Universities form illegal hiring cartel to keep faculty salaries low

A dead economist once wrote:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

or to lower wages.

While it is easy and legal for a geographically isolated university like, say, UO to use their local monopsony power to keep the salaries of, say, UO Economics professors at, say, 72% of the market, universities in locations with many competitors have more difficulty.

North Carolina’s research triangle, with Duke, UNC, NC State, and many smaller schools within miles of each other is a case in point. An underpaid professor at one school could switch to another and get a raise to her market value, without even having to move the kids out of state and pay the realtor’s commission on selling and buying houses – the transactions costs that UO exploits. *

Unless, of course, these universities had a “gentleman’s agreement” not to make job offers to each other’s faculty. So I’m not exactly shocked to hear that’s what’s they’ve got. Though it is a little surprising to read the emails revealing just how ignorant these southern gentleman are about how illegal this is. Colleen Flaherty has the story in InsideHigherEd, here:

“I agree that you would be a great fit for our cardiothoracic imaging division,” the chief allegedly wrote. “Unfortunately, I just received confirmation today from the dean’s office that lateral moves of faculty between Duke and [Carolina] are not permitted. There is ‘reasoning’ for this guidance which was agreed upon between the deans of [Carolina] and Duke a few years back. I hope you understand.”

It turns out that Assistant Professor Danielle Seaman understands very well. Read the story for links to her lawsuit. Her lawyers just settled a similar one against Apple and other Silicon Valley employers.

Meanwhile the NCAA is still getting away with doing the same thing to student-athletes.


* Unless you’re a JH VP like Robin Holmes, in which case they’ll use any excuse to give you a raise.

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