• July 24, 2014

College Administrations Are Too Bloated? Compared With What?

In today's tough economy, more people are questioning why colleges cost so much. Many blame administrative bloat and inefficiency. Over the past 20 years, as enrollment has grown by 40 percent, the number of support-staff members on campuses has doubled, according to a report from the Center for College Affordability and Productivity.

But we must place higher education in context. It's important to recognize that growth in support staff compared with enrollment reflects a set of natural responses to shocks that are broadly affecting many other industries as well.

As defined in the center's report, "support staff" comprises many job categories. Two of the important ones are computer specialists and workers in business and financial operations. Both types of employees occupy an increasingly important role in colleges and in the economy as a whole. They also represent highly educated workers.

Colleges employed fewer than 13,000 computer specialists in 1970. By 2008 the number had soared to more than 111,000. A similar trend holds for workers in business and financial operations. At the same time, however, those two job categories have followed the same upward path throughout the nation as a whole.

We can also look at the history of two important employment categories that represent an important slice of the clerical work force but are not considered support staff: typists and secretaries. In 1970 colleges employed close to 50,000 typists, but by 2008 that category had all but disappeared. Similarly, in the national data, typists numbered almost one million in 1970, but today they number just over 128,000. Meanwhile secretarial employment at colleges has risen in absolute numbers but has fallen substantially as a fraction of employment. Again, the same is true at the national level.

Such evidence leads us to the conclusion that larger forces, transcending the boundaries of any particular industry, are at work, and that all organizations are responding, whether large or small, for-profit or nonprofit. To take the example we just noted, the army of typists that used to labor to process professors' papers and exams is now gone. They technically were "clerical workers" instead of college-educated "support staff." Those clerical workers have been largely replaced by a smaller number of IT support personnel (the computer specialists whose numbers are rising) and a lot of new capital equipment on the desks of the professors. Even secretaries, whose job descriptions tend to be higher-tech than in the past, are declining rapidly as a share of higher-education employment.

Technological change has made clerical workers scarcer in organizations throughout the economy while increasing the use of highly educated support-staff members in their place. In part, that reflects a longstanding global trend toward more intensive use of educated professional and technical workers. Professional and technical workers accounted for less than 14 percent of the nation's total labor force in 1970, but almost 25 percent in 2008.

Like most organizations, colleges are responding to the cost-reducing potential of new technologies. Yet because overall cost is not falling in higher education, the added support staff seems suspect. But what would the cost have been had colleges continued to hire as though the computer revolution had not occurred? The dollar costs might or might not have been lower, but there would have been hidden costs, such as not producing the kind of students that society needs. Comparing the dollar costs with the number of students enrolled is an inappropriate way to gauge efficiency and productivity. Employers often require students to be familiar with increasingly expensive technologies and processes, so the "product" that colleges produce would be of lesser quality if those students graduated without the technical knowledge and skills they needed.

The addition of IT personnel aren't the only reason that college support staffs are growing. Accountants and other financial types, or business and financial-operations employees, make up another area of support-staff growth in higher education. The commentary in the center's report suggested one reason that might be happening: an "onerous regulatory environment has been established," in which "colleges need to employ a staff that is responsible for providing the multiple state and federal agencies with compliance reports and data." Once more, higher education is certainly not unique in the growth of the number of such employees. In addition, all colleges, particularly state-supported institutions, have been forced to rely increasingly on private fund raising—which also requires more staff members.

Colleges also have more people working in career services, student support and counseling, and health care, to name a few other staff areas. Those workers aren't producing more college graduates, so the ground is laid for more charges of unproductive waste. But that reflects how researchers choose to measure output or productivity more than it does any objective measure of inefficiency.

Much like the output of any firm, the services that colleges offer embody many attributes. In addition to basic classroom education, colleges offer students a range of extracurricular activities, athletics opportunities, and ways to do independent research. They also provide meal plans and lodging choices. Dining and housing can be spartan or luxurious. Health care and counseling can be bare-bones or extensive. When demand for some of those attributes rises, we would expect rational institutions to respond. In a sense, that is no different from a restaurant that chooses to use higher-quality or more-natural ingredients. Its output of meals served may remain unchanged, yet we would be reluctant to call the addition of higher-cost organic produce a complete waste.

