SENATE Economic Status of the Faculty
1998-99 Report of the Senate Committee on the Economic Status of the Faculty
May 5, 1999
| CONTENTS | APPENDIX A | APPENDIX B | Table 1 | Table 2 | Table 3 | Table 4 | Table 5 | Table 6 | Table 7 | Table 8 | Table 9 | Table 10 | Table 11 |
The Senate Committee on the Economic Status of the Faculty (SCESF) is charged by the "Rules of the Faculty Senate" to:
The focus of this report is on the economic status of the faculty based on salary and benefits data. In contrast with recent economic status reports of SCESF, we do not offer recommendations here for development of faculty salary policy--the Committee's main strategy in the past for representing the faculty in the determination of faculty salary policy. As described in more detail in Appendix A, the Committee, in consultation with the Senate Executive Committee (SEC), is developing an alternative process to perform this responsibility. As described in Appendix A, SCESF will report to SEC and the Faculty from time-to-time on issues and developments in faculty salary policy.
In designing this report on the economic status of the faculty, SCESF has addressed three broad concerns:
Major sections of this Report are devoted to each of these three topics, while the final section is devoted to SCESF's overall conclusions about the economic status of the faculty.
In performing its responsibilities, SCESF has been cognizant of Penn's current salary policy as stated by the President, Interim Provost, and Executive Vice President (Almanac April 28, 1998; see Appendix B). Penn's guiding principle in salary planning is to pay faculty and staff (a) competitively, (b) in relationship to the markets for their services, and (c) in order to acknowledge their contributions to the University, and to help Penn remain a strong and financially viable institution.
In studying faculty salaries for this report, SCESF has benefitted from detailed salary information (excluding, of course, individual faculty salaries) that has been provided by Penn's administration. Our understanding both of Penn's competitiveness with peer institutions in faculty salary levels and of faculty salary variability within Penn has been enhanced enormously by access to this information and by the assistance of those who produced it. The SCESF acknowledges this cooperation with appreciation.
Faculty salaries are the product of a two-step process. First, most of each school's resources are raised in accordance with the principles of Penn's Responsibility Center Budgeting System. In addition, subvention is distributed to schools by Penn's central administration. Of these resources, each School makes a certain amount available for faculty salaries in three respects: (a) sustaining existing faculty appointments, (b) providing annual salary increments for continuing faculty members, and (c) creating salary funding for new faculty positions. In addition, schools must provide funds for employee benefits that approximate 30% of all such faculty salary expenditures. Second, deans of schools make annual salary increment recommendations to the Provost for continuing faculty members by a different process. These two steps are described separately in the following sections.
In accordance with principles of the Responsibility Center Budgeting System (RCBS), each of Penn's 12 schools is allocated most of the income that it generates annually. In turn, each School is obligated to establish a level of annual expenses that does not exceed the total of available income.
A school's revenues are divided into two major fund groups: "General Operating Funds" (which were termed "unrestricted" funds prior to 1997), the expenditure of which is not restricted by specific terms and conditions established by external donors; and "Designated Funds" (which were termed "restricted" funds prior to 1997), the expenditure of which is restricted by specific terms and conditions established by external donors of such funds. Because payment of the base academic year salaries of most standing faculty members is assured from General Operating Funds (even though significant portions of such salaries are actually paid from Designated Funds), only principles of the RCBS as applied to General Operating Funds are described here. [footnote 1]
In general, the General Operating Funds income available to each School is of three types: earned income, gift income, and centrally-awarded subvention. These sources are shown in greater detail in Table 1 for all of Penn's 12 Schools combined. Tuition is, by far, the greatest source of school income, with indirect cost recoveries from externally funded projects a distant second.
With respect to faculty salaries, it is possible (at least in principle) that the amount of money available to a school could be increased by augmenting a school's income from one or more of the nine specific sources listed in Table 1. To the extent that it is possible to increase a school's income from sources that are based on the work of faculty (e.g., tuition, indirect cost recoveries, and net income from clinical practices), faculty members have influence over the growth of income that is available for supporting faculty salaries.
General Operating Fund expenses for each school are also of three general types: academic compensation [footnote 2] (i.e., salary plus benefits), other school-related operating expenses (including staff compensation, materials, equipment, debt service, and student aid), and central University costs that are allocated among the schools according to RCBS formulas (e.g., facilities services, central computing services, central research support services, the University Library System, public safety, etc.).
