Higher Education Strategy Associates

Author Archives: Alex Usher

January 11

Comparative Salary Data – Canada vs. U.S.

Yesterday, we looked at trends in Canadian faculty salary data. But how does our compensation stack up again the United States?

Here, I take 2009-10 U.S. salary data for professors at four-year institutions from the AAUP’s Report on the Status of the Academic Profession. For Canada, I use the same data as yesterday but add professors in medical fields. I do not adjust for currency since the dollar is roughly at par. The comparison looks like this:

Canada vs. U.S. Base Salaries, 2009-10

Of course, U.S. profs are paid on a nine-month basis while our pay is based on 12 months. To compensate, American professors can pay themselves an additional two months of salary out of their research grants – if they have them. So table 1 is only an apples-to-apples comparison of people who don’t hold external grants.

I haven’t been able to find good data on grant-holders at U.S. universities. Based on NRC data, my impression is that about 65% of professors at doctoral universities hold these. My best guess (take it with a grain of salt) is that the figure is probably about 25% at “master’s” universities and maybe 5% at “baccalaureate” universities. Multiplying that out implies that in total, 44.3% of profs get a boost of 22.2% (2/9) to their base salaries, which averaged out means we should bump the American salary figure by just under 10%, making the apples-to-apples (with salt) comparison more like this:

Average Salaries, Adjusting for U.S. Summer Research Income

That’s still a 28% gap overall, though only 15% at the top end (and it’s possible that I’m understating the latter gap because I spread the 10% research bump across all ranks). No matter – it’s big enough that you can’t argue Americans are better off because of lower tax rates.

Part of the difference is due to Canadian faculty being more senior: 74% of profs in Canada are “associate” or “full,” compared to 69% in the US. I suspect part of it is also that a greater proportion of our professors teach at doctoral-equivalent universities, where pay is better. But those don’t come close to explaining the full gap – one which would be substantially larger if we confined the analysis to public universities. Our pay is higher – full stop.

What about looking at increases over time? We can do that, too, but it’s worth keeping in mind that it’s not just pay that’s increased since 2001 – so, too, has the value of the Canadian dollar. A fair comparison requires an examination of changes in both domestic and foreign currencies.

Changes in Base Salary 2001-09

To say that our ability to compete with the US for academic talent has improved lately would be a bit of an understatement, no?

January 10

A Good Decade for Profs

I was browsing through some Statistics Canada data on university salaries the other day, and I rapidly came to the conclusion that there have been few decades in which it was better to be a prof than the last one. As the following table shows, over the years 2001 to 2009 (the years for which I could get good-quality data from Statscan for free – this email’s not paying a paying gig unfortunately), pay for full professors in non-medical disciplines across Canada rose at a rate very close to three times the rate of inflation, and about 85% faster than the average Canadian wage.

Change 2001 to 2009

There was some variation across institutions, of course. Generally speaking, pay increases were slightly higher at large institutions, and were definitely larger the further west one goes. But there was no university where the increase in salary was less than the increase in the national average wage. To put it another way, it’s a perfect Lake Wobegon situation, in that all professors are above-average.

Above-average, but not table-topping. Academics didn’t fare quite as well over the last decade as people from the “forestry, fishing, mining oil and gas category” – miners in particular have made out like bandits since about 2004. But they did fare substantially better than some other employment categories against which they might plausibly be measured: Finance/Real Estate (37%), Educational Services (27%) and especially Professional, Scientific & Technical (3%) (curious what STEM advocates have to say about that last one? Me too).

Increase in Average Nominal Earnings, by Occupation Sector, 2001 to 2009

(If you’re wondering how academics as a whole can be up 42% when every individual rank is up by more than that – it’s a composition issue. Proportionately, there are a lot more junior rank professors than there used to be, and that drags the average down.)

Now the obvious retort here is that by using the lens of a decade, I’m distorting the longer-term picture. To a considerable extent, the rapid rises of last decade were a reaction to the 1990s, when academic salaries rose by slightly less than inflation. That’s somewhat persuasive if you’re comparing academic salaries to inflation – less so to average wages, which also took a beating in the 1990s.

