The University is capping salary raises for both faculty and staff in the next fiscal year as part of its efforts to reduce personnel costs by 5 percent.
Whereas typical annual raises have hovered in recent years between 3 and 4 percent, next year employees making less than $75,000 will receive a maximum raise of 2 percent, and raises for those making over $75,000 will be capped at $1,500, Vice President for Finance and Business Operations Shauna King said.
Unlike other cuts in personnel costs, this measure does affect faculty members, for whom the average salary is $130,537, excluding those with appointments at the Medical School. But when some employees expressed interest in waiving their raises in order to avoid other cuts, administrators became concerned that the absence of a consistent policy could create an uncomfortable environment of peer pressure and resentment.
The reasoning behind splitting the cap at the $75,000 level, Deputy Provost Charles Long said, is to give a bigger raise to the people who make less and, presumably, need it more. The $1,500 cap above $75,000 is 2 percent of $75,000, but the same raise on a $200,000 salary, for example, amounts to only 0.7 percent. The $1,500 is also a lot less than the raise someone on a $200,000 salary would ordinarily receive, which would be more like $8,000. The result is major savings for the University.
Administrators and the Yale Corporation considered freezing wages altogether but decided against it in keeping with their preference for introducing reductions gradually rather than trying to recapture in one year the entirety of the budget deficit resulting from the endowment’s estimated 25 percent plunge this fiscal year.
“We felt that a cap rather than a freeze allows us to send the message that we deeply value our staff and faculty even in difficult times,” Provost Peter Salovey wrote in an e-mail Wednesday. “We also felt that we would be in a better position to attract faculty and staff to Yale now and in the future if we were able to avoid a freeze.”
But maintaining salary increases, albeit at tamped-down levels, will require deeper cuts elsewhere because departments will still have to cut personnel costs 5 percent overall even while salaries are rising. When taking that into account, the effective reduction in personnel spending University-wide is more like 7 percent, which the University hopes to achieve by leaving open positions vacant, King said.
That pressure has led some employees to float the idea of waiving their raises in order to meet their unit’s cost-cutting quota. The idea has set off a controversy within the administration, as some officials fear that the lack of a uniform policy could contribute to workplace discomfort.
“Staff and faculty always have the right to refuse to accept a salary increase,” Salovey said in an e-mail Wednesday, “but no one should feel pressured to do so.”
Because the debate is still internal and the issue is still evolving, the three administrators interviewed asked that their names not be associated with a particular viewpoint. But they described concerns that reveal how the economic downturn has crept into workplace dynamics.
In a presentation to unit managers last week, King presented the raise caps and said some people had already volunteered to waive their raises. The senior officials in her department who comprise the Business Operations Leadership Team volunteered to forgo their $1,500 raise and turn it into University savings, for instance. Stephen Murphy, Associate Vice President for Business Operations and head of that leadership team, did not respond to requests for comment.
“We’re not mandating it — no one can mandate it,” King, who did not respond to requests for comment this week, said last week at the presentation. “People can get the raises that they’re entitled to, but we are seeing a lot of people volunteering to give it up.”
In many cases, the motivation for the raise waivers was that, if an entire department banded together, they could avoid other cuts — possibly even layoffs — just by waiving their raises.
But administrators fear that if another department does not do the same and someone loses a job or is reassigned because of it, that person might resent the department for not saving his or her position. Another possibility is that people who personally need the raise might feel pressured to waive it because other people are.
Salaries vary widely across and even within different departments. So some administrators feared voluntary waivers might be divisive and arbitrary.
For some professors, $1,500 could make a big difference — a difference that grows because it factors into their base salaries and retirement funds for the rest of their lives. For other professors who may make money consulting or publishing in addition to teaching, $1,500 may not be so significant.
The result of the controversy so far has been the absence of any policy on the matter. In concrete terms, that means employees cannot volunteer to waive their raises in exchange for a promise to avoid other cuts in their department or school. But there is also nothing to prevent employees from waiving their raises and letting the University keep the money, or from accepting their raise and in turn donating the money to the University. The administration is not running any budget models that assume raises will be waived, Salovey said.
Further details on how the budget cuts will affect each unit are still being hammered out by the Provost’s Office and the Budget Office. A comprehensive budget planning memo should be released within the next two weeks, Salovey said.