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Comment by mac01021 | Hacker News Reader

Can someone explain to me the economics driving salaries for presidents of public/nonprofit universities up to $500k-$1M?

Are the people in these positions in possession of a skill that non of the people who would gladly hold the post for $150k have? What is it?

They're hired by a board of regents, right? What is the BOR looking for that they value so highly?

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College presidents/chancellors don't do as much administrating as they do fundraising from alumni and donors. This is more true the higher up in university prestige you go. The amount of value they bring in from donor contributions far outweighs their salaried cost.

Exactly. University presidents easily pay for their salary many times over just through their fundraising activities. Presidents aren't chosen for their administrative prowess, but instead for their professional network and informal connections. Further, most people that could serve as president could easily draw a much larger salary in the private sector and many were formally C-level executives at larger companies where were paid such a salary. For them, becoming a university president is more about prestigious and service to an institute they value than it is about maximizing compensation.

I think the problem to focus on is the large and ever growing number of administrators and staffers throughout universities. One stat that always makes my eyes bulge is that while student enrollment and professors have both grown by about 50% between 1970 and 2010, yet the number of administrators have grown by 85% and administrative staffers grew by 240%! [0] If anything, administrators and staff should've decreased due to productivity improvements from technology.

There is so much fat to be cut from administrative ranks.

[0] https://washingtonmonthly.com/magazine/septoct-2011/administ...

No one works in a vaccuum. If students and alumni are paying for prestige, then you need staff to ensure the prestige is maintained and grown. However if students and alumni are paying/investing in education you may need significantly less staff and more professors/teachers.

If you add the staff that a university president brings in to the payroll is the 5 million dollar/year president actually worth more than the 500k/year president?

Let's say you can increase your own salary, and no one is going to stop you from doing so. While some may not want to because it's a non-profit, others will happily nudge their pay upwards.

Eventually the universities that hesitated to raise their pay will be well below the pay of the others, and feel forced to raise their pay to something comparable to attract decent talent.

Same sort of trend occurring with CEO pay, just with a lot less hesitation because no one feels like they're robbing a charity.

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