The cause of this? It’s not a drying up of supply – PhDs are being pumped out faster than ever. Nor, as we have seen, is it competition in the private sector – quite the opposite since professional/scientific wages were so weak. In fact, it’s really hard to avoid the conclusion that the cause is simply availability of government funding. The 90s were a decade of restraint and the 00s weren’t – and salaries changed accordingly.

January 09

You Couldn’t Make It Up

This email is G-rated, so I can’t use the full range of sexual/scatological imagery needed to describe my true feelings about the Ontario government’s Tuition Rebate announcement last week. I’ll keep it to: I told you so.

To recap, the Ontario Liberals made a not-particularly sensible election promise to give a 30% rebate tuition to full-time dependent students. But at least it involved giving some new money to low-income students, even if it came at the cost of providing a lot of money to families who clearly didn’t need it. And at least their proposal wasn’t as dumb as the CFS critique of it, which demanded (with the usual self-righteousness) that the government give less money to low-income students so that students from families making over $160,000/year not be excluded.

(Seriously: CFS’s definition of “progressive” policies includes ones with redistributive outcomes like the Bush tax cuts. Obviously, student views need to be heard, but let’s not pretend the CFS’s possess intellectual coherence).

Anyways, the Liberals got post-election religion on the deficit and someone, somewhere – the Premier’s office, maybe? – subsequently decided that the new grant had to be revenue-neutral. That meant the rebate went from being a good-news new money story to a money-shuffling what-the-hell? story.

The source of the $400 million needed to fund the rebates is still unclear. We know that some will come from the elimination of the Textbook Grant – hilarity alert: this was the Liberals’ signature PSE promise in the 2007 election – the Queen Elizabeth II Scholarship and the Ontario Student Trust Fund. We also know that some will come from displacement; students with relatively high need who get the new grant up front will get less OSOG at the end of the day (something the Liberals who spun this three months ago swore blind was never going to happen).

Now, those two sources don’t add up to nearly $400 million, so there’s some more cuts coming that we don’t know about. But based on what we do know:

– Students from high-income families who get this grant will be $800-$1,600 richer. Students from low-income families who are needy enough to receive OSOG will be no better off because of displacement.
– The Textbook Grant and the QEII were more narrowly targeted on income than the rebate – killing one to fund the other means, on aggregate, shifting money from poorer families to better-off ones.

Bottom line: cannibalizing existing programs to fund the Tuition Rebate means more money for upper-income families and less money for low-income ones. Oddly, the CFS is still unhappy, despite this being exactly what they asked for. Not just bad policy, then: bad policy presented so poorly your main critics don’t realize they got their wish.

Honestly, you couldn’t make it up.

January 06

Fun with Class Size Data

Yesterday, I promised to show you some of the data on our alternative measure of class size (see here for more details). Some preliminaries, though:

Our measure of “average number of classmates” may be a bit crude (it depends on student estimates of class sizes), but it is robust. Institutional averages bounce around by a few percent each year, but long-term averages – which at most institutions involve between two and four thousand observations – are pretty stable. To avoid complicating things, what I present here are six-year institutional means.

Obviously, class size is correlated with institutional size (i.e., smaller universities have smaller classes); but the data shows an enormous amount of variation around the mean. Take a look at the highest- and lowest-scoring U-15 schools: even among supposedly similar universities (research-intensive universities with medical schools), one can get vastly different average class sizes. Since they’re the same type of institution, these differences can’t be accounted for by different mixes of faculties – they must be straight-up reflections of differences in the way undergraduate education is managed.

Smallest and Largest Class Sizes Among U-15 Schools

Perhaps more intriguing are the results for the next tier of institutions – comprehensive institutions with substantial student populations but without medical schools. At the lower end, these schools have substantially smaller “average numbers of classmates,” but at the top end, at universities like Brock and Guelph, the numbers are indistinguishable from those at top research universities.

Smallest and Largest Class Sizes Among Comprehensive Schools

Finally, here’s smallest and largest class sizes among the smaller universities.

Smallest and Largest Class Sizes Among Small Undergraduate Schools

Notice how the institutions with the highest numbers on each of those graphs are from Ontario? That’s not a coincidence. Only three Ontario universities (Ryerson, Lakehead and Laurentian) have averages under 100; outside the province, only seven (Dalhousie, McGill, Manitoba, Calgary, Alberta, SFU and UBC) have averages over 100. Clearly, when you combine the lowest per-student funding in the country with the highest professors’ salaries in the country, something has to give somewhere: that something, apparently, is class size.