These expenses are shown in greater detail in Table 1 for all of Penn's 12 schools combined. Academic compensation and total allocated costs were the greatest (and roughly equal) sources of school expenses in the FY 1998 budget. With respect to academic salaries, it is possible (at least in principle) that the amount of money available within a school could be increased by reducing that school's "standard of living" (i.e., by reducing the level of staff and other support, facilities used, and/or student aid), or by increasing the efficiency of that school's administrative operations (or those of the central University) so that key services are delivered at current or expanded levels, but a lower cost.
In essence, the RCBS sends the message to schools that each can spend as much as it can earn, and that each School has a great deal of latitude in how to spend its income. More, or less, might be spent on faculty salaries at a school's discretion. A major exception to this message is that a significant component of income is subvention--an annual award of funds to each school by the University centrally. The amount of subvention awarded to each school is based on a number of considerations such as an adjustment for certain inequalities among schools in the costs of providing instruction and supporting research. One of many such considerations can be the variation of average faculty salaries by rank among schools. For this and other reasons, the percentage of school expenses provided by subvention income varied widely among Penn's schools from a low of 4% to a high of 28% during FY 1998. [footnote 3]. These percentages suggest that considerable central judgment is used in allocating subvention to schools.
Annual salary increase recommendations for continuing faculty members are made by Department Chairs (in schools with departments) and by Deans, with review and oversight by the Provost (see Appendix B for a statement of the "Salary Guidelines For 1998-99" as published in Almanac April 28, 1998, p. 2). Penn's President, Provost, and Executive Vice President set an upper limit on a "pool percentage" for salary increases. For FY 1999, schools were authorized to award, as salary increases, a pool of up to 3.5% of the FY 1998 salaries of continuing faculty members. The recommended salary increase range was 1% to 6%, with Deans being obligated to consult with the Provost about any increases outside this range. Deans could supplement the pool by 0.5% without the Provost's approval, and by more than this with the Provost's approval. To address possible inequity in faculty salaries, Deans were asked to "pay particular attention to those faculty who meet our standards of merit but whose salaries for various reasons have lagged over the years."
Within this framework of available funds, Department Chairs and Deans had the responsibility to recommend salary increases to the Provost for each continuing faculty member based on general merit, including recognition of outstanding teaching, scholarship, research, and service. In addition, the Provost reviews the Deans' faculty salary recommendations "to insure that raises on average reflect market conditions in each discipline."
Average Penn Faculty Salaries (i.e., academic year base salaries) are compared with three external indicators in the following sections: growth in the Consumer Price Index (CPI), a survey of faculty salaries at about 25 public and private research universities in the United States conducted annually by the Massachusetts Institute of Technology (MIT), and a sample of 17 public and private research universities selected as comparable to Penn from among those included in the "Annual Report on the Economic Status of the Profession" issued by the American Association of University Professors (AAUP). As a methodological note, all faculty salary information discussed in this report refers to the aggregated "academic year base salary" of individual faculty members whether salaries are paid from General Operating Funds and/or from Designated Funds. In addition, all salary data reported exclude members of the Faculty of Medicine and all standing faculty members who are appointed as Clinician Educators from four other schools that have such positions (Dental Medicine, Veterinary Medicine, Nursing, and Social Work).
Faculty salary increments by rank, averaged for all schools except Medicine, for FY 1998, FY 1999, and compound cumulative for FY 1986-98, are shown in Table 2 in comparison with comparable data for the CPI (UScityaverage) and Penn budget guidelines. Even though the nation is in a period of low inflation, it is still reassuring to observe that median faculty salary increments for all three ranks for FY 1998 exceeded the percentage growth in the CPI and Penn's budget guidelines for both 1998 and 1999.
As noted in last year's report, the most impressive salary increase percentages were the cumulative compound salary increments over the 13-year period from FY 1986 to FY 1999 as seen in Table 2. On the whole (all ranks combined), cumulative mean Penn faculty salary increments were well over twice the growth in the CPI (Uscityaverage). Obviously, much of the faculty salary decline relative to inflation during the 1970s has been regained in recent years. [footnote 4]
Furthermore, the mean compound cumulative growth in faculty salaries over the 13-year period exceeded Penn's budget guidelines by a wide margin. These guidelines refer to the centrally-recommended salary pool percentage. What has happened is that many (perhaps all) of the Deans of Penn's schools have added considerable additional school resources to the recommended cumulative base pool for salary increments. If we estimate the compound cumulative increase over the 13-year period for all ranks combined to be 112% (the exact number is not available), the cumulative compound additional contribution of schools to the salary pool must have approximated 38% (112% minus the recommended budget guideline of 74%). Thus, it is apparent that both Penn's central and school administrations have made substantial joint efforts to raise the level of faculty salaries well in excess of the rate of inflation in the CPI during the past 13 years. [footnote 5]
The overall increases in faculty salary by rank in comparison with growth in the CPI, as seen in Table 2, are reported by school (including three disciplinary areas of SAS) in Table 3. A high percentage of faculty members in all of these schools/areas was awarded salary increments for FY 1999 that exceeded growth in the CPI (Phil.) for the twelve-month period ending June 1998. Given the low percentage level of inflation in Philadelphia (1.14%) and the fact that aggregate salary increases for the continuing professorate ranged from a low of 3.77% (Social Work) to a high of 13.04% (Annenberg) for FY 1999, it is puzzling to see that 6 of 13 schools/areas awarded a salary increase below the CPI growth percentage to more than five percent of all continuing standing faculty members. It is also disappointing because an increase of less than the CPI growth percentage for an individual faculty member represents an effective reduction in the purchasing power of a salary.
