Page 110 - Crisis in Higher Education

82 • Crisis in Higher Education

• Problem 5. Completion time increases: As productivity declines and
cost increases, completion time increases.
• Problem 6. Job placement decreases: With fewer resources because of
declining productivity, it is more difficult to work with organizations
that hire graduates.

4.7 HOW RAPIDLY GROWING COSTS FOR
BOOKS AND SUPPLIES (ROOT CAUSE 5)
AFFECT THE UNDERLYING PROBLEMS

In the 1960s, a reasonable estimate for books and supplies for one year
20
of full-time study was about $120 with textbooks being about $100. The
21
estimate for books and supplies today is more than 10 times that amount.
These data seem to conflict with textbook inflation data, which are pre-
sented in Chapter 2 and indicate that the cost of textbooks has increased
from about $10 per book in the 1960s to $200 per book today and even
more in some cases. How can the cost of books and supplies increase by
a factor of 10, while the costs of individual books increased by a factor of
20? The answer seems to be free markets and technology.
In the 1960s, most bookstores were owned and operated by universi-
ties, and many universities did not release their book lists so other book-
stores were unable to acquire and sell textbooks. University bookstores
had a monopoly. The Internet and online shopping were decades away.
Textbook prices were high for three reasons. University bookstores were
not efficient because universities had no special expertise at managing
bookstore and no competitors to keep costs in line. Second, university
bookstores had three periods when they had nearly all of the sales—a
few days around the beginning of Fall, Spring, and Summer semesters,
although summer had much lower sales. University bookstores had high
fixed costs for infrastructure and managers that were fully used only a
few weeks each year. To put it in the vernacular of economics, they had
no economies of scale—no way to spread their fixed costs over larger sales
volume. Third, university bookstores, for reasons that are unclear, chose
to sell new books and did not participate heavily in the used book market.
For a variety of reasons, including lack of expertise, no economies of scale,
pressure from various interest groups for lower costs, and a desire for one
less problem to deal with, universities began to outsource their bookstore