Real income per capita in the United States has almost tripled since 1960. If the demand for certain attributes of personal services rises when income rises, then we should not be surprised that more resources are devoted to those things, and we should be somewhat circumspect about labeling the expenditure as unproductive. On college campuses, that argument applies to expenditures on a wide range of things, including dormitories and food plans—whose real costs have not risen nearly as rapidly as educational costs have—and career services and counseling.

The key point is that a lack of a comparison group is common in much industry-specific research, and higher education is no different. Focusing exclusively on what is going on inside an industry is often a mistake. Sensible policy analysis often requires a researcher to stand back for a broader view.

Rapid cost increases, like those seen in higher education, can be found in many other industries. For example, if you examine the inflation-corrected price of dentists' services from 1947 to 2006, you will find that it overlaps almost completely with the inflation-corrected price of higher education. Whenever the cost of dental care moves rapidly upward or flattens out, so do college costs. Over the whole 60 years, the cost of getting your teeth worked on has risen by the same percentage as the cost of a year in college has. The striking similarity of the two price series could be just a coincidence. Alternatively, they may have been subjected to the same economywide forces—most notably changes in productivity growth and changes in the wages of highly educated workers. And because the two industries share important characteristics, they may have reacted in similar ways. Higher education is a personal service that uses an extremely highly educated labor force relative to the national average. The same can be said of dentists' offices.

All industries have to react to the economic environment in which they operate, and any finding about higher education—or about any other particular industry, for that matter—needs to be checked carefully against behavior elsewhere in the economy. If the finding is shared across industries, that fact should influence how we think about what's actually going on and should be built into our policy recommendations.

Robert B. Archibald and David H. Feldman, economics professors at the College of William and Mary, are completing a book manuscript about why college costs so much.

Comments

1. pine1263 - August 10, 2009 at 07:23 am

Jeff, This is a more thoughtful piece than the one to which we both reacted the other day. It points out that a college today has to have a huge technological infrastructure if it is to recruit the best faculty, whose reputation and publications help to recruit the best student. (High school seniors, I well know, are incredibly choosy today, albeit somewhat naive about what they are observing.) Anyway, I suspect that the star science faculty at Augsbug, that cesspool of iniquity, wouldn't have come there had there not been electron microscopes, live animal experimentation with all those costs, etc, etc. We need to chew on this topic together, perhaps up here when we can medicate Dick so that he will let us talk -:) On another topic, you mentioned back when we were searching for a date for the Deer Lake Seminars that you were hoping to go spend your ill-gotten gains in ?France?Italy? When are you going and where? I have Mafiosa friends in both countries who will look after you. Dave

2. jhough1 - August 10, 2009 at 07:34 am

The general point of this article seems correct, but it misses the forest. The policy of the Clinton and Bush Administrations artificially inflated consumption through asset bubbles, trade deficits with a Leninist like inflation of US consumption at expense of Asian exporters, credit bubbles, and budgetary deficits. (Even Clinton's surplus was the unexpected result of the NASDAQ capital gains.) The added consumption went to what is called the middle class: those with a family income of over $100,000 (the top 25% of the population) or the rich by any reasonable definition). Academia was one of the sectors that benefitted from this unsustainably high growth of the income of those towards the top. We now are in what is likely to be a very painful decade-long readjustment in which Asia begins to consume its own production, and tax changes must benefit the middle income (those around $60,000). Academia has painful adjustments and they may be painful indeed.

3. bstevens - August 10, 2009 at 09:33 am

Thank you for a rational analysis. I didn't notice any mention of reduced state funding for public universities. Over the last several years, the amount of state support has become a smaller and smaller portion of the universities' budgets, meaning that at least some of that difference had to be made up in higher tuition rates. This doesn't relate directly to "bloating," although the tightening of belts has certainly made the institutions much more circumspect about adding any personnel, but it does answer for much of the tuition increases.

4. dhfeld - August 10, 2009 at 10:03 am

To the Readers, from Robert Archibald and David Feldman: In preparing this article, we created a data table with information about employment in specific support staff and clerical staff roles for the higher education industry and for the economy as a whole. Our data captures change over the years 1970-2008. In addition to the categories mentioned in the article, our data table also includes information for Life, Physical, and Social Scientists. These are the non-teaching research staff that contribute to cost, but who do not contribute substantially to pushing increasing numbers of students out the door. Lastly, we have prepared a diagram comparing the time path of higher education costs to the cost of dental care between 1947 and 2006. We are happy to share the table and the diagram with interested readers. You can contact Robert Archibald at rbarch@wm.edu or David Feldman at dhfeld@wm.edu.

