Thursday, December 10, 2009

UC Pays Big Bucks for Fake Compensation Study

The UC has spent a great deal of money on hiring a consulting firm, Mercer, to analyze their compensation, and not only is the study completely flawed and incomplete, but a more effective study could have been done by anyone for free by just using the salary data available on the web. The study (available here) tries to show that the high-paid administrators and star faculty are actually underpaid, while the low-paid unionized workers are above the market rate. Here are the major claims according to the UC:

• On average, cash compensation for UC faculty is 10 percent below market, and total compensation (cash plus benefits) is 4 percent behind comparable institutions.

• Union-represented service workers are closer to the market average than all other categories of employees in the UC system, and their total compensation (cash plus benefits) is 18 percent higher than their counterparts at other institutions.

• The largest compensation gap affects senior management group members (e.g., president, chancellors, deans, vice presidents, chief financial officers) whose cash compensation, on average, was 22 percent lower than their counterparts. Total compensation for top administrators, including university chancellors, was 14 percent below their counterparts at comparable institutions.

• Cash compensation for Managers, senior professionals and professionals and support staff – both union- represented and non-represented – lags behind their counterparts as well. On average, the gap for all of those categories ranges from 13 percent to 19 percent.

• For UC medical centers, results show that cash compensation for most UC medical center employees is near or slightly above market, except for staff physicians whose pay is 18 percent below market.

• In total compensation, all medical center employee groups, except staff physicians, were above market by 4 to 17 percent.


The study comes with a major disclaimer: “The 2009 study followed established industry practices. Consistent with industry practices, cash compensation was defined as base salary, excluding forms of rewards that generally are not a part of ongoing compensation, such as one-time relocation allowances, stipends for assuming additional temporary responsibilities, summer salaries for faculty, one-time bonuses and the like.” The study thus only looks at base pay, while as I have shown, more than 36% of the pay of the 3,600 people making over $200,000 in the UC system comes from non-base pay compensation (and this does not include benefits). The total gross pay of the over $200,000 earners in 2008 was $1 billion and the base pay was $640,000 million (here is the spread sheet:). (I detail, who earned this money, and how it went up 40% from 2006 to 2008 here ). The base pay of the remaining, 147,000 people, half of them unionized, while none of the top are unionized, was $7.3 billion and their gross pay was $7.9 billion (here is the spreadsheet: ).

Another giant flaw in the Mercer study is that their sample is unscientific. They readily admit that they only looked at the salaries of half of the employees (page 9) even though all of the salaries are in the pubic domain. They also excluded whole categories of employees, and as I have shown in my study of senate faculty salaries, due to the incredible imbalance of compensation, with most of the raises going to the people at the top, you cannot simply look at the average salary.

This kind of study and this type of waste of funds is why the workers and the unions and the state do not trust the UC administration. They will pay large sums of money to circulate false information

19 comments:

  1. Thanks for the links to the spreadsheet. I am curious if you know what pay goes into "extra" pay in the spreadsheet?

    Assuming that base salary in the spreadsheet is the same as base salary in the report: If you search for job title "*prof*" in the spreadsheet (hopefully pulling in most faculty, though I don't know UC titles well enough to be sure), avg base salary is $100k, avg non-base (extra) is $37k. If faculty at the universities the study compares to make $0 in non-base, which is not likely, that means the avg non-UC faculty salary is $110k. Then rather than making 10% below market, according to the study, UC profs actually make 25% above market! Of course, it is certain that non-UC faculty get non-base salary just like UC faculty. So the real question, not addressed by the study, is how does non-base salary compare with UC? Is UC up to its old tricks?

    Something else to look at is the shape of the curve of non-base salary. Knowing the median is nice, but it would be nice to know the mean and other data. Obviously there are some coaches who skew the data.

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  2. So the entire purpose of this study wasn't to get an accurate idea of employee income, but instead to justify their current pay rate? The fact that they conducted this study for the sheer purpose of finding manipulatable data shows that they really had no intention of running a real statistical study of the UC pay system. I think this in itself is an insult to the scientific community as well as a huge waste of time and money.

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  3. I find that this is common for most of these "studies" funded by firms; since the companies are the ones paying the ones doing the study, naturally the study will end up being in the firm's favor. This study is practically an insult to our intelligence, seeing as most of this information is available to the public. I agree that these studies do nothing but damage the reputation of the subject and are thus a waste of money.

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  4. So basically this study was just a waste of time...? Why spend time and money on data that is bound to be bias and in the end the results are faulty? This whole "study" should just be thrown out and left at that.

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  5. This post and many other posts in this blog show that the UC administration can do anything and get by with it. This fake compensation study implies that the wealthy should get wealthier and the poor should suffer. It's a pity that the money that UC administration used to make this false compensation study could have easily been used for a better cause such as compensate for the low school budget.

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  6. The study seems to just be an attempt to circulate UC propaganda regarding the pay rates of faculty. It just supports what the wealthy of the UC system want everyone to believe. The fact that it only shows the base pay of everyone just furthers this assertion even more. The wealthiest people in the UC system, I’m sure, are paid through bonuses and other special ways in order to hide the fact that they are paid a lot more then collected information shows. The rich keep getting richer and the poor are forced to bear the burden. The wealthy of the UC system are manipulating the system in order to attain their wealth and they should not be allowed to do that. There needs be a system of checks and balances put in place so that they cannot make more money at the expense of the poor in the UC system.

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  7. It’s ridiculous that the UC system thinks that they can get away with such a questionable study. We are from UCLA, so I don’t understand how they think no one would point it out. They try to use loopholes to make the numbers seem as if they’re in the right. This study just wastes more money that could have possibly been used to benefit the students and shows just how little our education matters to those in charge. I’m sure any of our statistics majors could had done a better job with this.

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  8. I tried. I honestly tried, but I cannot post one comment regarding this flawed "education" system without turning sour.

    I cannot help but think that the UC administrators have connections in the judiciary branch of the government. If they are doing this sort of shady business and are not prosecuted for false and misguiding 'facts,' even when such actions are brought to public eye, then the education system is the least of our worries.

    If something as tangential as this goes by unnoticed, it makes you wonder what else the president of public "higher" education is also doing.

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  9. Well This just furthers my belief that you can manipulate numbers and statistics in a way that fits you purposes. Whenever I see things like this in newspapers and on tv I am always a sceptic.

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  10. It is good to know how the UC system exploits statistics in attempting to prove that high-paid administrators are underpaid. The more people that know about it the better, because they may lead reforms to help improve the UC system.

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  11. It is obvious that the UC is paying someone to find as many ways to skew the statistics as possible. The huge amount of money in bonuses is similar to the corruption in banking companies which gave bonuses to executives while claiming to be bankrupt. The public information that is available should be more exposed to everyone.

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