At a time when the School offering the lowest average salary increase percentage (3.77%) for the current year that was over three times the CPI growth percentage in Philadelphia (1.14%), it appears that recent salary increases in the case of some individual faculty members might have been inequitably low. Since salary increases are based principally on merit [footnote 6], the data of Table 3 for FY 1999 imply that about 7% of standing faculty members at Penn performed at less than a satisfactory level. We draw this inference because it does not seem reasonable that, under prevailing conditions, some faculty members performing at a satisfactory level would receive a salary increase of less than the growth in the CPI. Alternative explanations (for which we have no evidence) are that: (a) there was an unspoken policy to reduce the purchasing power of the salaries of selected faculty members for reasons other than merit, or (b) the salary levels of some highly paid faculty members were judged to be inequitably high in relation to merit, and a low percentage increase was therefore awarded to bring them more in line with their merit ratings.
By contrast, the vast majority of full professors of all schools/areas received cumulative salary increments that exceeded growth in the CPI (Phil.) over the six years from 1993 though 1999. On this indicator, 8 of 13 schools/areas awarded cumulative salary increases exceeding growth in the CPI to 100% of its continuing full professors, while only the social science area of SAS was below 90%. The high percentages for most schools/areas indicate that only a small minority of full professors have fallen behind growth in the CPI over the most recent seven year period. Nonetheless, the relatively low percentage (87%) seen in the social sciences area is cause for concern.
SCESF recognizes that there are legitimate reasons for individual faculty members to be awarded increments less that the growth in the CPI. For example, in a particular year, the salary increment pool may only approximate, or even be less than, the rate of growth in the CPI. Furthermore, in a small department or school, a few promotions or market adjustments needed to retain a valued faculty member could obligate a disproportionate share of an existing increment pool, thereby leaving little to award to other faculty members in the unit. Finally, some faculty members may be sufficiently lacking in merit to justify an increment exceeding the CPI growth. However, when a salary increment pool is available well in excess of CPI growth (as it has been in recent years), it is difficult to imagine that circumstances such as these would limit salary increments to less than CPI growth for more than 10% of the faculty in a school/area. It therefore seems possible that the cumulative salary increments received by some of the full professors in the social science area have been inequitably low, at least in part.
The best available salary data from other institutions of higher education are provided by the MIT annual survey of an elite group of approximately 25 private and public research universities (the sample size varies somewhat from year to year). The sample includes major private universities, as well as a number of highly regarded public research universities and one or two colleges. For 1997-98 salary data (the most recent available), the MIT sample included 24 institutions: the California Institute of Technology, Carnegie-Mellon, Columbia, Cornell, Georgia Institute of Technology, Harvard, Massachusetts Institute of Technology, Princeton, Purdue, Rice, Stanford, California (Berkeley), California (Los Angeles), California (San Diego), California (Santa Barbara), Illinois, Michigan, North Carolina, Pennsylvania, Rochester, Texas, Wisconsin, Williams College, and Yale.
In short, the MIT sample includes most public and private universities that Penn can consider to be peers. Mean faculty salaries by rank (professor, associate professor, assistant professor) and discipline have been made available to the SCESF as of the Fall Semesters for the years 1982 through 1997. These salary data are reported for the following disciplinary areas:
The most meaningful comparisons of Penn faculty salaries with those at other institutions in the sample are broken out by academic field and rank. However, as a broad overall generalization, it is fair to conclude that Penn's mean faculty salaries as of the Fall 1997 (for the four schools included in this analysis as weighted by faculty size) were well above average in the MIT sample. By rank, full professor salaries were at the 68th percentile; associate professor salaries were at the 70th percentile, and assistant professor salaries were at the 54th percentile. Thus, Penn faculty salaries (for the four schools included) in comparison with a substantial group of research universities are certainly at a competitive level. However, there is clearly room for improvement in Penn's competitive position because salaries in some categories have lagged behind the 70th percentile level, especially assistant professor salaries.
