Reforming higher education has become a national issue, mainly due to its rising costs and doubtful educational value for many students. Parents, students, and taxpayers complain about higher education far more than in the past, and that has politicians, bureaucrats, and university leaders looking for solutions. Unfortunately, some politically attractive “solutions” will not improve the situation at all.
Recent criticism of academic tenure belongs to that category of proposed reforms.
Proposed changes in tenure can be summarized under two headings: bottom-up and top-down reforms. (My comments apply mainly but not exclusively to public universities.) My purpose in this article is to briefly explore those two ways of reforming academic tenure.
The commonly understood meaning of academic tenure is a professor’s contractual right not to be fired without cause. Its major function is to guarantee the right to academic freedom. However, tenure does not protect professors against the elimination of their positions due to financial issues facing the institution or to changes in academic programs.
In the United States, academic tenure emerged from the bottom up in the late nineteenth century, sparked by cases such as that of Professor Richard Ely. Some members of the University of Wisconsin Board of Regents wanted to oust Ely because of his progressive views. Even though that effort failed and the Wisconsin regents as a whole strongly defended academic freedom, the attack against Ely led to demands that professors have tenure. Those demands took (and still take) the form of voluntary contracts between professors and their universities.
The common denominator of those agreements is that professors accept a reduction of the monetary income they would receive from alternative occupations (business, law, entrepreneurship, etc.) in exchange for non-pecuniary goods: relatively high job security, freedom from censure, low teaching loads, research grants, graduate assistants, and secretarial help. Scholars who argue that their monetary salaries should approach those in business and law assume, quite wrongly, that the non-pecuniary forms of income they enjoy, including the relative absence of stress, are free goods. Universities, for their part, accept the costs of long-term contracts, including tenure, in exchange for a number of benefits: lower payroll costs, the inflow of grants, and academic prestige.
The fact that tenure contracts are voluntary means that both professors and universities expect to be better off because of them. That is no different from any other negotiated deal.
The process of granting tenure in the United States is not mandated from above. State governments do not compel colleges and universities to have it and, in fact, some schools do not have tenure—such as Grove City College and Lindenwood University. The terms of tenure contracts differ from one school to another, and the margin of acceptable qualifications of the candidates for tenure varies among universities. Colleges and universities are free to change the terms of tenure for new professors and to seek to renegotiate already existing contracts.
The critical question is whether the bottom-up process of granting academic tenure is efficiency-friendly. It clearly depends on the competitiveness of the market for tenure. The best evidence of the competitiveness of the market for tenure is the response of universities to changes in the economic conditions of higher education through time.
Thanks to the Cold War and the launching of Sputnik by the former Soviet Union, the 1960s and 1970s were truly “decades of the university.” Higher education received strong support from federal and state governments, private foundations, corporations, and parents and students. To deal with the shortage of qualified teachers in those years, universities increased the number of professors with tenure contracts.
In the late 1980s, universities began to experience growing financial problems. The resulting pressures on university budgets raised the costs of decisions that have an impact on future value, including the granting of tenure. Thus, in competitive markets we would expect to observe higher demand for non-tenured faculty relative to tenured-track faculty. And indeed, we do. IFigure 1 depicts the response of American universities to changes in the economic conditions of higher education. Schools have markedly shifted away from tenure, as indicated by the continuing increase in non-tenure track and part-time faculty.
An implication of this response by universities is that the market for academic tenure is both competitive and efficiency-friendly. By implication, academic tenure does not contribute to the growing costs of higher education.
Consider the alternative to the bottom-up reform we have seen—top-down changes or even abolition of tenure. Support for top-down changes in academic tenure comes primarily from the business community and many conservative and libertarian groups.
Business people like to point out that they have no tenure. Yet, that is not always true. Golden parachutes in the world of business are contracts that will compensate executives in the case of dismissal—thus, the relationship is one of implicit tenure.
Conservatives and libertarians often criticize the “publish or perish” mentality that governs tenure contracts. That criticism, however, is a bit of mystery. Tenure is a contract and not a law; that is, the terms of contracts should not be the business of outsiders. Letting academic tenure expand, contract, or wither away via voluntary contractual agreements should be more consistent with their preferences.
Top-down reforms, if any, should focus on the incentives of those who hire new faculty. In most universities tenure decisions originate within departments. Tenured professors, especially at first-tier universities, have strong incentives to favor scholars whose presence on the faculty would enhance their prestige. Doing away with tenure would replace academic tenure as we know it with an implicit tenure controlled by unions and administration. And their incentives are not consistent with maintaining or increasing the quality of candidates for faculty positions.
Academic tenure developed from the bottom up in an institutional environment marked by the absence of private property rights. The absence of property rights in higher education limits the efficiency that might be gained from tenure-granting contracts. Nevertheless, the benefits from tenure agreements must exceed the costs; otherwise tenure would not have survived competition from other types of contracts. Over time, the benefits and costs of tenure have changed, and the market for tenure granting contracts responded to those changes.
In conclusion, this note does not defend academic tenure. It defends the process that controls it. Tenure is a contract; replacing it with a top-down decision merely constrains freedom of contract. Tenure may be on the way out, but in a society of free and responsible individuals, tenure should wither away through voluntary decisions . It is best to leave the process alone.