and federal governments, two groups who often find themselves stretched to the max, financially speaking.  Secondly, the pressure to drive top salaries skyward just doesn't exist, at least not to the degree that it does for football coaches.  Not only is it more difficult to separate the great teachers from the good ones, but there is little to no financial incentive to do so.  Sure, everyone would like fantastic undergraduate instruction, but how much more would you be willing to pay over merely good instruction, or even adequate?  And that's only if you can reliably identify which teachers are the best.  The laws of supply and demand will always provide a place for excellent teachers, and provide them with adequate compensation, but unless our valuation of educators undergoes a radical realignment, we'll never find the wildly stratified salary distribution of football coaches within the academic realm.

Finally, I really want to clear up the common assumption (which the author relies on) that the value judgements we make have a direct correlation to the financial resources we put towards the things we value, especially between dissimilar goods and services.  I value heat and water more than I value cable television, and if I had to choose one to drop, cable would be gone in a heartbeat.  The fact that I pay more for cable than I do for water or for heat is irrelevant; I pay what I have to for the service I desire.  The same comparison holds between football coaches and university administrators; UC pays what it has to obtain quality talent for both positions, and the relative dollar amounts really don't say anything about what UC values more.  If financial constraints forced UC Berkeley to choose between a football program and a chemistry department, OF COURSE UC would cut football.  However, given that UC decides to have both (and strives for excellence in both fields), there is no relative value judgement between the two; recent investments in the football program have been done in the hope that football will NOT be a financial drain on the University for the foreseeable future.

Look, I want to be clear here:  I'm not saying that football coaches aren't overpaid, or that UC administration isn't a bloated waste of education resources, or that the next generation of UC students isn't being shafted because of financial constraints.  I'm not saying any of that.  What I AM saying is that to compare the salaries of these different classes of University employees directly, with no consideration of their differing functions or contexts, is both negligent and disingenuous.  It's one thing to pot-shot a (probably overpaid) administration from the position of tenured professor, but to actually be forced to understand all of the financial realities of administering a huge statewide University system is quite another.  Perhaps a thorough critique of the University's administration in these rough economic times is wanting, but "Legitimacy is in question when the president's salary exceeds non-profit status and the football coach's salary far exceeds the president's!" isn't it.

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