The Impact of the Financial Crisis on Faculty Labor Markets
The impact of the recent financial crisis--as well as prior cyclical downturns--on faculty hiring and wages is not well understood. An important first step is to document the basic short term relationship between budget cuts, employment levels and wages among different types of colleges and universities. The fiscal crisis brought a collision of contractions in budgets and increased student enrollment demand. As a result, faculty hiring in the junior ranks contracted sharply while student faculty ratios have increased commensurately. The magnitude and duration of these effects differs markedly across institutions. For private research universities that draw substantially on endowment income, the financial crisis produced a short--though significant--shock to revenues and, in turn, hiring. For public universities, the effects of the financial crisis are longer-lasting, with appropriations in many states continuing downward to 2012, and the impact on hiring longer lasting. The Great Recession has further widened differences between public and private universities in faculty staffing and, to some degree, salaries. As student faculty ratios have increased notably at public-sector institutions, it is natural to ask whether this decline in resources per student will adversely affect student attainment and research output in the coming years.