Small classes aren’t everything, of course; after all, Western manages to get stellar satisfaction ratings despite having some of the country’s largest classes. But this data does suggest that the Ontario student experience is significantly different than that in the rest of the country – and it’s not commensurate with the tuition they’re paying.

Interesting results, no? Anyone who wants to work with us on improving our methodology, let us know. We’re all ears.

January 05

Alternate Measures of Class Size

It may sound silly, but calculating and comparing average class sizes across institutions is very hard to do. Here’s why.

Back when institutions actually paid attention to Maclean’s, the class size questions were the easiest to “massage,” because there was no common definition of what constituted a class. Do course sections count? What about instrument practice classes in music faculties? Many universities gamed the system by including these for the purposes of calculating “average class size” but excluding them when it came to calculating “percentage of classes taught by tenured faculty.”

Playing with numerators and denominators was good for yuks, but not so good in terms of coming up with reliable comparators. Which, of course, was the point. Bluntly, any time you’re counting on institutions to give you accurate data for comparison and some institutions know they won’t come out well in such a comparison, the likelihood increases that said institutions will try to game the data. Way it goes.

But even if the input data were clean, the traditional measure of “average class size” – total student credit hours divided by the number of “classes” (however defined) – leaves much to be desired. Imagine a school with only two classes: one with five hundred students and the other with ten. The “average class size” of this institution using the traditional definition is 255. But this is a vast distortion of reality since 98% of students only experience a class of 500. Matching tiny classes with huge ones can bring the average way down without actually altering the experience of the vast majority of students. In short, the traditional way of measuring class-size can be skewed lower just by adding a few small classes – and it provides significant leeway for institutions to monkey with the data inputs.

But there is there an alternative. Instead of measuring “average class size” (credit hours divided by classes), why not measure “average number of classmates per class”? We’ve been doing it for six years now with the Globe and Mail: asking over 30,000 students each year about each of their classes and specifically asking them how many classmates they have. Using that measure, our fictional two-class university would have a score of 490, which I would argue is probably a better reflection of most students’ experience than the more traditional measure.

It’s a bit crude, to be sure, but the resulting institutional averages are pretty stable over time, which suggests it’s a robust measure. And, crucially, it’s a measure that can’t be gamed. As we’ll see tomorrow when we look at some of the data, the results shed some very interesting light on institutional priorities.

Till then.

January 04

A Harper-ized Canada Student Loans Program

I rarely say this about a Jane Taber article, but her Christmas Eve piece on Prime Minister Harper’s stewarding of federal-provincial relations was mildly fascinating. Her thesis is that Harper is gradually starting to impose his vision of water-tight federalism and has a long-term plan to get the federal government to back off and let provinces get on with doing whatever they are supposed to do under Article 92 of the Constitution.

So, what’s the impact on higher education? I doubt there’s reason to worry about the federal commitment to research – Harper’s attachment to the innovation agenda seems reasonably strong though it’s possible the budget review might have some nasty surprises for SSHRC. The government’s commitment to keeping 25% of the Canada Social Transfer notionally “reserved” for education is also probably safe (to the extent that matters in the slightest).

But student loans are another story altogether; it’s not outside the realm of possibility that these could see a major shake-up over the next four years. For starters, they are after all the ultimate fed-prov governance nightmare. Part-federal, part-provincial, each clutching their own portion of the program so tightly that integrated communications programs that students can actually understand remain a challenge even after 47 years in operation.

Then there’s the fact that there’s an enormous amount of equalization built into the program, which always seems to irk the Tories. Per capita, students out east are getting substantially more aid than students in Ontario and the west because of higher borrowing rates (since default rates are also higher, that aid also costs more).

What might a Harper-ized student aid system look like? It would be relatively easy to change the program into a system of block-transfers to provinces, and one could do so without doing violence to the principles of CSLP providing provinces agreed to three simple principles in return:

– a common need assessment system to ensure equal treatment for students across the country
– all student aid to be portable to ensure mobility
– visibility for the federal government’s contribution (OSAP to become COSAP, for instance)

In return for just those three commitments, Harper and co. could get out of the business of handling student loans and just cut big cheques to the provinces who in turn will use the money to create simpler, integrated programs that are easier to understand, that work for students and that align with local political priorities. And in a number of ways, the system would be better than the one we have now.