In our 1998 report, SCESF provided information about salary levels for each academic field included in the MIT survey for the most recent year for which data were available (Fall 1996). This information is now updated for Fall 1997 in Table 4. In addition, comparable data are shown in Table 4 for every five years since 1986-87. Some of the major trends seen in Table 4 are as follows:
Of greatest interest and concern, therefore, is the current competitiveness of Penn faculty salaries by rank and academic field included in the MIT survey. [footnote 8] In sum, while none of Penn's four schools ranked first or second within its relevant academic field in the survey sample, none of Penn's Schools ranked below the average of the other institutions except at the assistant professor level. Though the percentile ranks seen in Table 4 provide important information about the competitiveness of Penn's faculty salaries by rank within five academic fields, these data do not reveal how far Penn is behind the most competitive universities. To gain perspective on this issue, the percentage difference between a mean faculty salary at Penn and the mean faculty salary at the university ranked second in the MIT survey was computed. The results are shown in Table 5 in terms of the percentage that a mean Penn salary that would have to be increased to attain the level established by the university ranked second within each rank and academic field.
As seen in Table 5 with respect to the weighted means, the salary levels of institutions ranked second in the MIT survey are about 11-12% higher than Penn salary levels for each of the three ranks. In contrast with the percentile rankings of Table 4 which show Penn assistant professor salaries to be less competitive than salaries of its full and associate professors, the data of Table 5 provide an additional perspective. They show that assistant professor salaries are as competitive as full and associate professor salaries in terms of how far they lag behind the mean salary ranked second. Both these perspectives are valid. The implication is that the mean salaries of assistant professors from institutions included in the MIT survey are more tightly bunched than the mean salaries of full and associate professors. [footnote 9]
Nonetheless, the data of Table 5 show that some Penn salary levels are far from competitive within their respective sectors (e.g., full professor salaries in the natural sciences and assistant professor salaries in architecture as represented by Penn's Graduate School of Fine Arts). On the other hand, salary levels for Penn's full professors in architecture, associate professors in engineering, and assistant professors in management (as represented by Penn's Wharton School) are not far behind those established by universities ranked second. Overall, Penn's faculty salaries are fairly competitive with the best paying universities but there is considerable room for improvement, particularly in several fields.
If we assume that the competitiveness of Penn faculty salaries in the five academic fields included in the MIT survey is representative of the competitiveness of all Penn faculty salaries [footnote 10], we have computed that a gap of about 11% (or 10 million dollars) separates the average faculty salary within all academic fields from the number two salary ranking nationwide. To place this 11% (or 10 million dollars) gap in perspective, it represents an amount that is just over twice the 5.0% mean increase in salaries of Penn's continuing faculty members from 1997-98 to 1998-99.
As reviewed in the previous section, the compound cumulative faculty salary increases at Penn were over twice the growth in the national CPI from 1986 through 1998 (see Table 2). By contrast, the MIT data show no gain in the relative standing of Penn's average faculty salaries for full and assistant professors during the period 1986 through 1998, and some gain for associate professors (see Table 4). It seems clear that our peer universities in recent years have likewise increased faculty salaries well in excess of growth in the CPI. Therefore, the substantial increase in faculty salaries that has been attained at Penn during a recent 12-year period has been necessary just to maintain our generally favorable competitive position.
A major limitation of the MIT salary survey is that it does not provide salary data for seven of Penn's eleven schools. Since no such school-level data are now available from other sources, SCESF initiated a comparative study of mean salaries aggregated at the university level. The results are reported in the following section.
In the absence of salary data for seven of Penn's schools, a comparison of the mean salaries of all full professors at Penn was made with those at a small select group of research universities based on data published annually by the American Association of University Professors (AAUP) in the April/May issues of Academe. To make meaningful and fair comparisons of Penn salaries with those at other Universities, five criteria for selection of comparison universities were first defined: (a) be included in the Research I category of the Carnegie Classification System, (b) offer a broad array Ph.D. programs in arts and sciences disciplines, (c) include at least two of three major professional schools (law, business, engineering), (d) not include a school of agriculture, and (e) have a composite academic reputation rating greater than 4.0 (on a five point scale) [footnote 11] in a rating system reported by U.S. News and Report. The 17 research universities meeting all five of these criteria are identified in the first column of Table 6.
