Comparison of U.S. Higher Education and the U.S. Automotive Industry
Bayard (“By”) Baylis, retired
Former Provost of Cornerstone University, Grand Rapids, MI
Recently as I watched a major league baseball game on television, the play-by-play announcer commented on the large number of Japanese players that were on the rosters of the U.S. major league teams. The color commentator pointed out that one of the up and coming star pitchers in Japan asked the Japanese pro teams not to draft him because he was going to go to America to play in the best league in the world. That phrase “best in the world” rattled around in my brain. Where had I heard that before? Twenty years ago, U.S. automotive manufacturers were throwing that phrase around in talking about their cars. The engineering and the construction was “the best in the world.” German and Japanese manufacturers were watching U.S. firms to see “how to do it so that they could emulate them.” But automotive manufacturers were not the only group throwing that expression around. For forty years, I have heard that same expression in higher education. U.S. higher education is the best in the world. People from all over the world are coming to America to take advantage of the myriad of opportunities and to see how it should be done.
What’s the problem? Look at the American automotive industry today. To investigate the health of the automotive industry, I did what almost every student of the 21st century does, I went to the internet. I found a Wall Street Journal Article from November 22, 2005, entitled, “A Tale of Two Industries.” The article began by stating that General Motors had just announced that it would close nine plants and cut some 30,000 jobs. I did not remember that exact article. However, I remembered the announcement. We had just moved from a small Indiana county that was rocked by that announcement. The largest employer in the county was GM. Buried in that announcement was the fact that GM was closing one of its two plants in the county and cutting almost 2,000 jobs. Later that week we found out that this included the job of one of our former neighbors. These cuts took a huge toll on a county that already had an unemployment rate hovering at around 10% at the time. The article continued by stating “There’s no doubt that GM and Ford especially are in a big hole thanks to high fixed costs and shrinking market share.” The article went on to outline the rise of a second American auto industry; one centered more in the South than the Upper Midwest. This new competitor was paying its employees well and as of November 2005 accounted for 26% of all cars made in America. The article suggested that the decline in the Big Three companies represented a failure to provide products for which people were willing to pay a premium. What’s this got to do with U.S. higher education?
I believe a 2002 research piece by the National Center for Public Policy and Higher Education entitled “The Iron Triangle” explains the connection. The report begins with the premise that “parents and students…are starting to question whether higher tuition costs-and the debt families shoulder to pay them are always warranted.” How many students and parents are willing to pay a premium to go to a residential liberal arts college or a state flagship university?
Plant after automotive plant in the Upper Midwest has closed, wreaking economic disaster on family after family and town after town. Will we see the same thing in higher education? I don’t know but we have been led to believe that the rate at which colleges are closing is increasing. To check out this assumption, I did a little research on the matter. Using the best list of closed colleges that I could find, which is maintained by Mr. Ray Brown from Westminster College in Fulton, MO. Mr. Brown maintains this list on a personal webpage <http://www2.westminster-mo.edu/wc_users/homepages/staff/brownr/ClosedCollegeIndex.htm> to help displaced alumni find out how they can get transcripts from defunct schools. In Mr. Brown’s list I found 1385 U.S. colleges that have closed since 1850. As I compiled Brown’s data I found counter to general public opinion and my intuition, which may have been biased by current publicity, the worst decade for school closing was the 1970’s with 183 school closings, compared to 46 so far this decade. The second worst decade was the 1930’s with 134. The next worst decade was the 19-teens with 126 closings. The 1990’s was the fourth worst with 100 school closings. I should have remembered the 1970’s. I was working at a struggling college at the time. It was just barely getting enough students to hang on. It did eke out an existence until the 1990’s when it finally closed, a victim of its own lack of foresight and planning during the good times. It lost students to colleges with better facilities and more programs. Are there any patterns to the schools that closed? A quick look indicated that a higher percentage of the closed schools were smaller schools in agricultural areas west of the Mississippi River or South of the Mason-Dixon Line.
Data compiled from a list of closed institutions maintained by Mr. Ray Brown on a personal webpage
Why do college personnel have the opinion that we are in bad times? I think it is due to the fact that generally many of us in higher education administration experienced the good times and growing enrollments during the golden ages of the 1980’s and first half of the 1990’s. During these years, we grew comfortable in our kettle. We are like the crab or lobster that grew comfortable in the pot that was slowing coming to a boil. When we finally realized that the water was hot, we started clawing frantically to find a way out of the kettle. Compared to the 1980’s, the last several years have been a famine. Given the actual number of college closings so far this decade, it appears that we are surviving the famine and the hot water. However, before we get too cocky, we need to remember that for every year of small entering classes, it takes four years of plenty to fill up the store house again; plus the conditions that brought about the famine have not improved and may even be getting worse. If we think about the dust-bowl conditions in Middle America during the 1930’s, some of those areas are still not fertile enough to yield significant crops. Am I suggesting that we are heading into an educational dust bowl? Not if we are cognizant of the dangers and act appropriately.
We can analyze school closings. What we don’t have is good data on the number of individual programs or degree offerings that have been shut down. I think it would be an interesting study to analyze program closings. Even for colleges that do not close, college administrators and faculty members are very worried about flat enrollment or enrollment declines. Without enrollment increases, the new buildings, the new programs and new equipment, and salary increases are not going to happen. I believe that the reason for this is the fact that U.S. higher education is using a revenue plan that is doomed to failure. To my brothers and sisters in the academy, I don’t apologize for thinking of higher education as a business. For forty years, I have been very thankful that the paycheck at the end of the month cleared the bank. I was also very thankful when I saw that the medical insurance premiums had been paid for another month. To provide the revenue for these items, colleges have to act as if they are businesses that provide a service in exchange for revenue. They have to sell something. What do colleges sell? I am pleased to say that most colleges do not sell degrees. What they sell are credit hours. Credit hours are the pricing mechanism used by most colleges. Credit hours are also the base for faculty wages. What’s the problem with this? How do you increase revenue? There are essentially five ways to increase revenues in this format.
- Sell more credit hours by increasing enrollment
- Sell more credit hours by making the current students take more credit hours
- Charge more per credit hour
- Pay faculty less by reducing wages per credit hour
- Pay faculty less by becoming more efficient in offering more credit hours for the same pay as now.
In the current climate, it is highly unlikely that the general public will take kindly to options 1 through 3. Options 4 and 5 will be fought by faculty members that believe they are already underpaid and overworked.
In the face of these prospects, there has been the growth of a second educational industry (sound familiar?). The Sloan Consortium which conducts an annual survey of online education in the U.S. reported in their 2008 report entitled, “Staying the Course,” that more than two-thirds of all U.S. accredited institutions offered some online education in 2007, with almost 4 million students taking at least one online course. This is more than twenty percent of all U.S. higher education students, eerily similar to the automotive industry numbers. It also represented more than a 12 percent increase over the number taking online courses in the fall of 2006. This rate of growth is more than 10 times the growth rate of the number of students taking on-ground courses in U.S. higher education institutions. Many proprietary institutions are prospering, as well as the online educational operations of public flagship universities and many residential liberal arts colleges. Why? They are providing a product at a reasonable price in a fairly convenient format for a public that does not believe the premium that the residential liberal arts colleges and flagship universities are charging is worth the difference in price. I think we should be taking seriously the question raised by Joseph Marr Cronin and Howard E. Horton in their May 22, 2009 Commentary in the Chronicle of Higher Education entitled, “Will Higher Education Be the Next Bubble to Burst?”
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