Should Taxpayers Subsidize the Pay of College Presidents?

August 24, 2014

Colman McCarthy has a piece discussing the low pay received by many adjunct professors across the country. He argues that they should make a living wage and then suggests that a way to pay for this would be to cut the high salaries for university presidents and other top administrators, which can cross $1 million a year.

It is worth noting that universities, both public and private, operate with large taxpayer subsidies. In the case of private universities, most enjoy tax-exempt status. As a result, they are exempt from many state and local taxes, but most importantly, individuals can deduct their contributions from their income tax. For wealthy contributors, this means that the taxpayers are effectively picking up 40 percent of the cost of their contributions.

If the public felt it was more important that adjuncts made $40,000 a year than university presidents made $1,000,000 a year, there could be a limit on compensation levels that would allow an institution to receive tax-exempt status. For example, if the cap for total compensation was set at $400,000, university presidents would still be able to earn twice as much as cabinet officers

Of course universities would complain about such a restriction as government interference, but this is nonsense. They are free to pay their staff absolutely as much as they like, the restriction only applies if they want a government subsidy. (It’s sort of like restrictions the government imposes on people who get TANF.)

The universities will also complain that they cannot get qualified people for $400,000 a year. This one should invite a healthy dose of ridicule. If we can get qualified people to run the Defense Department and Department of Health and Human Services for half this amount, perhaps their school is not the sort of institution that deserves taxpayer support if it can’t find anyone willing to make the sacrifice of running the place for twice the pay of a cabinet secretary. 

Free market economics is so much fun!

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