It's time for a game of Would You Rather
Would you rather be a manager at a top 10 liberal arts college or at Gustavus Adolphus College in St. Peter, MN?
Yes, I know it’s cold in Minnesota (I grew up there). Suppose you only cared about your salary. Here, let me help by showing you the average inflation-adjusted salaries of managers at top 10, top 11-25, top 25-50, and top 51-100 liberal arts colleges over time. Btw, Gustavus was ranked #76 in 2022.
I bet you said you’d rather be a manager at a top 10 school. And I can see why! It’s totally natural to conclude from these charts that higher ranked schools always have more managers and pay them better.
Unfortunately, that conclusion is wrong.
The plot below shows shows a line for each school in my sample, split up by tiers according to USNWR ranking. See that brick red line in the bottom right panel? That’s Gustavus Adolphus. It’s higher than for any school in the top 10.
This phenomenon is related to what’s called the Ecological Fallacy, or the tendency to assume that a characteristic common to a group is true for every individual in that group. In this example, that first chart showed that average salaries for managers are higher at higher ranked schools. But this second set of charts shows that there’s a wide range of average manager salaries, both for top schools and for lower ranked schools, and knowing the average for Gustavus Adolphus’s tier doesn’t actually tell you very much about whether you should seek a job at Gustavus.1
Ok, why am I bringing this up.
Last week I closed by saying that I was surprised that small liberal arts colleges haven’t been investing more in IT professionals. I stand by that.
My next question is what the downstream implications of this underinvestment might be. Do we have more non-IT staff because SLACs haven’t used technology to learn how to do more with fewer people? Do those non-IT staff have less interesting jobs, because they’re doing slowly by hand what computers could do faster? And are those staff getting paid less, because their jobs are more rote and less inventive than they could be?
That’s what I wanted to talk about this week.
But when I started working on this post, I realized that I may need to think harder about the ecological fallacy. These are the two sets of charts I’ve been puzzling over, the first showing the number of IT staff per student and their inflation adjusted salaries, and the second showing the same for administrative assistants. Take a look.
At first glance, it looks like top tier schools just have more IT and administrative staff, and that they pay both types better. And that could be true. But that also makes no sense. Why would a school invest in more, more qualified, and more expensive IT people if it didn’t save money elsewhere? I mean, SLACs could be making stupid staffing decisions. That’s, um, totally possible. But it’s also possible that I’m the one doing something stupid.
Let’s look in greater detail. The plots below show the number of IT people and administrative assistants per 100 students, this time with a unique line for each school in my sample. As you can see, there are differences across tiers, but there are huge variations within each tier too.
What this means is that we’ve gone as far as we can with a graphical analysis, at least for these questions. I’m going to have to do some kind of econometric analysis on the individual school data, perhaps with lagged changes in IT staff predicting future changes in administrative staff.2
And I’ll be honest, I’m a bit rusty on combining panel data with time series techniques. So either this is going to take me some time OR if there’s someone out there who wants to partner with me on a future post, please reach out!
And for next week: something different. TBD. Subscribe now for more later.
“But wait, Jess,” I can hear you thinking at me, “couldn’t the data about the average manager salary at Gustavus suffer from the ecological fallacy too? How do I know there isn’t one really well paid manager there while all the others make bubkis?” Good point, dear reader, good point. In this case I can actually rule that out, but then another puzzle presents itself, so maybe don’t take that job at Gustavus after all. Read on.
Every tax-exempt nonprofit in the US must make their tax returns public. One of the things reported on that form (the 990) is the salary and total compensation of the officers of the institution and the highest paid employees (both in Part VII of the form and with even more detail in Schedule J). For Gustavus in 2022, that Part VII list starts out:
Executives at small colleges are reported in the Management category of the IPEDS SAL-NIS data, so column D there shows you the salaries of the top 5 highest paid managers at Gustavus. But puzzlingly, those are the only five managers Gustavus reported that year. Whaa? How can a school with more than 2000 students have only 5 managers? Weird. Seems like maybe their data infrastructure and reporting needs work. So if you do accept a job there, just know that going in.
Anyway, if you want to find out how much the executives at your college are paid, you can Google “My College Financial Statements” or search for your college in ProPublica’s Nonprofit Explorer.
And for the real data nerds in the bunch: Yes, there is an API for the ProPublica database, but no, it doesn’t have everything you’d want, so yes, my summer RA found another source for digitized 990 data, and yes, I do have a post on executive compensation and the composition of officers planned.
Yes nerds, I know that’s not causally identified. This summer I looked into using a newly hired VP of IT as an instrument for changes in the size of the IT staff. But that idea doesn’t work because very few schools have a VP of IT (mine is one of four), and most don’t even have a lead IT professional that’s paid enough to be listed on the 990. Which is, ironically, emblematic of the problem I wanted to study!