It probably won’t happen; Harper’s not aching for a largely symbolic fight about education and fiscal federalism. But don’t rule it out.

January 03

Our 2012 Forecast

Hello, all. We’re back up and running at HESA Towers, and we’re starting the year with a list of things to look for in 2012.

The #1 story of the year in Canadian higher education will almost certainly be labour unrest. The faculty strike that just ended at Brandon lasted a staggering 45 days while at McGill, the non-academic staff were on strike from September to early December. Unions appear to be getting bolshier while money is starting to become tighter – not exactly a recipe for campus harmony.

Budget season won’t be pretty. At the federal level, ministries have all been told to present options for cutting budgets by ten per cent (best evidence yet of the Harper machine’s media management excellence – the press hasn’t caught even a whiff of what’s on the way). Transfers are safe, but program spending probably isn’t; granting council money that doesn’t look like value for money is probably at some risk.

In the provinces, our best guess at the moment is that we will see significant funding increases in Newfoundland and Saskatchewan, real declines in Ontario and B.C., and status quo everywhere else. At least one and possibly two provincial governments will significantly revamp their student aid programs.

On the international stage, it will become clearer that higher education reform in India is a mirage, while in China, sky-high levels of institutional indebtedness plus continuing high rates of graduate unemployment will push the sector into major reform. In Europe, the repercussions of the financial crisis will be centre stage, and it will become clearer that the Bologna process has become more a discussion group than a reform process (albeit a pretty interesting one). In the spring, all eyes will be on the U.K. to see how the largest tuition hike in history affects application and enrolment figures.

Financial pressure on American institutions will ease slightly as state tax receipts rise, but student debt will occupy (so to speak) centre stage and likely play a prominent role in the presidential election. Unlike the rest of the world, the search for solutions to student debt in the U.S. lies squarely on getting institutions to be more cost-effective; expect echoes of that debate to waft north across the border.

Last but not least, there’s the ultra-important Human Capital Song Contest, which exactly NONE of you have chosen to enter so far. Either you were all really busy over the holidays or you are collectively lamer than a Malaysian student loan fight song (MP3). I prefer to believe it’s the former, so I’m leaving the contest open for a couple of more weeks.

Back to work!

December 16

Holiday Human Capital Lyrics Competition

We’re going to take a break from sending you Thoughts for a couple of weeks and will be back on January 3rd. But before doing this, I thought it only proper to send you on your Xmas way with some good, holiday thoughts about higher education.

One problem: I couldn’t do it. I drew a complete mental blank about how to tie those two concepts together.

Part of the problem was that I had a ridiculously wonderful song in my head. Not festive music – something better:  The Official Song of Malaysia’s National Higher Education Loan Fund Corporation (MP3), which is known in Malay as PTPTN, (Perbadanan Tabung Pendidikan Tinggi Nasional).

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Seriously, it’s catchy, in an Asian Musak kind of way.

You can check out the original Malay lyrics here, but I feel the Google Translate version (with a little help from me) is poetic enough:

A business of a target
Knowledge to Excel
Education Funding
Generating Human Capital

A noble and pure service
Which espouses the ambition
Of eliminating differences between races, religions and nations

Stand tall
Sound Savings
Integrity with a Human Soul
Mind the Personal Skills Block
Building Civil society
In the Era of Globalization

Is that fantastic, or what?

Anyways, before signing off for the break, I thought I would pose a challenge to all of our devoted readers:  Try your hand at writing a song about the Canada Student Loans Program (or a provincial equivalent), or a ditty about human capital.  Entries to be judged on artistic merit, humour, and the ability to include ludicrous economic or bureaucratic jargon in the body of the song.

Come January, I will publish the best entrants, and the winner gets to choose the topic of a One Thought to Start Your Day.

Happy Holidays, and see you in January.

December 15

Affordable Enough?

