Top officials’ pay outpaces the economy

Salaries for top officials at Yale and at its peer institutions are rising faster than those of lower level administrators and, according to a recent study, are also increasing faster than the U.S. economy’s rate of inflation.

A study published earlier this month by the College and University Professional Association for Human Resources found that at 48 private institutions surveyed, including Yale, the median pay for 175 administrative positions rose by 3.3 percent from last year, outpacing the inflation of the U.S. economy. The survey results were confidential and several Yale officials said they did not know what the median pay was for all University administrators, but Yale President Richard Levin said administrator salaries have risen on average by about 5 percent each year recently, with larger raises for top Yale officers, whose salaries increased by 6.3 percent from 2002 to 2003. The University aims to keep the average pay raises for administrators on par with the average salary increases for Yale faculty members, he said.

Salaries for most administrators at Yale have risen higher than the rate of inflation, which increased by 2.2 percent from 2002 to 2003. Yale Corporation fellow Len Baker ’64, who sits on the Corporation’s compensation committee, said he is not surprised by the high pay increase at Yale because the University’s overall expenses have consistently beat out the rate of inflation. In general, wages in the United States have continually risen faster than the rate of inflation said Baker, a venture capitalist.

As the University’s highest decision-making body, the Yale Corporation sets salaries for administrators at one of its six annual meetings. Levin, the tenth highest-paid university president in the United States at $695,025 in 2003, advises the Corporation in determining salaries for Yale officers, but is not involved with deciding his own compensation.

“They presumably felt they wanted to reward performance for some of the officers,” Levin said, commenting on rising salaries.

The Corporation considers both seniority and the salaries of similar officers at comparable universities when determining salaries, Baker said.

“It’s keeping up with the market and making sure people want to stay at Yale,” Baker said. “It’s partly a matter of fairness, trying to pay people fairly as determined by the market.”

The higher yearly pay raises for top officers at Yale and other private institutions could be due to higher turnover because of the demanding nature of the jobs, said Kirk Beyer, who is director of human resources at Gustavus Adolphus College in St. Peter, Minn. Beyer said universities generally have to provide bigger pay raises to top officials in order to keep up with the market for university executives.

“To be president, that’s a 24 hour a day, seven days a week job,” Beyer said. “It really takes a lot out of people. When you hire a new person, you have to match the market to get what they want.”

The University aims to stay on par with median salaries at schools with financial resources and size similar to that of Yale, Vice President for Finance and Administration John Pepper said. When benchmarking compensation for administrators, Yale officials also consider health care packages from year to year.

In the finance and administration department, administrator salaries have been rising almost as quickly as those of top officers, but Pepper said he thinks the pay raises are justified.

“The salary increases we’ve had have been in the 4 to 5 percent range,” Pepper said. “That may be a little higher than the national average, but we feel that it’s right to get people where they need to be, and it’s where we should be.”

The University does not disclose yearly salary figures for most of its administrators.

Comments