CASE STUDY: SALARY COMPRESSION

Abstract

ABSTRACT This study examines salary compression in a single entity – a small liberal arts university classified as IIA in the WSC region. This university has experienced major salary compression between the full and assistant professor ranks and the associate professor and assistant ranks since 2001. The salary compression question was also examined for the nearly 25 IIA universities located in the West South Central Region. On average there was only minor compression between the associate and assistant ranks since 2001. Major salary compression among academic ranks appears to be unique to this small liberal arts university. The University administration undertook a program to reduce the degree of salary compression in 2012. It used the deviation in university faculty salaries from the norms of equivalent faculty in a national survey to adjust those faculty salaries having the greatest deviation. That process has been in effect for three years and it is reducing the degree of salary compression to closer to parity. This program will need to be continued to normalize the differences in ranks compared to the average of WSCIIA salaries. To date there have been no adjustments for the lower inflation-adjusted income stream that faculty have had over this extended period of major salary compression. Salary compression has had the effect of reducing inflation-adjusted salaries of faculty during their working years but also in retirement as dollar contributions to 403b accounts have been smaller. Also it likely forced some faculty to continue working longer than they intended. Keywords Salary Compression, Inflation-adjusted Salary Differentials, Academic Ranks, Income Loss