Reasons for the faculty strike at UNB

Written by Rod Hill on February 2, 2014

After three weeks, the strike by UNB faculty and librarians has concluded with a tentative agreement that leaves some important issues to be decided by arbitration. Despite considerable media coverage, the reasons for the strike were probably not well understood by students, their families or the general public.

Muddying the waters, the UNB administration claimed “The AUNBT bargaining team has emphasized compensation is the most important issue in a new collective agreement.” But in fact the comparability of faculty salary and workload at UNB with those in similar institutions was the key issue from the faculty’s viewpoint.

To clarify the nature of the dispute, which remains partly unresolved, consider the following fundamental questions: How do UNB salaries compare to those elsewhere in the last dozen years? Do relative salaries matter? Can UNB afford to pay competitive salaries?

How do UNB salaries compare?

Negotiations about salary and workload at UNB have long compared UNB with a group of 13 or 14 similar institutions from Memorial in the east to University of Victoria in the west. The list has evolved over time by mutual consent, but all are medium-sized ‘national comprehensive universities’. This excludes small universities (lacking engineering, law and large science faculties), and very large institutions as well as francophone universities, which operate largely in a separate labour market.

UNB salaries have recently fallen far behind those of comparable institutions after many years of approximate comparability in the 1980s, 1990s and early 2000s. The chart shows the average salary at UNB for each rank (assistant professor, associate professor and professor) and the average salaries at the other universities, adjusted for inflation so that changes over time can be properly compared.

comparison_dollars_UNB_G14_to_2010-11plus

The chart reveals two important things. First, average salaries at UNB have been consistently lower than at comparable universities, but the gap has widened significantly in recent years.

The average UNB salary (not shown in the chart) was 3-5 % lower than the comparison group up to 2008/09. But by 2010/11, the last year for which this Statistics Canada data is available, a 12 % increase in the average UNB salary would have been needed to get to the comparison group average. UNB salary changes since then (shown in the chart for each rank) have only marginally narrowed that gap.

Second, the reason why the gaps have grown is that real UNB salaries have actually declined in recent years, while salaries elsewhere have increased. In effect, UNB salaries failed to keep up with the rate of inflation, while salaries elsewhere increased by more than inflation. In 2012/13, the average salary of UNB assistant professors was actually lower in real terms than in 2004/05! Other ranks experienced declining average salaries since 2008/09 and are only now catching up to where they were then.

Assistant professors were $19,000 behind their colleagues elsewhere in 2010/11. This is not a small gap for young academics considering where to begin their careers. The gaps for the other ranks were $17,000-18,000. These gaps have likely declined slightly since then, but remain large both in absolute terms and in terms of past experience.

In its public relations campaign, the UNB administration carefully avoided reference to these facts that directly compare what people are actually paid. The information they provided were in line with a method identified by statistician Darrell Huff in his classic book How to Lie with Statistics: “If you can’t prove what you want to prove, prove something else and pretend that they are same thing.”

In a line frequently repeated in news reports, the UNB administration stated that “about 60 per cent” of faculty “earn more than $100,000 in compensation,” a fact useful in fueling general resentment against university faculty. It also illustrates that faculty earn more than the general population, although not more than other professionals with post-secondary degrees. However, it is entirely irrelevant to the question of how actual salaries at UNB compare with those elsewhere.

Finally, some historical perspective on the salary gap is important. UNB average salaries were approximately equal to the comparable group average from about 1982 to 1995. The 2001-2005 Collective Agreement had a formula to determine salary changes to keep UNB salaries close to the comparison group average. This formula was eliminated in the 2005-2009 Collective Agreement, which, however, still explicitly recognized that adjustments to salaries were “meant to in part account for cost of living effects and the need to be competitive with the comparison group.”

The 2009-2013 Collective Agreement – determined by binding arbitration – reiterated that “it is desirable to maintain a competitive position on the national market in order to attract and retain quality faculty”. But the salary changes it imposed failed to maintain competitive salaries. This precipitated the need to restore comparability as a concrete and meaningful goal, a key reason for the recent strike.

Does the salary gap matter?

Wayne MacKay, a former president of Mount Allison University, said recently: “There needs to be some degree of parity in wages across the country or you won’t be able to keep the best talent and have the best teachers at your university.” In a radio interview with CBC, MacKay explained further that it’s “a comparative market and it’s very much a national and international market for university teachers. To have high quality institutions, you need to have competitive salaries for both administrators and for faculty.”

