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Faculty salaries have stagnated at most colleges and universities in recent years, even as other portions of institutional budgets have ballooned. But a new study suggests that investing in instructional costs yields key returns on investment, including better undergraduate employment outcomes -- especially for disadvantaged students. Data also suggest that spending on certain kinds of students services, such as career-oriented programs, correlates with better career outcomes for more advantaged students.

“Given the recent focus on college spending, costs and students’ success postgraduation, we need to better understand the link between institutional spending and student outcomes,” the study says. “Not only do instructional expenditures help to compensate for more disadvantaged backgrounds during college but these expenditures continue to help these students in the labor market. They may increase salaries and, more strikingly, they make these students significantly more likely to gain full-time employment and to land a job that closely matches their skill set formed in college.”

Moreover, the authors note, the positive correlation isn't limited to graduates -- even attending a college with relatively high instructional expenditures seems to benefit students, especially disadvantaged ones, in the long run.

Expenditures on student services, meanwhile, have a larger impact on labor market outcomes of college graduates from more affluent or educationally advantaged backgrounds. Increased expenditures in this area correlate with students finding a field related to their college major, possibly because such services provide important networking opportunities that continue postgraduation, according to the study.

“These organizations may also build human capital directly by providing important skills in teamwork and interacting with different types of people that could lead to better skills in job interviews or on the job,” the authors add. “It appears that more advantaged students are able to take advantage of these opportunities more effectively.”

For their study, Amanda Griffith, an associate professor of economics at Wake Forest University, and Kevin N. Rask, a research professor of economics and business at Colorado College, analyzed data from a National Center for Education Statistics longitudinal study of high school sophomores to see how different categories of institutional spending impact graduates and nongraduates’ salaries and employment outcomes. The 15,000 students originally surveyed in 2002 were last surveyed in 2012, by which time many students had graduated from a four-year college and entered (or, in some cases, left) the labor market. A subsample of 5,000 students who attended college soon after high school, about 2,800 of whom graduated, became the researchers’ main data set.

Using various models, researchers examined the student data with respect to four kinds of institutional spending: on instruction, student services, academic support and research. The first two correlated most meaningfully with student employment outcomes, with instructional spending having the biggest impact. A move from the 25th percentile for instructional spending to the median in a ranking of representative institutions, for example, increases postcollege salaries roughly 1.5 percent for graduates and 4 percent for nongraduates. A bigger increase, to the 75th percentile, increases salaries 4.6 percent and 12.5 percent for each kind of worker, respectively.

The researchers say student services (think career counseling, tutoring and student organizations, as opposed to climbing walls and lazy rivers), play a bigger role in getting a job than in how much it pays. But small salary increases were still observed with increases in this kind of spending, primarily for nongraduates. Academic support spending also has a very small but positive effect on both graduates' and nongraduates' salaries.

The researchers also consider the return on investment for students who choose to attend more expensive college where faculty members receive relatively high salaries. A student who attends a top 25 liberal arts college as ranked by U.S. News and World Report will pay about $10,000 more per year than someone who attends a less selective liberal arts college (ranked about 100) on the list. But for that extra $40,000 over four years, the student can expect to benefit directly from $15,000 more in instructional expenditures. And that extra $40,000 would pay off in 15 years in the labor market in the form of a higher salary (linked to the extra $15,000 in instructional expenditures). The effects are even more pronounced at selective versus less-selective public colleges and universities, where the instructional expenditure differential per student is even bigger.

“These very rough back-of-the-envelope calculations indicate that paying the higher tuition for a more selective institution that spends more money on their students can very often be worth it,” the study says.

“The Effect of Institutional Expenditures on Employment Outcomes and Earnings” is now in the revise-and-review stage of submission to a journal that does not permit authors to name it when discussing their findings prior to publication. Griffith, the lead author, said her findings mean that disadvantaged students “can compensate for a lack of resources earlier in their educational experiences by attending institutions with high-quality faculty.” That’s because such students may benefit from better instruction and more high-quality classes, she said. (It should be noted that the analysis of the findings assumes higher faculty salaries mean higher-quality faculty members.)

