Talking About Tenure

12 08 2010

Have a look at this very interesting and thoughtful article about tenure.  Christopher Beam is against the North American tenure system, but the article isn’t egghead-bashing by any means. In fact, he sympathizes with professors and recognizes that it can hurt all parties: universities, students, and academics. This is very different from the standard right-wing “talk radio” critique of tenure.

Key passages:

the clincher for the anti-tenure argument may come from the very people it is supposed to benefit: academics. Specifically, young academics. Consider the career path of an aspiring full-time tenured professor…  by the time you come up for tenure, you’re 40. For men, the timeline is inconvenient. But for women who want to have children, it’s just about unworkable… Princeton President Shirley Tilghman once called the tenure system “no friend to women”

Sounds pretty plausible to me. The tenure system can be terrible to women.

Defenders say that tenure helps attract the best and brightest. Universities can’t match the salary offered by a pharmaceutical company or an investment bank, the thinking goes, but they can offer job security. Yet the appeal of job security may be overrated. Tenure may be an added incentive, but it’s almost never a deal maker.

Last month, Atlantic Magazine blogger Megan McArdle has sparked a lively online debate about the future of tenure. I suspect that this debate inspired the Christopher Beam article cited above.

McArdle is totally opposed to tenure for academics. I don`t agree with everything she said in that article, but she has a great command of the language. I particularly liked this sentence, where she was dissecting the old argument that tenure protects freedom of political speech:

The current tenure system only protects revolutionary, dangerous ideas to the extent that they spring full blown from an academic’s head after he has secured tenure, startling the hell out of everyone who hired him.

In a follow-up to her original post, Megan wrote:

One of the interesting response I’ve seen from a lot of people is that tenure is a non-pecuniary reward that enables us to keep the cost of teaching lower.  That’s one way to think about it.  But I think of it not in terms of annual salary, but as an accounting cost.  And in accounting terms, hiring someone on a five year contract at $80,000 is much less expensive than hiring them on a forty year contract at $65,000.  One is a liability of perhaps $350,000; the other, of millions… Imagine I offered you one cell phone contract for two years at $100 a year, and another for 50 years at $90 + inflation.  Would you really consider the second contract “cheaper”?

On one level, McArdle is right. Tenure creates a huge “off-balance sheet” liability for universities. But the very fact this liability isn’t on the books explains why universities are unlikely to abolish tenure in the future. Abolishing tenure would likely involve commutation payments to tenured professors. “Ok, nobody at this university will have tenure any longer, but in return for giving up tenure, you all get $X thousand cash”. Borrowing the money for the commutation payments to end tenure would add to the institution’s on-balance sheet indebtedness.

That would be difficult to do at the present time, especially since myopic people tend only to see the obligations on the university’s books, such as pensions. They don’t see how borrowing money now can actually reduce one’s long term obligations.

In the 1850s, the Canadian government borrowed money in London to fund the commutation payments of that ended the seigneurial system and gave farmers in Lower Canada freehold tenure to their land. See “An Act Respecting the General Abolition of Feudal Rights and Duties”, passed in 1854. We were only able to do this buy out because the costs of borrowing were relatively low at that point. In the 1860s, when interest rates in London were much higher, it would have been much far difficult to have raised the cash to buy off the seigneurial class.

The Seigneurial System of French Canada

The financial situation the world right now resembles that of the 1860s. The 2008 liquidity crisis and its aftermath, which have devastated universities, is strikingly similar to the crisis that followed the collapse of the Overend Gurney bank in 1866.

Moreover, voters are now firmly against the idea of governments taking on more debt. So I don’t see provincial or state governments providing the cash for the commutation payments needed to end tenure.

I think that I have found another hole in McArdle’s argument– she doesn`t consider that fact that the job security that comes from tenure is a non-taxable benefit. In terms of security of future income, the salary given to a tenured professor is more like a government-issued annuity or a GIC than the earnings of, say, a small businessperson. A small businessperson`s income is more like anticipated future earnings from investments in the stock market– you might make a little money, but you might lose it all. It could be feast or famine. Promising a professor that his or her income will be paid until age 65 regardless of performance or market demand is like giving someone an annuity. You have peace of mind.

Consider now the issue of taxability. If an employer offers you a free gym membership or a bus pass as a non-salary perk of the job, you have to pay income tax on it, with the government estimating its approximate cash value. It is easy for the income tax authority to estimate the value of the gym membership. It can go to the website of LA Fitness and get a quote.  But if the employer offers a low but lifetime-guaranteed salary instead of a higher but less secure salary,  the tax rate on the salary isn`t affected by the fact it is more secure than a more precarious income that you might derive from another occupation. Given that most academics are in fairly high income tax brackets, taxability is an important factor. If tenure were abolished and academic salaries became more precarious, universities might have to offer higher salaries as a way of getting people to work for them. Indeed, Boston College, which recently abolished tenure for some new academics, compensated for the lack of job security with higher salaries. Of course, those higher salaries are taxable.

Federal income tax was re-introduced in the United States in 1913, following the passage of the 16th amendment. At the time, income tax was levied on just the top 2 or 3 percent of the population, a group that probably included full professors as well as doctors and dentists. The legal concept of tenure emerged at roughly the same time, also in the United States. I strongly suspect that this wasn’t a coincidence, since tenure is a way of giving your employees a non-taxable benefit.

Another thought occurs to me. Does the existence of tenure influence the mix of personality types that are attracted into the professoriate? Does tenure select for cautious, risk-averse people?

Anyway, I had better get back to work on this publication. I need to be tenure-ready by the time I become a father.




One response

17 08 2010
R. Mowat

Seems to me that changes to tenure are coming – eventually.

Some thoughts:

The impact on female academics is real. Since there is no need for faculty to retire at 65 any longer, perhaps tenure should simply be granted less often and at a further length into an academic career (age 50)?

A system with very few tenured professors might induce greater mobility of academics among universities (and even between the non-academic sector), with a potential for greater cross-fertilization benefits.


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