Most hiring at universities is for assistant professors. Early in their career, many academics work on short-term contracts before competing for tenure-track positions that offer the possibility of long-term employment. Once they reach a more senior rank, most people spend their career at one institution. Job openings at senior non-administrative ranks are limited, but the very best are always mobile.

This typical career path means that location choices made early on by assistant professors are particularly important. A very large salary gap at the assistant professor level will surely dissuade many young academics from making a career at UNB and the continuing salary gap at the higher ranks provides no offset to that.

A common reaction to the question of salary gap is that lower salaries are justified because the cost of living in New Brunswick is lower. But where is the evidence?

The prices of goods people buy are effectively set in a national market, adjusted for costs of getting them to consumers (higher in New Brunswick than in larger, more densely populated areas) and the degree of competition (likely lower here). Income and sales taxes are significantly higher than in most of the rest of the country and are not counterbalanced by higher quality public services. Only the price of land is relatively low, but it’s low, in part, because of these other disadvantages.

But the real issue is that the salary gap has grown significantly in recent years. Has it suddenly become $10,000 a year cheaper to live in New Brunswick than elsewhere?

Some think that there are so many good academics on the job market that even relatively low salaries permit hiring top-quality faculty. The evidence, such as it is, offered for this is not convincing.

In my own experience, I have seen that low salaries and unattractive working conditions affect the pool of applicants: it’s rare now to get any application from candidates from the country’s top graduate schools. We typically hire late, so that the universities with whom we can’t compete have had their pick. There’s no point in bringing people in for costly interviews before that. It’s not at all uncommon for our offers of tenure-track employment to be turned down. The market is competitive; you get what you pay for.

Another common response to the salary gap is “If you are not happy with your salary … then there is the door” (quoting a comment on the CBC News website). In fact, everyone at UNB is going to leave, one way or another. For example, of the eight other economists on my campus who were here when I arrived or who were hired later, two remain; four quit to take other jobs, two retired and have not yet been replaced. I will retire in a few years. The university renews itself every generation.

If UNB salaries remain seriously uncompetitive, a decline in the quality of the university is inevitable. Once that happens, it will be almost impossible to reverse.

University faculty have a professional responsibility to care about the university’s quality. We design our courses and programs and hire new colleagues to try to do the best we can with the resources available. UNB is a major public asset and it’s our job to pass it on in good shape to our successors.

It may seem self-serving to some when faculty members claim that faculty have to be paid more to maintain the long-run quality of the university. Still, the link between pay and quality remains a simple fact, in the same way that the cost and quality of materials used in making any product matters to its quality.

If we let UNB’s quality decline, future generations of New Brunswick students won’t be able to get a university education at home that meets national standards. How will that serve our province’s future?

Closing the gap

Much discussion of salary increases during the strike seemed to forget about inflation. Does 8 percent over four years sound like a nice amount to you? Given current and likely future inflation rates, it amounts to 0 % in real inflation-adjusted terms.

UNB’s initial offer to faculty, which remained on the table for months, was a reduction in real salaries of about 5 %, perhaps an early indication of the university’s lack of interest in negotiating seriously. When faculty gave their association a strike mandate, UNB was offering a real salary reduction of about 0.5 % annually over 4 years.

UNB’s offer just before the strike began is usually described as 9.5 % over four years, which amounts to a real increase of about 0.5 % annually. That could clearly not address the average salary gap. For example, it would just keep the gap constant, and only if salaries elsewhere also grow at 0.5 % a year above the rate of inflation. Crucially, the offer contained nothing on the principle of comparability with the other 14 universities.

The gap between UNB salaries and those in comparable institutions can be addressed by ‘catch-up’ increases that narrow the gap, step by step, over a number of years, as well as annual changes that track the movement of comparison group salaries.

Comparison group salaries have typically increased by a bit more than inflation, which the Bank of Canada targets at 2 %. The central objective of the faculty association in bargaining was to propose such changes and wording in the Collective Agreement that make the link clear between UNB salaries and those in the comparison group.

It seems that in the final hours of the mediated negotiation on Jan. 30, the UNB administration decided that it had to accept arbitration that will determine two specific amounts. The ‘catch-up’ amounts will (fully or partially) close the gap between UNB salaries and those elsewhere. A ‘tracking’ amount for three years of the contract will keep UNB salaries growing at a rate comparable to those elsewhere. This wording was the key objective of faculty negotiators and made the agreement on arbitration acceptable to them.

Despite this tentative agreement, there is no evidence that the UNB administration accepts that salaries at UNB should be actually comparable to those elsewhere. This will no doubt be apparent when it makes its case to the arbitrators.

Is closing the gap affordable?