The relative standings of mean salaries of Penn full professors are presented in Table 6 for the same four years used in Table 4 to report MIT salary survey data. The order of listing of universities in Table 6 was determined by the magnitude of mean salaries of full professors (from high to low) for the most recent year for which data have been published (academic year 1997-98). Next, the difference between a comparison university's mean salary and Penn's mean salary was computed as a percentage of Penn's mean salary. For example as seen in Table 6, the mean salary of Harvard full professors in 1986-87 was 16.9% higher than Penn's mean salary that year ($59,600), while the mean salary at Northwestern was 4.9% below Penn's mean salary.
The data of Table 6 show that the mean salaries for full professors at Penn gradually became more competitive during a recent 12-year period. For example, seven universities provided mean salaries more that 2% higher than Penn in 1986-87, while the mean salaries at only three universities (Harvard, Stanford, and Yale) exceed Penn by more than 2% in 1997-98. In addition, the percentage advantage of salaries at Harvard, Stanford, and Yale over Penn decreased substantially during this period of time.
Based on the data of Table 6, it is clear that mean salaries of full professors at Penn, on the average, have become much more competitive with the very highest salaries elsewhere during the past 12 years, and are now at a level among the top few universities in the nation (and probably in the world, for that matter). [footnote 12] Though Penn's competitive position in this respect is strong in general, aggregated salary data such as these do not reveal which schools, and departments within schools, may pay mean salaries that are particularly competitive or that may lag behind their competition. Therefore, SCESF is seeking comparative salary data that is specific to each of Penn's schools that are not included in the MIT sample.
Even though SCESF was careful to select universities for overall mean salary comparisons that were similar to Penn on several important criteria and made comparisons separately for each academic rank, AAUP salary data did not permit the SCESF to control for the specific schools sponsored by each university and the number of full professors appointed to each school. Such controls are desirable because mean salary levels vary by school, as do the number of professors appointed to the faculty of each school on which the means are based. Nonetheless, the 1997-98 salary data for full professors from the AAUP survey (of Table 6) appear to be reasonably consistent with the salary data for full professors from the MIT survey (of Table 4), and are therefore sufficiently valid to include in this report. In addition, tables similar to that of Table 6 (for full professors) were constructed for associate and assistant professors. They show that salary data from the AAUP survey are not reasonably consistent with data from the MIT survey of Table 4. Therefore, no comparative salary data from AAUP surveys are presented for associate and assistant professors.
For the first time in recent years, SCESF has examined comparative faculty benefits data, as well as salary data (the sum of salary and benefits is termed compensation). The mean salary data for full professors shown in Table 6 for 1997-98 are reproduced in the first column of Table 7, and shown alongside mean benefits data in the second column and compensation in the third. The same type of analysis is reported in Table 7 as in Table 6. Specifically, the degree to which salary, benefits, and compensation at comparison universities differ from Penn is reported in percentage terms. For example, the mean salary at Harvard was 11.7% higher than at Penn, while the mean benefits at Harvard was 13.5% lower than at Penn (i.e., Harvard's benefits percentage of 21.6 is 13.5% below Penn's benefits percentage of 24.9). As a result of Harvard offering a lower benefits percentage than Penn, Harvard's mean compensation for full professors was only 8.7% higher than Penn's compensation (while Harvard's salary was 11.7% higher).
Thus as shown in Table 7, the level of compensation Penn provides for its full professors is greater than, or equivalent to, that at all comparison universities except Harvard. Considered in this light, the economic status of full professors at Penn is very good, and, we suspect, the economic status of associate and assistant professors is not far behind.
The SCESF is in the process of securing more detailed information about Penn's strong competitive position in faculty benefits. More specifically, we seek information about components of the benefits package to determine which ones, if any, are much more generous at Penn than at comparable universities. We hope to present a fuller analysis of faculty benefits in subsequent reports.
As previous reports of the SCESF have highlighted, there is a great deal of inequality (e.g., variability) in faculty salaries at Penn attributable to several recognized factors: differences in individual merit, rank, time in rank, external labor market forces, the relative wealth of Schools, and perhaps differences among Schools in principles and practices for allocating salary increments.
One of SCESF's concerns has been that, among all the existing variability in faculty salaries, there might be some significant element of inequity (i.e., salary setting based on incomplete or inaccurate information about merit, or bias that could be involved in the process of deciding salary increments). However, it is not possible for the SCESF to pinpoint any instance of individual, or group, inequity without individual faculty salaries and associated information about individual merit, labor market forces, etc. What we can do is review many facets of salary variability and raise questions about the possibility that inequity might be responsible for some degree of the observed variability. These questions might lead to further review and action by senior academic administrators (Department Chairs, Deans, and the Provost) with a view to correcting any inequities that might be identified.
