Faculty Compensation and the Cost of Living in American Higher Education

Abstract

Dr. Smith, a faculty member at Harvard, receives an annual compensation package worth $63,200, while Mr. Doe, a faculty member at Augustana College, a small four-year institution in Rock Island, Illinois, receives a package worth $39,100. Both individuals are earning the average compensation for faculty at their respective institutions. Smith's superior compensation is hardly surprising; after all, he is a faculty member at one of the most affluent universities in the world. Appearances, however, can be deceiving. Smith's purchasing power in the Boston area is in fact worth only about $41,500 after adjusting for cost of living, the same as Doe's level of purchasing power in Rock Island. This hypothetical example underscores the fact that compensation alone is not a precise indicator of the financial well-being of the professoriate. A compensation package of $40,000 in Boston is not one and the same as a compensation package of $40,000 in Louisville, Scranton-Wilkes Barre, Champaign-Urbana, Palo Alto or Rock Island, Illinois. The purpose of this article is to demonstrate that cost-of-living differentials throughout the United States are so substantial that merely discussing academic compensation without reference to cost-of-living