5. 22218539 - August 10, 2009 at 10:18 am

The author's note that "All industries have to react to the economic environment in which they operate..." When will higher education react, as many other industries are, by reducing faculty wages, increasing production (above Monday to Thursday, thirty weeks per year), phasing out pensions, and eliminating non-performing tenured faculty? (P.S. Surely you must have found one other favorable comparision beyond "dental care?")

6. johnblee - August 10, 2009 at 10:19 am

Did the authors take a look the possibility that colleges are taking on more missions? As public support becomes more unpredictable, colleges may be increasing support for fundraising, contract training, on-line education or patent development. All of these would take more staff to support and, hopefully, result in more revenue.

7. donaldburns - August 10, 2009 at 10:40 am

You compared collge costs to the cost of dental services. They possess another characteristic that you did not mention. The consumers in both instances are separated from the direct cost by outside entities. In the case of dentistry the separation is created by insurance and in education the separation is ceated by financial aid. This separation has allowed increased pricing with limited direct impact on the consumer. Don B

8. smcdonald999 - August 10, 2009 at 11:19 am

Dental services? please! Those organizations are not subsidized by the tax payer, have little opportunity for leverage, and compete on a for-profit basis. Why are so many scholars seem so obsessed with defending the status quo of their profession? The number of articles defending the current-state model seems to outnumber those calling for change by 10 to 1. Without a meaningful feedback loop to identify better, faster, and cheaper, they seem to resort to finding other "just as bad" industries, or using purely subjective measurements like the starting salaries of their graduates. Is that really the way we want to optimize a multi-billin dollar industry with the responsbility to help educate our work force and build effective leaders? No bother though...creative destruction is on the way. Technology has spawned a new group of competitors with a passion for change, such as for-profit universities, third-party content providers, and a handful of universties committed to a new model, e.g. MIT. As soon as one or more of these institutions establish a program with Ivy League prestige, the game is over. At that moment, a tipping point will occur as the public's perception regarding the value of higher education will migrate away from traditional lecture-hall learning towards more productive and personalized education techniques: techniques that levarege the power of the digital technology to deliver more integrated, accessible, and relevant material at a fraction of the cost.

9. jesor - August 10, 2009 at 11:22 am

While outside of the scope of the data comparison you relied upon, it would be interesting to see whether or not there has been a diminishment of the faculty role in advising and mentoring students (in favor of research and publication) which would necessitate more student support staff. Additionally, it would be interesting to look at admissions trends over time since my sense is that in the effort to make college more accessible, higher education has started more actively serving a population of students who require more assistance (and have been less academically successful in the past) due to both psychological and physical challenges.

10. intered - August 10, 2009 at 11:57 am

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11. intered - August 10, 2009 at 12:46 pm

I hope that the author's analyses include comparisons across the full spectrum of the economy and not only cases where, like higher education, there are, at best, ineffective components of a market. (We are now seeing the emergence of a true market in some sectors of higher education.) I hope that the authors have examined and attributed causes to the steady 50-year decline in professorial productivity. The facts are relatively easy to extract from payroll, credit award, and graduation data. Surely, they will report on the fact that 5% of the nation's colleges and universities have accounting systems or assessment metrics that permit them to make rational decisions related to program, personnel, and market development and management. Will they point out that external economic incentives offered to aid students are invariably snapped up by insatiable increases in tuition and fees, many of which they attempt to hide from the student? I hope so. Absent an inspection of these and at least a half-dozen other well-documented forms of inefficiency and gluttony in higher education, we may be looking at a self-serving paean to the profession. We have conducted such analyses every year since 1986, in boom and recession. With few exceptions, higher education joins health care as a system badly in need of reform. Robert W Tucker, President, InterEd, Inc.