We turn next to a description and analysis of several dimensions of faculty salary variability at Penn. As with the external salary comparisons reviewed above, all salary data reviewed in this section exclude the School of Medicine and all standing faculty members who are appointed as Clinician Educators from four other schools that have such positions (Dental Medicine, Veterinary Medicine, Nursing, and Social Work).
As reported in Table 2, median faculty salary increments by rank for all of Penn's schools combined substantially exceeded the growth in the CPI for the most recent full year (FY 1998) for which data are available and exceeded Penn's budget guidelines in both FY 1998 and FY 1999. These salary increases are broken out by school in Table 8 where it can be seen that all Schools awarded median salary increases that exceed the budget guideline in all three professorial ranks for FY 1998. However, there was considerably more variability in median salary increases for FY 1999, also as shown in Table 8 along with the first and third quartiles (Q1 and Q3, respectively).
Before reviewing the salary increases for FY 1999, it should be recognized that the salary increase guideline of 3.5% is just that, a guideline, and pertains to an aggregate of all increases for all ranks combined for each of Penn's schools (i.e., merit increases for continuing faculty members, special increases for faculty members who have been promoted in rank, and market adjustments for faculty members with generous salary offers from other institutions). Schools may allocate more, or less, resources to faculty salary increments than the guideline, depending upon each school's financial circumstances (see Section II.B. above). Therefore, a comparison of the median increase awarded to faculty members of a particular rank and school with the salary guideline only gives an indication of the extent to which the guideline was implemented in that particular instance. Accordingly, a particular median increment of less than 3.5% should not be regarded as a specific failure of salary policy, since there is no policy for each rank and each school to be awarded at least that much on the average. Furthermore, the 3.5% guideline pertains to the mean increase, a measure of central tendency that is usually higher than the median salary increases shown in Table 2.
Nonetheless, the overall mean salary increase for all faculty members continuing in the same rank for FY 1999 was 5.0% (see Table 2), a number well above the guideline of 3.5%. Under this circumstance, the faculty should be able to expect, for the most part, that this substantial salary increase resource would be distributed sufficiently widely to lift the median salaries of all ranks in all schools/areas by at least the guideline amount.
In contrast with FY 1998, there was considerably more variability in median salary increases for the current year. With an overall salary increase mean of 5% and a guideline of 3.5% for FY 1999, we note from Table 8 that the median increase for full professors in 5 of 13 schools/areas was less than 3.5%, 3 of 10 schools/areas for associate professors, and 3 of 11 schools/areas for assistant professors.
The distribution of salary increase resources is shown much more clearly in the first and third quartile data of Table 8. It can be seen that none of the relatively low median increases (below 3.5%), as noted above by rank and school, were due to extremely high third quartile percentage increases (i.e., because unusually large increases were allocated to only 25% of faculty members in a rank/school group). Instead, it seems that the increases provided to faculty members in these particular schools/areas were generally low relative to the university-wide average. Therefore, the relatively low median increases are more a problem of inadequate resources than wide variation in the distribution of available salary increase resources.
We also note with concern that the median increases for all three ranks in the humanities and social sciences areas (of SAS) and the School of Nursing were below the 3.5% guideline. Again, the quartile data of Table 8 are helpful in revealing that both the first or third quartile raises did not diverge greatly from the median (i.e., the second quartile), thereby indicating that relatively low increases were common in these sectors of the University.
Overall as seen in Table 8, there is great variability for FY 1999 in salary increment percentages both among Schools within ranks, and among ranks within Schools. SCESF is not aware of specific information about merit and market factors that is available to department heads and deans, and how they weigh this information in deciding salary increments for individual faculty members. Without such information, it is not possible to determine whether any inequity is involved in the salary increase percentages reported in Table 8. Nonetheless, the greater variability of median salary increases in FY 1999, in comparison with the prior year, is sufficient to question about how well equity was served for many faculty members receiving the lowest percentage increases.
Mean faculty salaries by rank are shown in Table 9 for all schools combined (except Medicine, of course). Such data give the crudest perspective on rank differences in salary, however, because of aggregation biases across schools. For example, one might expect a considerably larger difference between mean assistant and associate professor salaries. The modest difference might be accounted for by the facts that the Law School has no associate professors (a fact that might decrease the observed associate professor mean) and the Wharton School has a considerably higher percentage of assistant professors than is typical of other schools (a fact that could increase the observed assistant professor mean).
A more meaningful comparison of variation in faculty salaries by rank is made by computing the ratios for continuing faculty members for each school and then computing a mean weighted ratio (weighted for the number of continuing faculty members at each rank in each school). [footnote 13] The weighted ratios thus computed are also seen in Table 9. Viewed in this way, there is much greater spread in mean salary levels by rank.