Student services, meanwhile, appear to benefit more advantaged students, meaning students from higher-income backgrounds or with parents with more education, Griffith said. “We think that this might be more of a story of these students being more familiar with taking advantage of these resources. For example, students with more highly educated parents might be more comfortable with approaching a career services center to help them with their job search," she said. Less-advantaged students might not use these resources most efficiently.

Griffith said the study doesn’t speak directly to the use of more part-time faculty, which in many other studies has been linked with negative student outcomes due to these faculty members’ temporary status (not necessarily their effectiveness as teachers). But because part-time faculty members are paid relatively low salaries, she said, the study does suggest that increased use of adjunct faculty would have a negative impact on graduates, unless they get paid much better, which would be associated with better working conditions. In particular, she said, it would likely decrease the probability of graduates receiving a full-time job and finding themselves in a job that best matches their skill sets.

Over all, Griffith said, “our results point to the importance of high-quality faculty, as well as the importance of other educational student services, suggesting that the increased spending in these areas over the past decade or so is in fact benefiting students rather than wasting their tuition dollars.”

In particular, she said, many colleges are concerned about low representation of disadvantaged students and aim to not only enroll these students at higher rates but to help them to succeed. So having high-quality -- expensive -- faculty members available can have a strong positive impact on these students' success postgraduation.

Adrianna Kezar, director of the Delphi Project on the Changing Faculty and Student Success at the University of Southern California, works with administrative and faculty groups to examine the impact of instructional factors on student outcomes. She said the data make sense in relation to the existing literature, and shine a harsh light on how many institutions choose to spend limited resources.

“We have built a gigantic infrastructure of student support outside the classroom without examining what is actually most important,” she said, noting other research suggests that many students are simply too busy to partake in nonacademic student services. “Student support is best contained in classroom.”

Kezar also said the salary issue could be a kind of “proxy” for full-time faculty employment, in that the institutions with the highest instructional expenditures probably have higher shares of full-time faculty. Full-time faculty employment and strong institutional supports for faculty are correlated in many studies with increased student success.

Gary Rhoades, a professor and director of the Center for the Study of Higher Education at the University of Arizona, said it was unfortunate that the study did not closely examine the adjunct faculty issue, “because the decline in instructional expenditures as a share of overall institutional expenditures is directly related to the growth of adjunct and contingent faculty, and there is consistent and strong evidence that proportion of adjunct faculty is inversely related to a range of student outcomes.”

That’s not because of the quality of the adjunct or contingent faculty, he said, but rather the “adverse working conditions that provide insufficient institutional support and resources and poverty-level wages and often no benefits to the faculty.”

Rhoades also said he had secondary concerns with the authors’ definition of student success, since it’s risky to directly equate success with employment in one’s major field. For example, he said, what’s wrong with a psychology major taking a satisfying job outside the discipline?

One major strength of the study, however, he said, is that it disaggregates what students stand to gain or lose from the disinvestment in the faculty.

“Lower-income students benefit most from investment in faculty, which makes sense because of a range of literature in higher education on the importance to these students of personal contact with faculty,” he said. “If we are going to do a better job of engaging and serving the growth demographics of the U.S., which we have historically underserved, then this paper makes clear that we must start reinvesting in faculty to enhance their working conditions in order to enhance students' learning conditions and outcomes.”

John Barnshaw, senior higher education researcher for the American Association of University Professors, is the author of the organization’s annual faculty salary survey (available on Inside Higher Ed exclusively), which has found that even tenured faculty salaries and overall instructional costs have been relatively stagnant in recent years, even as other shares of institutional budgets have grown.

Barnshaw said the new study draws on a strong data set -- the Education Longitudinal Study -- and reinforces numerous other surveys and reports suggesting the importance of instructional spending for student success. Moreover, he said, “It comes at a great time.”

“There’s a sea change in higher education with the widespread use of part-time faculty, and this is more evidence controlling for several important factors of the impact of instructional expenditures,” he said. “This is an important story worth telling.”

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