There’s really no excuse for this kind of thing in the age of the internet, when you can look stuff up in five minutes that 20 years ago would have taken weeks to track down:
Sarah Maslin Nir’s extraordinary two-part exposé, in the Times, of the rotten pay and terrible working conditions in New York’s nail-salon industry is full of revelatory and shocking details. Who, for instance, would believe that, in 2015, there are businesses in the city running classified ads advertising that they pay a mere ten dollars per day? But one of the most surprising, and economically telling, facts in the piece is also among the most mundane: namely, that the price of a manicure hasn’t budged much, if at all, in the past two decades.
This wouldn’t be surprising if we were talking about, say, personal computers, or even automobiles. In those industries, businesses get consistently more productive over time, thanks to things like automation, better information technology, and incremental innovation. Such advances mean that workers in those industries can make a lot more stuff per hour than they could two decades ago. The number of hours it takes to build a car, for instance, has plummeted since the nineteen-seventies. This allows companies to pay workers more (and/or to increase their profits) without raising, and often while cutting, prices.
There are many industries, though, that don’t experience this dynamic. These include labor-intensive service businesses, like nail salons, in which it’s hard, if not impossible, for workers to become more productive over time. After all, it takes as long to cut hair, tailor a suit, or give a manicure today as it did twenty years ago.
The economic problem that companies in these industries typically face is that, in order to attract workers, you need to pay them roughly as much as they could earn doing other kinds of work. If you don’t, they will, in theory, take other, better-paying jobs. In effect, the rising wages of workers in industries where productivity is rising set a relative benchmark for workers in all industries. (That’s why the average tenured professor is paid considerably more today than he would have been twenty years ago, even though he isn’t any more productive.) So companies in the service sector have to raise wages, and the only way to do that while keeping profits steady is also to raise prices. This is what economists call “Baumol’s cost disease.” You can see it in many service businesses: look at the rising cost of education or health care, or even the price of a haircut, which has risen faster than inflation over the past thirty-five years.
This is James Surowiecki in the New Yorker, the magazine’s resident economics writer. He’s a big fan of citing Baumol’s cost disease, and indeed I hear this rationale all the time for why the cost of higher ed keeps skyrocketing, despite increasing rates of per student subsidization. You have to pay the faculty a lot more or they’ll go start a literary theory factory or something.
Except, on average, the people who do the teaching in American higher education are getting paid far lower salaries than they were several decades ago, back when cars were still built by teams of UAW workers instead of robots (BTW is it true that car companies actually pay production workers more, in real dollars, than they did in say the 1970s?).
Now I bet Surowiecki is at least vaguely aware of the adjunctification of academia, which is probably why he adds the qualifier “tenured.” But he’s still completely wrong. Let’s go to the tape: (All dollar figures are in 2013 dollars, which is the most recent year for which data are available)
Average salary in 1993 of all full-time faculty in American degree-granting post-secondary institutions:
That’s a 5.2% increase. How does that compare to the average American wage earner, who doesn’t have Baumol’s disease to help keep his or her wages up? Not too good, it turns out:
National average wage in 1993:
That’s a 20.4% increase.
Now things are a bit better if you belong to the exalted ranks of the tenured, although not by that much. Full professor salaries were 12.4% higher in 2013 than in 1993, and associate professors were making 7.7% more. But again, those increases are both quite a bit lower than those experienced by the average American wage earner (of course the “average” wage has been pulled up to some degree by huge increases in the wages of the one percenters, but still).
And again, average wages of the people who do the teaching in American colleges and universities — that is, the faculty — are lower in real terms than they were 20 years ago, because a much higher percentage of the faculty are part of the academic precariat.