How Academic Finances Affect the Job Market

December 06, 2002

This month we thought it might be a good idea to take a look at some trends in American higher education and how they affect the job market. For some expert advice, we turned to J. Douglas Toma, who directs the Executive Doctorate and Penn Center for Higher Education Management at the University of Pennsylvania.

Julie: When job candidates are so busy applying for jobs, finishing their dissertations, and preparing for interviews, why is it important that they understand the big issues that affect higher education?

Doug: The big issues, such as levels of state appropriations or federal research funding, determine whether jobs will be available at all. And issues like increases in state-mandated accountability shape the professional lives of new faculty members. Understanding these trends can help job candidates take a less parochial, less idiosyncratic view of their own job searches and plan their careers in terms of the evolving reality of higher education.

Trends in state support are of critical importance in shaping the academic job market. About 80 percent of enrollment in higher education is at public institutions. The rate of increase in state support is declining, and a growing number of states are failing to provide increases that outpace inflation. With severe deficits becoming the reality in several states, support is only likely to weaken. This matters because lines for new faculty positions open when there is funding available. It is also important to remember that higher education competes with K-12 education, prisons, health insurance, and other areas for the same state dollars. So, increased needs in, and greater emphasis placed on, these areas can further cut into what is available for universities and colleges.

There is also a trend toward increasing tuition, which has the potential to drive students toward lower-cost alternatives, forcing institutions to try to keep their costs competitive. Terms such as "downsizing" are becoming increasingly familiar on campuses -- and can lead to fewer faculty lines as high-cost, low-demand programs are eliminated and units across the institution are "streamlined" (like "downsizing," another business-inspired phrase). Even something like the need to devote funds to deferred maintenance, an area neglected over the past couple of decades, can divert money from faculty lines.

Mary: Is the tightening of state support the main source of financial pressure?

Doug: Hardly. Another area is increasingly uncertain federal research funding. This is important. About 60 percent of all research and development dollars comes from the federal government. (To put this in context, the government spent about the same amount in direct student aid.) In the social sciences and humanities, there are regular threats to funding through the National Endowment for the Humanities and the National Endowment for the Arts. In science and technology we see a move toward "big science," which involves large commitments of dollars to a smaller number of longer-term, very expensive projects.

In other areas, in response to financial pressures, we see increased university-industry collaboration; commercialism expressed through for-profit technology units; and increased political involvement in research funding as Congress takes an interest in where research funding is going and indulges in pork-barrel spending. The bottom line is that there is greater uncertainty in funding, thus making the opening of new faculty lines less certain.

Julie: With government money uncertain, does that mean a shift toward private funding?

Doug: Yes, without question. More funds are coming from private sources, including students themselves. For example, the University of California system received 37 percent of its budget from the state in 1981-82 and only 26 percent in 1996-97. Tuition and fees went from 13 percent of the budget in 1980 to 18 percent in 1993. Institutions are turning to private sources to make up these revenues. And, nationally, student aid shifted from loans to grants in the 1980s -- a trend that has only become more prominent. Again, these funds are less certain, giving institutions a disincentive to create new faculty lines.

Mary: It sounds as if, with this reduced funding, fewer students would be participating in higher education, but that's not the case, is it?

Doug: On the contrary, there is increasing participation in higher education. In 1974, 24.6 percent of high-school graduates participated in higher education. In 1994, that figure was 34.6 percent. And this group is less white, more part-time, and older in relative terms. For instance, participation during these 20 years by African-American students has increased from 17.6 percent to 27.7 percent. Still, African-American students are underrepresented in higher education, overall. Moreover, 44 percent of all college students are over 25 years of age, as are 22 percent of full-time students. Whether all of this has an impact on the faculty job market is an open question. With more students, it would seem, there should be more demand for faculty members. But the question is, what types of faculty positions are opening? There has been an increase in faculty positions, but a decrease in permanent positions, from 66 percent of all faculty in 1979 to 55 percent in 1999.

Julie: As the student population is diverse, so is the environment for higher education, isn't it?

Doug: Absolutely. In the United States, we have a highly decentralized system. In our system, just about anyone can found an institution, anywhere, and for any purpose -- as long as they can find the money to support it. As a result, we have many institutions, and almost all compete within a predominantly local market for students and other scarce resources. Where opportunity presents itself, institutions will move in.

New for-profit ventures, such as the University of Phoenix, have entered many markets over the past decade. And even traditional, residential institutions are opening branch campuses in metropolitan areas to serve part-time students. These "campuses" are unlikely to hire full-time, tenure-track faculty members, however, preferring the flexibility that comes with part-time or short-term hires. If nothing else, those seeking academic jobs must keep the diversity of institutions in mind. The research universities at which they train are only one element of the overall system.

Mary: How can faculty members and academic administrators thrive given these trends?

Doug: As just one example, the move toward greater accountability may actually offer an opportunity for those on campus. Meeting state mandates for assessing student learning, improving graduation rates, documenting faculty workload, and demonstrating English-language competence may be linked with increased support or enhanced autonomy. For instance, governors and legislators are increasingly allowing institutions greater leeway in setting tuition prices in exchange for greater accountability. This can lead to more funds being available for new hires. Nevertheless, times are relatively tough. Over the past year, almost all states raised tuition by more than 5 percent, had a mid-year budget reduction, and had flat appropriations -- or reduced them. About a half reduced financial aid and increased faculty salaries by less than 2 percent. This is not an environment that suggests a robust faculty job market.

Julie: This all sounds a bit overwhelming. Anything else affecting higher education?

Doug: It is easy to argue, given the expectations of those in graduate school, that we are overproducing new Ph.D.'s. Production increased 30 percent between 1984 and 1994, while academic-job-placement rates in 1994 were about 65 percent -- 60 percent in the humanities. Shortfalls related to the predicted retirement of tenured professors are not really materializing. Even where there are retirements, there are not necessarily new faculty lines. Instead, there appears to be a turn to even more temporary and adjunct appointments. Institutions have incentives to maintain doctoral programs regardless of demand for new faculty members. They need teaching and research assistants, and there is considerable prestige, particularly for less-prominent institutions, that comes with doctoral education.

Mary: However, Doug, the "oversupply" of Ph.D.'s is much more of a problem if one assumes that obtaining a Ph.D. presupposes employment as a faculty member. As we know firsthand, people with doctoral-level training have been able to find rewarding professional employment in a variety of fields, including many which make direct use of their research skills. While people who enter Ph.D. programs assuming they will be assured of a faculty position should they want one are being short-sighted, I do have difficulty believing that it's a problem if we're producing highly educated people who are able to find jobs which use their intellects, wherever those jobs may be found!

Doug: I could not agree more, Mary. What we need is to fix the culture in doctoral education that values faculty careers over other types of careers. Current faculty members -- those who acculturate doctoral students -- are the problem here. There is absolutely no reason that we should consider new Ph.D.'s in the arts and sciences' accepting positions in the corporate, government, and nonprofit sectors something of a consolation prize. In fact, these careers typically pay better, can provide more autonomy and intellectual engagement, and can thus be more rewarding.


Mary Morris Heiberger and Julia Miller Vick are the authors of The Academic Job Search Handbook (University of Pennsylvania Press). They have provided career services for thousands of graduate and professional students since 1985. Ms. Heiberger is associate director and Ms. Vick is graduate career counselor at the Career Services office of the University of Pennsylvania.