12. jwgilley - August 10, 2009 at 02:56 pm

I think this just goes to show the Americans are living in a bloated if not obese economic paradigm. As real jobs disappeared to Mexico, India and China among other places and we spent the equity accumulated over the last half of the 20th Century we made up jobs to keep people at "work." We no longer make those things people around the world need or in most cases want so we have created a service economy while we spend from our national "home equity loans." It is difficult for me to determine how we can sustain an economy focused on taking in each other's laundry or a heavily focused "service economy" and survive in the long term. Great economies in history peaked and eventually floundered by a dominating military etc and importing cheap goods and cheap labor. Rome controlled its world and brought goods and services to Rome at a low cost and that included slave labor. We buy basketball shoes for our kids from China for one fourth of what it would cost us to manufacture them. At some point we lose our purchasing power to that Asian making a dollar a day to make cheap but nice recreational shoes for us. Rome collapsed in part because a society characterized by slave labor, a significant wealthly upper class enjoying the "good times" and a non productive middle class kept docile by "bread and games." Whether one is talking about Rome, England, Egypt centuries ago or America today that is not a sustainable and growable economy and will eventually crash. Such societies are sustained at the end in part by distracting wars here, there and everywhere but that kept them propped up only so loong. The pattern seems to familiar. And of course, institutions of higher educatiion are bloated as we make jobs for others so administrators have help in making morning coffee and planning for trips and meetings. Faculty are kept happy by hiring part time oppressed adjunct or graduate students to teach what they once taught. 40 years ago the typical faculty member in a land grant university taught 12 to 15 hours per semester. NOw that is down to 3-6 hours a week teaching with little productive research by most faculty. Our student now borrow from China and the middle east to finance this opulent structure but that cannot last. So like our society in physical nature our economy is also taking on an obese character and someone soon will have to pay the piper.

13. meyergd - August 10, 2009 at 04:04 pm

Robert Tucker reminds me that adademics and administrators do not analyze cost/benefit calculations. Any top consulting firm (e.g. McKinsey, Booz-Allen, Management Consulting Group, PLC)could find at least 1/3 inefficiency (waste)in the operations of any American university. This inefficiency is tied to costs associated with stated goals. In addition to savings of at least 33 per cent in the administrative functions, one decision would save at least that amount on the academic functions. That magical decision: require each tenured or tenure-track faculty member to teach one additional undergraduate course per semester. What are the chances that either of the suggestions above will ever be considered? Zero, and we all know why. University administration and teaching are cozy careers in which the inner-sanctum is made cleverly untouchable. This will be true unless long-term population ecology replaces the university form permanently. It will happen but not in my lifetime to be sure. gdm

14. marvchron - August 10, 2009 at 04:13 pm

It does need to be mentioned that the increase in support and administrative staff has occurred while the alleged most important function of the institution, teaching, has been increasingly farmed out to an underpaid minority referred to as adjuncts. Full-time teachers are becoming a rarity in higher education, while increasing teaching staff needs are filled by adjuncts. Nowhere has this change become more pronounced than at the community colleges, many of which have more full-time support staff than full-time teaching staff. It should also be noted that personnel offices (euphemistically labeled as Human Resource Office) have increased in size due to the need to comply with the large amount of legislation in the personnel area. These are for the most part offices that fill out forms and submit compliance reports as opposed to any useful function that actually improves educational delivery.

15. 22213708 - August 10, 2009 at 04:54 pm

Dental Service analog: When the dentist calls me up to cancel an appointment, I sigh with relief. When I have to cancel a class, my students sigh with relief. Go figure.

16. 22213708 - August 10, 2009 at 05:03 pm

"When will higher education react..." Hmmm. Higher ed has already reacted: http://www.ignou.ac.in US Higher ed hasn't, but the non-western have.

17. fizmath - August 10, 2009 at 05:19 pm

The comparison to dentistry costs is laughable since most Americans think the healthcare industry is ripping us off. Dentists, like physicians, control the number of people who can enter their profession. They also get paid a little too much for the work that they do. You can't have college costs exceed the inflation rate indefinitely. You will reach a breaking point where it becomes unaffordable. We are already at that point and I am certain that expensive colleges are getting less applicants because of it. I notice no mention of the growth of bloated administration. What do they do? Attend meetings and write reports? Are the students better off than 50 years ago because of our larger administration staff? I also see no mention of reduced teaching loads in exchange for more research. Should parents and students endure debt slavery to enhance a school's reputation?