As reported by the SCESF last year by school, the mean salary of the best paid 20% of full professors was 72% higher than the mean salary of the lowest paid 20% of full professors. This 72% figure was based on the weighted mean of full professors from thirteen broad disciplinary areas--ten Schools (Annenberg, Dental, Education, Engineering, Fine Arts, Law, Nursing, Social Work, Veterinary Medicine and Wharton) and three disciplinary areas of SAS (humanities, natural sciences, and social sciences). We have monitored this index of variability of professorial salaries and found no substantial difference for FY 1999 (the mean salary of best paid 20% is now 74% higher than the mean of the 20% lowest paid). Similar to past years, the percentage by which the mean salary of the top 20% exceeds the mean salary of the bottom 20% ranges from a low of 38% for one school to a high of 104% for another. As reported by last year's SCESF, there continues to be considerable stability in these percentages (overall and by school) since FY 1993. For a fuller discussion of trends based on this indicator, the reader is referred SCESF's 1996-97 report (Almanac, May 13, 1997).
Given the stability over many years of this index of salary variability of full professors, SCESF plans to discontinue its computation in future years. Instead, information about salary variability within all three ranks by school will be discussed in terms of a statistical measure of variability termed the "interquartile range," a term that refers to the difference between the third and first quartiles of a distribution-in this case, the distributions of individual faculty salaries by rank and school. Though the index based on the difference between the mean of top and bottom 20% of salaries and the interquartile range are closely related, [footnote 14] use of the interquartile range is a more representative measure of variability. Furthermore, it is not affected by a few extremely high or low salaries that are included in the top or bottom 20% of a salary distribution.
Regardless of which measure of salary variability within ranks and schools is used, the fact remains that the amount of variability of individual faculty salary levels within a rank (such as full professors) differs greatly among schools/areas. For example, the interquartile range of salaries for full professors in one school/area is over three times that in another school/area. Since it is difficult to imagine that differences in faculty merit would vary that much among schools/areas, it suggests that other factors are partly responsible for wide school/area differences in this respect, such as differential market forces and different standards for setting salary levels and/or annual increases.
As with other indicators of salary variability, the wide differences between the salaries of the upper and lower 20% of full professors among schools/areas do not in themselves demonstrate inequity. However, it is possible that some of the gap between these two groups of professors is inequitable, and that the inequities become exacerbated over time as annual salary increment percentages are applied to the base salaries of these in the lowest 20% of professorial salaries.
Even if some inequity is entailed in wide differences in salary variability among Penn's various schools/areas, it is not clear whether the highest paid professors in schools with low variability are paid inequitably low given their merit, or whether the lowest paid professors in schools with high variability are paid inequitably low given their merit, or even some of both. More generally, a question can be raised about whether the apparent wide differences among schools/areas in standards for setting faculty salaries are fully justified, and, if not, whether the standards used in some schools/areas yield some inequity in the different salary levels of individual faculty members.
Except for Annenberg, Graduate Fine Arts, and Social Work, sufficient information was available to SCESF to compute the ratio of the mean salaries of full professors appointed to a Penn faculty during the past 18 years (i.e., since 1981) to the mean salary of professors appointed before 1982. Ordinarily, it might be expected that this ratio would be less than 1.00, which would mean that more years of service at the rank of full professor at Penn is associated with higher salaries. However, in 7 of 10 schools/areas for which data are available, the more recently appointed professors have higher salaries on the average (in five of these seven schools/areas, over 10% higher). Professors in the Law School are the major exception, where the more recently appointed professors have average salaries 11% less that the those who have held appointments for 19 years or more.
While data such as these on a dimension of variability of faculty salaries do not demonstrate inequity, it is possible that more recently-appointed full professors in some schools/areas have been placed on a higher salary scale, and justifiable upward adjustments in scale have not been made in the salaries of many of the more senior professors. It is also possible that many of the more recently appointed professors have a number of years of experience at the full professor level at other universities prior to being appointed to a Penn Faculty. This is an empirical question that could be analyzed if more complete information were available about the total years of experience as full professor, both at Penn and elsewhere.
As described in previous SCESF reports, there is considerable variability in average faculty salary levels across Penn's 13 schools/areas (as identified in Table 3). Information about the extent of this cross-school variability is presented by rank in Table 10 in terms of the first quartile (Q1), second quartile (Q2, the same as the median), and the third quartile (Q3) of median faculty salary levels. For full professors, the interquartile range of median salaries based on the 13 schools/areas was $22,100 (i.e., the difference between the third quartile salary of $114,600 and the first quartile salary of $92,500). The interquartile range of median salary levels was less for associate professors ($14,800) and assistant professors ($17,500).
