November 29, 2015
Steven Pearlstein has some useful ideas for limiting the rise in college costs, but he leaves an obvious item off the list. How about a hard cap on the pay of university presidents and other high level university employees?
The president of the United States gets $400,000 a year. That seems like a reasonable target. (This would be a hard cap, including all bonuses, deferred comp, etc. There is no reason to waste time with a cap that can be easily evaded.)
This would not be an interference with the market determination of pay. The deal would be that this cap would apply at public colleges and universities and also private schools that get tax-exempt status. If a school doesn’t want to get money from the government, either in direct payments or tax subsidies, it would be free to pay its top management whatever it wanted.
Of course schools would scream bloody murder since many now give their presidents compensation packages that are three or four times this amount. But, life is tough. Just as U.S. manufacturing workers have had to adjust to a world where they compete with workers in the developing world earning $1 an hour, or less, university presidents may have to adjust to a world in which taxpayers will not subsidize their pay without limit.
While some of the current crop of presidents may take their deferred compensation and walk, there are many talented and hardworking people who would gladly take a job that pays ten times what the median worker makes in a year. Besides, since we keep hearing cries from the Washington Post crowd about the need to tighten our belts, what could be a better place to start?
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