18. giana711 - August 10, 2009 at 05:59 pm

Higher Ed has become baby sitting for adults.

19. rhughes43 - August 10, 2009 at 11:00 pm

The authors conclude that higher education is an "industry" and behaves like other industries. Because they are economists, they attempt to defend the "industry" from practices that other industries employ. It's the only model they know, after all. But the criticism directed at the rising bureaucratization of higher education -- and other alleged "public good" like health care and public education -- rests on the prior assumption that higher education ought not to behave alike another "industry." This is, in essence, a moral, not an economic argument. But it matters little. We are all commodities now, and destined in time to function as machines in a purely transactional system of use values. Faculty are labor, students are consumers, etc. If there's a counter argument that has empirical weight, I've yet to hear it.

20. recoveringmba - August 10, 2009 at 11:24 pm

Higher education suffers from cost disease (also known as the Baumol effect). Cost disease affects industries that do not have increasing labor productivity. The products of such industries will become relatively more expensive compared to the products of industries that do enjoy increasing labor productivity. Orchestra tickets have become increasingly expensive for the same reason as a university education has. In addition to cost disease, other factors, such as the costs of regulation, increased demand created by financial aid, and competition among universities based on amenities, also tend to drive up prices. As the relative price of a university education continues to rise, only the well-off and very gifted will have access to it. As we are already seeing, lower cost, more flexible, scalable and productive educational models, based on advances in information technology will be how higher education is eventually delivered to most people. The world will not come to an end, and it might even be an improvement for many people.

21. donkulasiri - August 11, 2009 at 06:59 am

I think American universities are definitely bloated with a top heavy administrative structures, massive support structures and staff, and a hugh number of faculty at senior ranks with highly specialized and narrowly focussed "disciplines".

22. stinkcat - August 11, 2009 at 12:20 pm

"rests on the prior assumption that higher education ought not to behave alike another "industry." This is, in essence, a moral, not an economic argument." As an economist, I have no problem with the idea that higher education ought to behave differently than a for profit industry. However, the evidence would suggest that we academics act little different than people in the for profit world. I have yet to meet an academic that was out for anything other than his or her own self interest. So if we are going to act like self interested individuals, it makes little sense not to treat us as such when building a model.

23. phikaw - August 11, 2009 at 11:06 pm

I'm a senior full-time faculty member at a private university without substantial endowment or public aid. My teaching load -- all undergraduates -- is labor intensive. No doubt I could teach more courses than the three per term that I do and/or teach more students per term than I do (typically 80-100), but how would that improve the education of students? It's very interesting how higher education has become a target for bitter complaints about expense. I don't hear about too many people complaining about the high cost of their gas guzzling SUVs or any other "non-service" item. Why is higher education such a target of public ire?

24. judsoneld - August 12, 2009 at 11:38 am

Bravo recoveringmba. Succinct, focused, no finger pointing and no sign of doomsday thinking.

25. tosburn - August 12, 2009 at 04:46 pm

Excellent commentary, and thanks for noting ".....we should be somewhat circumspect about labeling the expenditure as unproductive" relative to things such as residence halls and food plans. These operations, on practically all public campuses and likely on most private ones, must operate in the black and, in most cases, are not eligible for subsidies from state-appropriations, tuition revenues, and the like. Many campuses rely on these kinds of auxiliary enterprises to actually supplement the academic enterprise and physical plant operations, not the other way around. You will not see trimming or reductions in these areas in tight budget times; you will see them expand and grow as institutions seek more sources of revenue to recoup losses in state appropriations. I would like to have seen some comment on the impact of unfunded regulatory mandates from state and federal authorities that have contributed to the escalation in higher education expenditures and in the number of non-academic personnel and expenses on campuses. The FEDERAL reporting requirements alone now associated with things such as campus crime statistics, fire safety, emergency notifications, and the like have exploded in the last fifteen years or so. These kinds of things wind up requiring additional personnel, and have a way to morphing into full-time jobs with dedicated departmental units and budgets after a while. When government regulations grow, so do costs associated with complying with them. And that does not even consider the impact of unfunded mandates from athletic regulators, accrediting bodies, and other entities to which higher education is increasingly obligated. Surely reform in this arena is an appropriate part of the dialogue.

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