Wednesday, July 12, 2017

Mills College and cost disease in higher ed

Mills has fired 5 tenured professors in a bid to reduce costs and close its deficit, and UC Berkeley faculty registered their concerns, as part of the broader response by the American Association of University Professors (AAUP).

As the first article describes, one angle here is whether consumer demand, and thus revenue, can be sufficient at women's colleges or other sites that restrict their focus to a subset of the market. Those more knowledgeable than I about higher education may have some insight about the minimum sustainable enrollment at a college. Presumably every institution faces some fixed costs whose burden shrinks as enrollments rise. Things like structures and the array of extra-curricular activities and events seem like obvious candidates.

But it is hard to see why instruction, a college's primary mission, should not easily scale with enrollments. If a college is small, its ranks of faculty could also be small, with similar outcomes. That Mills is in the Bay Area, a densely populated zone rife with other academics at neighboring institutions, suggests that a small faculty at Mills could function successfully in a low enrollment environment. To me, the argument that a women's college cannot be profitable because it is too small seems suspect, unless there are large fixed costs in higher education.

A more worrisome angle is that higher education, and education in general, is probably subject to Baumol's cost disease, the classic case of which is the rising relative price of attending a concert by a string quartet. Industries like classical music and education, which are probably less able to enhance their productivity with new technologies, are doomed to experience rising costs and prices without some other offsetting change.

Shifting to cheaper part-time labor devoted to instruction is one such change, of course. I suspect that is the real motive behind the moves by Mills College, and they are far from alone in this, although perhaps trailblazing in their replacing through layoffs. Across the industry, there is a monotonic shift toward instruction by adjunct faculty and away from hiring tenure-track professors. One of the big questions is how instruction by part-time, adjunct faculty compares to instruction by full-time, tenure-track faculty.

Declining enrollments would be problematic, and as with the patterns in financial aid at Mills, it is hard to get a clear picture about what is happening. If enrollments were down at Mills, it cannot be because there are fewer women or students who identify as female. (Mills has a fairly open door to students across the identity spectrum except for those who self-identify as male upon admission.) It could be because other suppliers of education are undercutting Mills, or the nature or quality of the Mills experience is changing in such a way as to appeal to fewer demanders. If the latter is true, it is very hard to see how giving pink slips to popular faculty members reverses the situation.