Page 50 - Crisis in Higher Education

24 • Crisis in Higher Education

study beyond an undergraduate degree, and in some disciplines it takes
10 years or more, plus there is no guarantee of a job. In some disciplines,
like business, there are shortages of PhD-qualified faculty, whereas in oth-
ers there are large surpluses. Physicians, who have similar educational
requirements, earn more than two to three times the amount of a public
university professor: $221,000 for primary care physicians and $396,000
for specialists. 25
A closer look at administrative salaries provides additional insights
about pay increase. From 2000 to 2010, the median salary for top admin-
istrators at public universities rose 39% with presidents’ salary increas-
ing by 75%, whereas full-time professors gained only 19%. At private
colleges and universities, top administrator salaries increased by 97%,
presidents by 171%, and full-time faculty by 50%. It is clear that faculty
salaries have lagged. 22,23 From this discussion, it is reasonable to ask the
question: What percent of an institution’s budget is faculty instructional
costs? It is common to pay about 30%–35% for instructional costs, with
the lion’s share of the remainder going for administration. This sup-
20
ports a claim that there is more to the high costs in higher education
than having tenured faculty.

1.8 MANY INSTITUTIONS OF HIGHER LEARNING ARE
UNWIELDY CONGLOMERATES
A conglomerate is a single entity that owns multiple businesses, which
serve entirely different markets. The parent company is often referred
to as a holding company. The theoretical advantage is that different
businesses should have different customers, streams of earnings, and
risks. When diverse businesses are combined, fluctuations in earning
should offset, so the holding company will have strong and steady earn-
ings, which should be rewarded with a high stock price. Conglomerates
became popular in the 1950s and 1960s, resulting in holding compa-
nies that might own the following subsidiaries: glass container maker,
forest ownership and papermaking, nursing home manager, real
estate marketer, and digital display developer. During the 1970s and
1980s, many conglomerates were dismantled because there were no
synergies among these diverse businesses, so cost rose and corporate