If UNB truly can’t afford to pay competitive salaries, its deterioration is unavoidable. However, it’s easy to show that this is not the case.

UNB did pay roughly comparable salaries up to the recent past. Have UNB’s finances deteriorated to such an extent that comparable salaries are no longer possible? Can it be that UNB faculty have been suddenly radicalized and are knowingly and irresponsibly demanding the impossible? Or is it the case that President Eddy Campbell’s administration has changed the institutions’ priorities in recent years?

Because financial statements are not my favourite bedtime reading, I took the administration’s claims of hard times at face value. But the faculty association has drawn its members’ attention to UNB’s audited financial statements from which I have constructed the accompanying table.

This table shows the university’s annual surplus: the difference between its revenues and what the administration has chosen to allocate to its expenses. Since 2006/07, these surpluses have totaled $107 million. With the exception of the 2008 financial crash, expenses as a share of revenues have been on a steady downward slide. In practical terms, this has meant a growing salary gap, program cuts, retiring faculty not replaced, and increasing faculty workloads.

UNB Revenues and Expenses, 2002/03 – 2012/13 (millions)

Fiscal Year

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13

Revenues

$203.8

220.1

233.4

253.0

268.7

271.9

264.0

282.7

296.3

315.9

316.6

Expenses

$202.1

213.7

230.6

247.9

256.0

260.9

267.6

266.4

277.0

292.0

288.6

Surplus

$1.7

6.3

2.8

5.2

12.7

10.9

-3.6

16.3

19.3

23.9

27.9

Expenses, as percent of revenue

99.2%

97.1

98.8

98.0

95.3

96.0

101.4

94.2

93.5

92.4

91.2

Source: UNB Consolidated Financial Statements for Fiscal Years ending April 30, 2013.

A simple calculation shows the affordability of the salary increases that would close much of the gap with comparable institutions. Suppose that all 570 full time faculty and librarians were each given an immediate $12,000 salary increase. That’s $6.8 million in extra salary costs, about a quarter of the surplus in 2012/13.

If salaries are made roughly comparable, then to maintain comparability salaries have to change at same rate as those elsewhere. Given the rate at which UNB’s revenues have been rising in recent years, UNB can afford to keep salaries comparable into the future, if the university is properly managed. The faculty association, AUNBT, is correct when it argues that the dispute at UNB is about the choices that are being made with the resources that UNB already has (or can be expected to have in the future).

What did the UNB administration say about the affordability of comparable salaries? Its website stated: “AUNBT is seeking  a 26% salary increase over four years which would add $45 million to the university’s $179 million operating budget.”

The negotiating position of 26 % seems correct: 3 % each year for 4 years to close a 12 % gap in average salaries; 3 % per year to track on-going salary changes in the comparison group. But the claim that this would “add $45 million to a university’s $179 million operating budget” was a deception.

Full time faculty salaries total about $65 million a year. From this base level, four annual 6 % increases would add $4 million to salaries in year 1, $8 million in year 2, $13 million in year 3, and $18 million in year 4. The total for all four years would be $43 million.

The administration took this 4-year total, rounded it to $45 million, and pretended that it’s an expense the university would face in a single year. It then compared it to the lowest number it could find, a number far lower than the actual annual expenses in the audited financial statements. To admit that salary changes over 4 years would add an average of $10 million a year to the expenses of a university with more than $300 million a year in revenues would hardly justify the hysterical claim that it would “significantly jeopardize the university’s financial sustainability.”

In academic life, respect for the facts and for honest argument are values everyone shares. To judge from their recent behaviour, the senior administrators at UNB do not share those values. That does not bode well for relations within the university in the coming years should those administrators remain in their current positions.

I started looking into the facts that I have described here to understand better the issues in this strike and to ensure that my colleagues and I were doing the right thing. In retrospect, it seems the strike was inevitable, an outcome of the ballooning salary gap as UNB salaries stagnated, the declining share of revenues allocated to expenses, and, what I’ve sensed on my own campus at least, the increasing demoralization among the faculty.

The strike has already had some positive outcomes. It brought faculty out of their isolation and apathy and got them to reconnect with each other. The lack of confidence in the senior administration seems almost universal and apathy is no longer an option. Across campuses, the faculty seem energized to continue to work together to change priorities.

The strike was undoubtedly costly for current students. However, the university’s trajectory had to be altered and, unfortunately, it seems this was the only way the faculty could resort to, to try to begin to bring about change.

Rod Hill is a professor of economics at UNB’s Saint John campus.

Corrected version, March 25, 2014.

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