11th April 2012: Academic Skills Externalities

A gem from Slate‘s Matthew Yglesias:

 

But it seems to me that to the extent that the training is transferrable the employee is gaining something of real value, and the employer now has the ability to reduce cash compensation accordingly. Employers need to choose between paying a premium for already-trained workers, or paying lower wages to less-trained workers but bearing training costs. [emphasis added]

 

Some Australian universities are shifting the training costs back onto academic staff. An entry-level lecturer role (Academic Level B) now requires a PhD, a teaching degree (unlike US universities), and a publication track record. Five or ten years ago these requirements were necessary for a senior lecturer role (Academic Level C). New academics usually gain training through the rigour (or not) of their PhD program and collaborations with senior academics in their discipline or school. Early Career Researcher grants, membership of a professional association, and research incentive scheme money for publications also provide some training opportunities. Academics whose skills underpin their research programs have more employment flexibility.

 

Yglesias explains an important aspect of academic salary negotiation and skills development. Some Australian universities pay relatively lower wages to academic staff, in part due to enterprise bargaining agreements. Universities may hire new academics at strategic points like just before PhD conferral so that the institutions can pay lower wages and underinvest in training. Usually, the rationale is value-driven and knowledge extractive: universities get the most highly qualified academics for their human resources budget. The training budget is a ‘nice to have’ or comes from central and faculty resources.

 

But, over time, this strategy leads to two divergent groups: academics who plateau mid-career and take on administrative and teaching loads, and superstar academics with training who either get rapidly promoted or who defect to other universities. The first group provides a pool of staff that has to deal with heavy administrative and workflow systems. This actually prevents the institution from doing the business process reenginering to remain competitive. The second group provides the institution with visibility. They have greater input into incentives design and managerial decision-making. A ‘success to the successful’ dynamic occurs.

 

In a winner-takes-all environment, perhaps the successful academics will have to become their own player-managers, be aware of and use institutional incentives, and be adept at contract and salary negotiation.