Hard times for economists
Academically-based economists have higher salaries than mere political scientists and, so they tell us, for very good reason. It has to do with supply and demand, which if I remember my Econ 1 lessons from forty-some years ago, goes something like this: The greater the demand, relative to supply, the higher the price. Unlike political scientists, who are lucky to find gainful employment in colleges and universities in the first place, economists are employable in the private sector as well as in academia. To recruit and retain economists, colleges and universities have to be able to compete with the private sector, which means, among other things, offering high salaries.
He who lives by the sword dies by the sword — the “sword” in this case being the vagaries of the market. As the American economy has gone into the dumpster, so has the private sector demand for economists. To make things worse, so has the demand for economists in academic institutions. The economics departments at top schools aren’t hiring this year or, if they’re lucky, may have a single position to fill. And those pick-of-the-litter new economists who were getting wined and dined last year are waiting for the phone to ring this year.
It’ll be interesting to see whether academic starting salaries in economics fall due to the diminished demand. Somehow, I suspect that economists will cook up some new rationales that they can offer to beleaguered deans about why economists’ salaries should remain higher than what the rest of us make. Perhaps they’ll even bring equity considerations into play “We can’t pay X this year less than we paid Y last year” — although that rationale runs smack-dab into their traditional rationale of having to be market-based.
Who would have ever guessed that a profession that did such a crackerjack job of anticipating the current economic mess could have found its services in diminished demand? It’s just not fair.
Justin Lahart had an informative analysis of this situation in his article in last Wednesday’s Wall Street Journal.
Comments
You shouldn’t be so bitter, it’s not appealing!
I think that the decrease in quantity of hires is the reflection of the market and that one won’t find a comparable decrease in salaries. After all…a lot of economists argue that prices are sticky! :)
Posted by: Piffle_dragon | February 17, 2009 02:00 PM
If we can’t pay X this year less than Y last year, why can we pay X MORE than Y (even after adjusting for inflation) as is the case at many universities?
Posted by: Matt Jarvis | February 17, 2009 03:59 PM
I’ve never understood why universities allow economists to use their “real world” value to set salaries. If you want to earn X, go work 80 hours a week in the real world and earn it. Academic employment comes with its own benefits. As we all know, salary is not always one of them. Sorry to sound bitter!
Posted by: kathleen | February 17, 2009 05:13 PM
Hmmm, this could indicate that certain academic fields are sensitive to the market, so if the economy is doing well more people will be interested in going into fields that are lucrative now and appear to be profitable in a few years and if the market is doing badly…well you get the idea.
Posted by: Daniel | February 17, 2009 09:59 PM
As a Harry Truman economist might say to a political scientist, “On the other hand, ….”
Posted by: Shag from Brookline | February 18, 2009 08:23 AM
Who would have ever guessed that a profession that did such a crackerjack job of anticipating the current economic mess could have found its services in diminished demand? It’s just not fair.
Particularly when Marxist political economists, usually scattered in political science departments have been talking about the inevitability of something like this for years. True, true, Marxists have correctly predicted 92 of the last 4 recessions, but, I do think that political economists - `Marxist and otherwise - have had a better understanding of these dynamics than orthodox economists.
See this debate between David Harvey and a neoclassical
Posted by: Simon Kiss | February 22, 2009 05:23 AM