Financial Inequality in Higher Education: The Annual Report on the Economic Status of the Profession, 2006-07

By Thornton, Saranna | Academe, March/April 2007 | Go to article overview

Financial Inequality in Higher Education: The Annual Report on the Economic Status of the Profession, 2006-07


Thornton, Saranna, Academe


Inflation is down, and full-time faculty salaries are finally back up. These would seem to be encouraging signs for the economic status of higher education. Unfortunately, however, one good year cannot reverse discouraging trends that have been developing over decades.

Growing financial inequality in the United States has become a prominent public issue. In February 2007, President Bush publicly acknowledged the growing gap between rich and poor Americans and recommended that firms reconsider the size of the salaries they pay to chief executives.1 In a fall 2006 speech, Janet Yellen, president of the San Francisco Federal Reserve Bank, said that U.S. income inequality has risen to such a level that "there are signs that [it] is intensifying resistance to globalization, impairing social cohesion, and could, ultimately, undermine American democracy."2

Financial inequality is growing in U.S. higher education, too. In this report, we observe increasing differences between the endowments of rich and poor institutions, between the salaries of college and university presidents and their faculties, between the salaries of athletic coaches and professors, and between welland poorly compensated faculty members. This economic inequality has the potential to negatively affect higher education. We will address this potential in the context of this year's survey findings.

Average Salaries Up

In terms of the average salary for all full-time faculty members, 2006-07 was the best year since 2001-02.3 Overall faculty salaries climbed 3.8 percent compared with the previous year. The inflation rate, as measured by the Consumer Price Index, was 2.5 percent between December 2005 and December 2006, lower than it had been the previous two years. Adjusted for inflation, then, the average salary rose by 1.3 percent, the first "real" increase in salaries since 2003-04.

Table A provides an overview of this year's findings, as well as a long-term review of the changes from year to year over the past three decades. The upper half of the table shows the change in both nominal (actual) and inflation-adjusted (real) salaries by rank from one year to the next when all ranked faculty members at all institutions are considered. Among all faculty, the average salaries of full professors rose more than the pay of faculty in other ranks, but all ranks saw real increases of more than 1 percent.

The lower half of the table presents figures for faculty members who remained in full-time positions at the same institutions where they taught the previous year ("continuing" faculty). Increases this year were highest for associate and assistant professors. Because the figures for continuing faculty include raises arising from promotions and other factors, these ranks usually see the steepest increases. Unlike salary increases for all faculty, those for continuing faculty have exceeded the rate of inflation for more than two decades.

A Closer Look

American higher education is characterized by tremendous institutional diversity. The tables and appendices in this report portray some of that diversity by presenting results from multiple institutional categories. Colleges and universities are described in two ways: by category, which refers to the highest degree offered, and by affiliation, which groups institutions according to whether they are public, private-independent (non-church-related), or religiously affiliated. Survey report table 1 presents the percentage change in average salaries among full-time faculty from 2005-06 to 2006-07 for institutions that reported data in both years.

In terms of the change in average salaries, shown on the left-hand side of the table, increases were highest this year at doctoral universities (category I) and associate-degree colleges (categories III and IV). A more significant finding, however, appears in the columns representing institutional affiliation. For the first time in several years, average salaries increased more at public colleges and universities than they did at private-independent or church-related institutions. …

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