Think of It as Kid Insurance

Janet has a typically thoughtful post about tuition benefits, following on a proposal to eliminate tuition benefits for employees of the University of Illinois. Janet does a great job of rounding up the various pros and cons of the benefit and its possible elimination.

It takes no time at all for the “Tuition benefits are unfair to people without kids” argument to pop up in comments. This is, as always, pretty stupid, because the same logic leads to thinking that health insurance benefits are unfair to people who don’t become catastrophically ill. Tuition benefits are basically kid insurance– it’s a commitment to employees of an educational institution to compensate for lower salary, guaranteeing that even though they are not being paid as much as they might earn elsewhere, should they have children, they will be able to provide those children with a good education.

And that’s the real problem, here. In a sense, the current employees of the University of Illinois have already “paid into” the system– they have worked for less for the last several years, and planned their investments, with the understanding that their children would be provided for. In the absence of the benefit, they might have chosen to work elsewhere, and they certainly would have handled their finances differently.

For the current employees, eliminating the benefit is, in the insurance analogy, roughly equivalent to your health insurance canceling your coverage right before you get sick. Or, to change analogies a bit, it’s like the university not only stopping new contributions to an employee’s retirement fund, but retroactively taking back all of the employer’s contributions, going back to their first day on the job. It’s the breaking of a contract between the employer and employee, in every sense but the narrowest legal one.

This general class of problem is not unique to academia, of course. You see the same thing in the business world– businesses who have traded generous benefits for lower salaries, who find themselves strapped for cash, and start attacking the benefits of their employees (or, worse yet, their retirees). This was a big part of GM’s problems, for example. Sadly, the solution always seems to end up screwing the employees, who have less money and power.

“Yeah, but what are they supposed to do to make the budget work?” you ask. In the specific case of the University of Illinois, Janet has a good suggestion: eliminate the much larger expense of the free tuition waivers provided to members of the Illinois legislature (or, hell, just cut it in half, which would provide the same budget relief as eliminating the tuition benefit for staff). I wouldn’t recommend holding your breath while waiting for that, though– see earlier comment about money and power.

In the general case, I have essentially zero sympathy for managers and administrators who paint their institutions into this kind of corner. They made the choice to buy employees off with generous benefits that they didn’t think would end up costing them anything, and while it looked great on the balance sheet in the short term, it’s blown up in their faces long-term. They deserve to sweat and squirm for a bit, but they should not be able to renege on their commitment to their employees.

If it turns out that these sorts of benefits are not sustainable in the long term, then they might need to phase it out for new hires, but people who are already in the system have paid for their benefits, and should receive the tuition waivers they were promised. They should also investigate the possibility of means-testing the program (there may be tax law problems with this, though)– while these things are usually discussed on-line in terms of their effect on faculty, the effect of the benefit is much larger for the staff, who make considerably less than the faculty do. (Again, money and power.) I would be less offended by the proposals discussed in that article if they affected only faculty, and left the benefit intact for staff. But then, I’m the son of a teacher’s union official, so I’m crazy that way.

Full disclosure: Union offers a tuition benefit that is many times more generous than that discussed in the article, and there have been recent discussions along these lines on campus. What I saw above is my own opinion, and nothing more, and should not be taken as anything official. I’m not in any position to make those sorts of policy decisions.

Comments

  1. #1 KBHC
    December 21, 2009

    Chad, thanks for the post. Even though I am faculty and have a kid, I would be less miffed about this if it affected faculty and not staff. I am paid less than my colleagues at other universities, but staff here are paid, in the words of one colleague, circus peanuts. Either way, as you said employees are the ones without power — at least in situations where the employees don’t have a union — so they are the ones who lose.