“Everybody knows” that student debt loads are spiralling out of control, that the incidence of debt is growing at an alarming rate and that debt loads are unsustainable. Student debt forgiveness has played a major role in the Occupy movement in the United States, where student debt doubled in the last decade and now exceeds credit card debt. If reports are to be believed, we are in the midst of a student loan crisis.

Scratch the surface a little and you’ll see that the situation in Canada is hardly like that in the U.S. According to the most recent data on student debt, which unfortunately dates from the Canadian University Survey Consortium’s 2009 Graduating Student Survey, debt increased at a relatively small pace between 2000 and 2009, from just under $25,000 in 2000 to just under $27,000 in 2009 – 9% after inflation. No small amount to be sure, but keep in mind that tuition grew at a faster pace, by 14%, according to Statistics Canada during the same time period. Moreover, the proportion of undergraduates reporting debt increased by a mere two percentage points, from 56% to 58%.

While, in fact, student grant and loan remission programs are holding the line on debt, there remain concerns about the long-term manageability of debt loads; we’ve never really had a strong measure of the impact of student debt on a graduate’s financial decisions.

How much debt can students reasonably afford to take on in pursuit of post-secondary education? In a neat little paper for the College Board, Carleton’s Saul Schwartz and Skidmore College’s Sandy Baum, who combined have studied the issue of student debt from every conceivable angle, attempt to define benchmarks for student debt affordability (the pair worked on a Canadian version reaching similar conclusions). They conclude that what really matters isn’t the debt load, per se, but the proportion of income a graduate must devote to student loan repayment. They argue for a sliding scale of repayment, ranging from no payments for those earning $10,000 or less to a maximum of 18% of discretionary income (i.e., that which exceeds 150% of the poverty line) for those earning $150,000. Sound familiar? That’s because it served as the rationale for the parameters of the Repayment Assistance Plan administered by the Canada Student Loans Program and its provincial counterparts, which caps maximum payments at 20% of income and allows students to discharge outstanding debt after 15 years of repayment.

Coming off of a decade where student aid programs kept debt increases below the rise in tuition, Canadian students who do struggle after graduation have access to comprehensive repayment assistance. And yet, access to higher education remains titled in favour of those from wealthy, highly educated backgrounds. Tweaking student aid or adjusting the net cost of higher education is unlikely to produce huge gains in access; it will take serious efforts to address the academic, informational, cultural, motivational and aspirational barriers to higher education. Unfortunately, that’s a lot to fit on a placard.

A longer version of this article is included in the recent edition of Educated Solutions, put out by the Ontario Undergraduate Student Alliance.

December 14

Can Universities Compete?

There’s a basic problem with trying to get universities to compete with one another: most of them are structurally incapable of following any coherent competitive strategy at all.

Michael Porter posited that there were basically three generic types of competitive strategies.  Those competing on a broad scale could compete on cost (e.g., WalMart), or they could compete on product differentiation that allows them to charge a premium (e.g., Apple, Mercedes-Benz).  A third option is to limit oneself to a particular niche and compete in a very small market (e.g., Porter Airlines, which only tries to serve a few destinations).

Universities have a hard time restricting themselves to niches, as breadth is one of the things that distinguishes universities as an institutional type. Competing on cost is also extremely difficult for them to do. That’s not just because of their well-known tendency to conflate quality and expenditures; it’s because low-cost (and hence low-margin) strategies tend to work through expanding production and becoming a high-volume producer. Needless to say, exorbitant physical infrastructure costs make this an unviable strategy for all physically-based universities (though distance and e-learning providers can obviously make it work).

That leaves only product differentiation as a viable strategy. But deep down, this idea scares everyone because higher education is an almost comically conservative and isomorphic industry; what Harvard and Stanford do, virtually everyone else wants to copy, to at least some degree. At the margins, there are some value-enhancing alternate delivery models, with Waterloo’s co-op model probably being the best (McMaster could have done it with problem-based learning, but was so conservative that it never fully capitalized on its medical school’s breakthrough). But even that’s too much for most; hence the rush to differentiate on meaningless points such as food quality.

So – no strategy, no differentiation, just individual universities all providing the same services with some different marketing attached and hoping people will think they’re a “brand.”  This kind of thing leads governments to believe that institutions are really undifferentiated and should be treated like utilities; institutions, meanwhile, think their “brand” status entitles them to think of themselves as luxury goods.

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