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Envying the Salaries of Economics Professors

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By Jennifer Jacobson

Economics departments may be jealous of business schools for the higher salaries they can offer to faculty members, but within arts-and-sciences colleges, the earnings envy is directed at economics departments.

Assistant professors in the humanities typically earn anywhere from $40,000 to $50,000 in their first year on the job, but the going rate for a new assistant professor of economics is a minimum of $65,000. That pay disparity -- which exists even at some of the poorest institutions -- has created tension within colleges of arts and sciences, and prompted at least one dean to call economics professors a "cartel."

This dean of arts and sciences at a public research university, who spoke to Career Network on condition of anonymity, says he has been visited on more than one occasion by the head of the economics department who delivers the same message: If the university doesn't pay his faculty members more, they'll leave for jobs in business schools. "The threat hasn't always been quite that explicit, but there's no question that chairs of economics departments understand market forces better than other chairs," he says. "That's their business."

The demand for computer-science professors is just as high as for those in economics, the dean says, "but I don't have chairs of computer science saying if I don't do something for this cohort of computer-science professors they'll all go to Silicon Valley," the dean says. "They may argue on behalf of individuals, as all chairs do, but not in this class-action way."

This year, for example, the head of the economics department came to the dean and said that five associate professors of economics were severely underpaid: "The chair basically said, 'We're hiring people at the entry level, and these associate professors are either below or only a few thousand above it. Therefore you need to do something for these people or they'll leave.'" Even though the recession has frozen most faculty salaries on the campus, the dean says he ended up giving the five a "symbolic" increase of a few thousand dollars each.

Like other arts-and-sciences deans, this dean says, he sometimes wonders whether economics professors from around the country get together in some "smoke-filled room" to set the entry-level salary for a new assistant professor in the field. "I don't have the foggiest idea if it's true," he says. "But I do know that with economists, there's no negotiating room."

Robert E. Lucas Jr., president of the American Economics Association and a professor of economics at the University of Chicago, says department heads do meet at the association's annual meeting in January to compare salaries -- but not to set them. The purpose, Mr. Lucas says, is so that when economics chairmen tell their deans that they want to offer an assistant professor $80,000 and the dean says "that sounds high," the chairman can say "No, it's not. At the economics meeting, other chairs were offering $85,000."

Mr. Lucas sees no collusion and no smoke-filled room. Chairs in every discipline tell their deans that if they don't give a professor in their department a raise, that they'll lose that person. "Every field does this," he says. "People are moving all around in history and English."

He rejects the idea that economics professors threaten to go to business schools with no intention of doing so, just to secure a raise. The gossip is "so good" on "who's trying to hire whom" that that doesn't happen, he says. "We just lost a young assistant professor in our department to the finance department at Northwestern," Mr. Lucas says. "We knew about that offer before she did. There's a lot of talk. There's no question of bluffing. It'd be ridiculous. You'd be caught right away."

All of the tension raised by the salary differential in arts and sciences comes down to one thing: "There's no doubt we get paid more and people resent it," Mr. Lucas says.

Not all deans of arts and sciences have had to face economics professors demanding raises en masse, but many do bemoan the high salaries they have to pay to hire them in the first place. "We did lose two very good candidates this year for an assistant-professor position," says Elise B. Jorgens, dean of arts and sciences at Western Michigan University. The two dropped out of the search to take positions in the private sector where the salaries were double the roughly $60,000 that the university could offer.

Assistant professors of economics coming out of graduate school today, Ms. Jorgens says, expect to make $70,000 to $80,000 at many institutions. But she can't offer them that much, she says, "which makes it very difficult to recruit the best people."

Is the solution for deans of arts and sciences to band together and refuse to raise the salaries of economics professors? Not even the dean who requested anonymity would go that far: "We're all in competition for the best faculty. I'd love to raid the best economists or chemists from somewhere else, and we all do. That's one of our strategies for enhancing the quality of our institutions. It's counterintuitive on our part to act as a united front against economists who appear to have created a united front."