Bridging the Opportunity Divide

One Maryland College’s Bold Experiment in Capping Executive Pay

February 21, 2014
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One Maryland College’s Bold Experiment in Capping Executive Pay
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A salary cap may not be the most popular idea, but it could help strike a balance between the haves and have-nots.

For the people at the top of the pay scale, the concept of salary caps is probably discomforting. But the idea of providing more equal wages for all employees is being debated throughout the U.S. and around the world. Last November, Swiss voters rejected an initiative that would have capped executive pay at 12 times that of the lowest-paid employees at their companies. In the U.S., tens of thousands of citizens have signed a petition demanding Congress to cap the salaries of corporate CEOs to 50 times the average worker (let’s not hold our breath on that one). And now, students and faculty members at St. Mary’s College in Maryland have proposed a plan that would limit the salary of their next president to 10 times that of the lowest-paid employees — the janitors, grounds crew workers, security officers and housekeepers, who make anywhere from $24,500 to $30,000 annually.

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St. Mary’s last president — the school currently has an interim president, Ian Newbould, while they hunt for someone permanent — made around $325,000 per year, marking a 1:13 pay ratio, according to the St. Mary’s Wages, the St. Mary’s Way website. This, of course, represents a more balanced ratio than that of America’s largest businesses, where the average pay ratio is 1:354. But as colleges continue to raise tuition and fees, which have increased 1,120 percent since 1978, and the salaries of university presidents grow, even as the pay of the average worker remains stagnant, students can’t help but wonder what, exactly, they’re paying for. At St. Mary’s, the numbers speak for themselves. According to the campaigners’ research, the salaries of St. Mary’s president and vice presidents have risen approximately 91 percent since 2000. The salaries of the lowest-paid employees have increased only 56 percent over the same time period. The pay of associate and full professors has increased at even lower rates — 29 and 22 percent, respectively. Student tuition, meanwhile, is up 60 percent.

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Under St. Mary’s proposal, which would need approval from the board of trustees in order to be implemented, the president’s pay would be cut to about $300,000 annually. Obviously, that’s no small amount of money. The hope is that the pay cap will stop the rapid growth of executive pay and save the university money, which could in turn keep tuition costs down. Beyond that, the campaigners hope a pay cap will encourage the school’s top administrator to consider the workers at the bottom of the totem pole, who anonymously told campaigners that they often struggle to make ends meet. “I have to work overtime every week, had to let some of my bills go [unpaid] like my house phone, cable, and cut back on my heating, food, water, and my gas bill,” one worker wrote. “Sometimes I need to borrow money from friends, family, and by the time I get my pay check, I’m broke again.”

Critics of the salary cap say it will prevent the college from attracting talented higher education executives. They also say that providing lower-income workers with higher pay will raise costs, force job cuts and stifle in-house hiring. But the campaigners say that high pay is no guarantee for excellence, and maintain that the cap will attract candidates who are better fits for the university’s mission. “We’re deeply attached to our public identity,” Sandy Ganzell, math and computer professor at St. Mary’s and one of the campaigners, told The Huffington Post. “There’s no such thing as the best college president out there; there’s the best president for St. Mary’s … and that’s the person who believes in our mission.”

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