Given the considerable variability in median faculty salaries across schools/areas shown in Table 10, SCESF examined available data to determine whether the degree of variability has been stable or changing. For the most recent four year period, the Committee compared the mean salary of faculty members continuing in the same rank at the highest paid school with the mean salary of those at the lowest paid school. [footnote 15] The results of this analysis, as shown in Table 11, reveal that the mean salaries of both associate and assistant professors in the highest paying school gradually become larger than the mean in the lowest paying school from FY 1996 through FY 1998, and then stabilized for FY 1999. For full professors, there was a substantial increase in this difference from FY 1996 to FY 1997, followed by a period of relative stability at about 60% during the following two years. The difference in the highest and lowest mean salaries by school was much greater for assistant professors than for associate or full professors. Overall, for all three ranks, the difference between the highest and lowest median salaries by school increased substantially during the four year period from FY 1996 to FY 1999.
The trend toward greater disparity across schools in mean salary levels of continuing full, associate, and assistant professors, as seen in Table 11, has occurred because of differential annual salary increases in the following two respects:
In short, these statistical facts indicate that, in general, differences in average faculty salaries between lower paying schools/areas and higher paying schools/areas have been, and continue to be, increasing both in dollar amount and in percentage difference. As noted in prior SCESF reports, variability among schools/areas is no doubt a product, to a great extent, of market forces in the hiring of faculty members and in the relative wealth of schools. [footnote 18] The relative wealth of schools is, in major part, a function of how much income a school is able to earn and the level of non-faculty expenditures it regards as essential-all as discussed above in the section on the RCBS.
Whether variability in faculty salary levels among schools/areas represents some degree of inequity is controversial. Some argue that it is, while others argue that it is a natural outcome of the wealth inherent in various disciplines and professional fields that schools represent. Any effort to reduce such variability substantially by central university policy would no doubt require fundamental changes in the RCBS--a system that has become well entrenched during the past three decades.
The 1997-98 report of the SCESF included recommendations A through E. Short versions of these recommendations are presented below along with the responses of Interim Provost Wachter to whom the recommendations were made on May 21, 1998.
Recommendation B: To investigate further, by multiple means, possible inequities in individual faculty salaries.
Recommendation C: To establish a general principle for minimum (i.e., floor) annual faculty salary increments.
Recommendation D: To make efforts centrally to moderate some of the largest disparities in average faculty salaries among schools through the means of subvention allocation.
Recommendation E: To develop a comprehensive policy of faculty compensation (i.e., salary and benefits).
On the basis of these responses, the SCESF plans to follow up on these and other salary policy issues with the goals of improving Penn's competitive position in faculty salary levels with peer universities and of minimizing inequities that may exist in faculty salaries within Penn.
1. External Competitiveness. In general, faculty salaries, benefits, and compensation (the sum of the two) at Penn are competitive with a small select group of universities that provide the highest levels of faculty compensation in the nation. Evidence for this conclusion comes from the following sources:
2. Internal Variability. There is great variability in the distribution of faculty salary resources among the three professorial ranks (see Table 9), among the eleven schools included in this report, and among individual faculty members by rank within schools. For example, salary increase resources for FY 1999 were distributed sufficiently widely that 93% of all standing faculty members received a salary increase exceeding growth in the consumer price index for the prior year (Table 3). In addition, the median salary increase for FY 1999, for each rank, approximated or exceeded the university guideline of 3.5% in 10 of Penn's 13 schools/areas (see Table 8).
Furthermore, a considerable portion of the variability in average faculty salaries across Penn's schools/areas is the product of market forces as evidenced by the roughly similar percentile rankings of each of the five schools/areas included in the MIT salary survey (see Table 4). That is, considerable variability in average faculty salaries among these schools/areas is required to maintain similar competitive standings within their separate academic fields.
1. External Competitiveness. Although Penn faculty salaries are generally competitive with those provided by a select group of universities (as noted above), the following particular conditions are of concern about the external competitiveness of faculty salaries at Penn:
2. Internal Equity. In the absence of data on individual faculty merit to compare with data on individual faculty salaries, SCESF is not able to identify any specific instance of inequity among all the dimensions of salary variability included in this report. However, there is concern that some of the wide variability in individual faculty salaries may entail more than a trivial element of inequity. Though we are not able to report specific instances of salary inequity among individual faculty members, ranks, departments, or schools, SCESF has identified the following conditions that give rise to equity concerns:
Almanac, Vol. 45, No. 32, May 11, 1999