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UW Faculty Pay Raises Will Save Money for Wyoming

September 25, 2013

By Bill Gern

A lack of state funding for employee pay raises over the past four years has resulted in a steady increase in the number of University of Wyoming faculty members leaving for other institutions. Those departures represent an immeasurable loss of expertise, harming the university’s ability to fulfill its land-grant mission of teaching, research and service.

What many members of the public may not realize is that there’s also a measurable impact to Wyoming’s economy when some of UW’s top performers leave for greener pastures. That economic impact should be more than enough reason to take action and help the university stop the loss of its best and brightest through merit-based salary adjustments. In fact, increases in salary for UW employees actually save money. Here’s why.

High-performing professors contribute to Wyoming’s economic growth not only through relevant research and top-notch teaching, but by attracting millions of dollars in research grants every year. During the last fully audited fiscal year, 2012, faculty members at UW received a record $86 million in external funding for research. The vast majority of those dollars came from federal agencies including the National Science Foundation and National Institutes of Health. It’s money that would flow to other states if it didn’t come to Wyoming.

About 60 percent of a typical research grant goes to salaries for people -- graduate students, post-doctoral researchers, technicians and undergraduate research assistants -- who buy goods and services in the state. Those salaries multiply in the economy to a total impact of about $90 million in a single year. That’s not to mention the economic contributions of successful research projects through industrial applications, spin-out of new businesses and societal improvement.

Simply stated, UW’s research activity is an enterprise zone for the state -- a big one. A good number of faculty members actually make money for the state, far beyond their salaries, by attracting research grants from the federal government and industry.

Since 2009 -- the last time UW received state funding for employee pay raises -- close to 90 faculty members have left. Many were lured away by other institutions or sought employment elsewhere. In almost all cases, those teachers/researchers left for higher-paying jobs. With their departure, about $20 million in active grants was lost -- dollars that would have supported jobs in Wyoming had they stayed. The additional secondary economic loss to the state as a result of those faculty departures is around $21 million. What community in Wyoming can stand the loss of a $21 million business?

And while this number is big enough, the departure of high-performing research faculty is far greater because their economic loss to the university and the state is felt for a number of years. It is here that the financial loss becomes great, because it is additive year after year. It takes time for a new faculty member to gain research competitiveness and significant external funding -- perhaps a decade. In that intervening decade, Wyoming’s estimated loss is at least $75 million. None of this revenue would have been lost if the original faculty member remained at UW.

And here’s the rub: An average 1 percent pay raise for UW employees costs about $1.8 million annually. If UW had been able to grant 1 percent raises each of the past four years, the total cost would have been $18.2 million -- a significant amount of money, but still less than has been lost in direct research grants, and much less than the secondary economic loss, together totaling close to $100 million.

Now, there’s no guarantee that regular pay raises would have allowed UW to retain all faculty members who have left over the past four years. But we could have kept a good number of them. UW might not be able to match every offer that comes from a competing institution, but modest, regular raises to reward successful faculty members go a long way toward retaining them.

The fact is, hiring a new university faculty member is an investment that includes not only the person’s salary, but also start-up costs for laboratories and other expenses. Some of those faculty members, unfortunately, don’t develop into top performers and end up leaving; others flourish and more than pay for their keep with robust research enterprises that take significant effort and time to develop. When we lose professors who are at the top of their game in pulling in research dollars, the state’s investment in developing them ends up benefiting other states and institutions, not Wyoming. And replacing them is difficult and expensive, as start-up costs increase every year.

The situation is similar to professional baseball. An organization makes an investment in a particular player and pays the cost of developing him into a star. That player, in turn, brings value to the franchise through such things as ticket sales, apparel sales and concessions. If the player moves to a different organization when he advances to the big leagues, the investment is lost.

When it comes to university faculty, Wyoming must decide whether UW will be a farm club or play in the major leagues. Over the past decade or so, our elected officials and private donors have helped create major-league facilities at the university with hundreds of millions of dollars in one-time spending -- even during times of economic concern. To continue to populate those facilities with the top players in their fields, Wyoming must commit to paying what it takes to recruit, develop and retain them. That’s the only way UW will fully achieve its potential and become the top land-grant institution in the country.

Bill Gern is vice president for research and economic development at the University of Wyoming.

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