We all know that, in the midst of the Second Great Depression, it is the best of times for a few and the worst of times for everyone else.
That’s clear from all the macroeconomic indicators, as corporate profits, CEO salaries, and stock market prices rise but unemployment remains high, workers’ wages are stagnant, and a large percentage of the population is either poor or financially insecure.
But what might it look like at the microeconomic level, in terms of a single company—say, a college or university?
Consider the following hypothetical scenario: a university has achieved great prestige, as one of the Chronicle of Higher Education’s “Great Colleges to Work For” as well as a wealthy endowment (say, in the billions of dollars, and thus one of the nation’s top 15) and, of course, a distinguished faculty and successful athletic programs. That same hypothetical university decides to impose austerity measures, by placing staff members on hourly pay and converting them to 10-month (instead of 12-month) contracts. So, perhaps with 60 days notice, staff members will soon be receiving 83 percent of their previous salaries. On top of that, let’s say some members of the staff are successfully encouraged to retire, and they will not be replaced. So, the remaining staff (many of them, we might suppose, are women and sole breadwinners) will be required to do more work at lower pay.
On top of that, however, the administrators of this hypothetical university might try to justify the cuts by arguing that it will allow them to hire more “hot shot” professors and to increase financial aid to students. The administrators will share in the sacrifice, of course, by paying higher fees to park close to the buildings where they work. They are not, however, deciding to cut their own salaries or lower students’ tuition or slow the expansion of more lucrative parts of the university or to spend part of the endowment to avoid cuts in staffing and paychecks.
I know, the whole situation sounds extreme. It makes absolutely no sense. Presumably, as a result of those kinds of savage cuts and the outlandish arguments used to justify them, the dome of prestige of such a university would become tarnished.
However, that’s exactly what might happen to a hypothetical university during the best of times and the worst of times, when it tries to balance its budget on the backs of those least able to afford it.