    I’m glad this issue is getting more coverage because I don’t think we should just let universities strip away our benefits without raising a stink. The Campus Faculty Association — our unrecognized faculty union at the U of I — is trying to raise awareness about this and other issues (furloughs, time cards) right now: http://campusfacultyassoc.blogspot.com/

  2. #2 MRW
    December 21, 2009

    It takes no time at all for the “Tuition benefits are unfair to people without kids” argument to pop up in comments. This is, as always, pretty stupid, because the same logic leads to thinking that health insurance benefits are unfair to people who don’t become catastrophically ill.

    I have to disagree with this, and express annoyance at your dismissal of the argument as “as always, pretty stupid”. Having children is a choice. Sending children the the school you work at is a choice. If the analogy to health care was really valid, we’d expect people to argue that businesses should be providing this “kid insurance” for their employees.

    The other part of the analogy, I agree with. Tuition benefits are a promise in return for smaller pay – like health insurance, pensions, and tenure – that employers shouldn’t be able to just remove for employees who have been paying into the system in the form of lower pay than they would have otherwise demanded.

  3. #3 Michael
    December 21, 2009

    MRW, the problem with your statement is that you are essentially saying that “having children is a poor decision, and people who make this decision must pay the consequences.”

    Suppose a person wishes to have a child. However, looking at their financial situation, they discover that, while they can certainly support such an endeavour, it is very unlikely that they will be able to put their child through university. Even if their child is very bright, there are simply not enough scholarship opportunities around – and, such scholarships are not necessarily an indication of whether or not a child “deserves” to be at an institute. They decide, in the end, to not have a child because their would not have the same opportunities as other children – a situation that seems decidedly unfair.

    As you have said, the rest of the analogy flows into this, and further strengthens the argument – further demonstrating why “tuition benefits are unfair to people without kids” is a poor argument.

  4. #4 Steinn Sigurdsson
    December 21, 2009

    An interesting metric of how academia is doing, is to ask whether the children of the faculty could, on average, afford to attend the university at full cost, given only the income from the faculty salary.

    There are of course variations on the theme, and spreads in what the costs and income are, but this seems to be a fairly robust metric.

  5. #5 scott
    December 21, 2009

    It’s not just for kids – staff (actual staff, not those on the tenure pipeline) take advantage of the tuition benefits as well. And I can pretty much guarantee that they’re getting a pretty raw deal in terms of salary, respect, recognition, etc, when people start discussing the troubles at universities. I’d just like to remind the faculty who run around screaming “OMG! The sky is falling!” at every little slight that when the staff gets gutted in the budget cuts, there will be no one around to help you manage your email accounts (ahem, Dr. Guy that can’t respond to an email all by his lonesome).
    The kids crack (‘unfair to people without kids’) is stupid because it displays a complete lack of understanding of how the benefit is used. It’s not just for the kiddies; it’s not just used by faculty’s families. Remember, staff are people too. And they’re usually the first to go in times of trouble (almost all of the first round of cuts at my local uni involved staff positions; other concessions were to not create faculty positions but no existing positions were lost).
    The world would be a much better place if more of the faculty could look outside their little PhD-shaped boxes.

  6. #6 Chad Orzel
    December 21, 2009

    I have to disagree with this, and express annoyance at your dismissal of the argument as “as always, pretty stupid”. Having children is a choice.

    In addition to the things other people have said, I would add that while having children is a choice, so is not having children. And one of those two choices adds dramatic additional expenses that are highly likely to affect people’s decisions about where they would like to work. It’s entirely logical that employers would put such a program into place, as it’s a big draw for faculty and staff.

    From the faculty side, I would say that tuition benefit programs are right behind generous family leave and just ahead of subsidized day care on the list of “family friendly” policies that colleges and universities ought to have in place if they want to address problems like the limited number of women in academia.

    And on the staff side, I would argue that tuition benefits are an absolutely essential part of meeting an educational institution’s obligation to improve the larger society by providing educational opportunities for the families of the low-income staff. Any measure that increases socioeconomic diversity (and, given the correlation between race and class in America, this will almost always increase racial diversity) in academia is a Good Thing. If higher education is going to be a tool for social and economic mobility, it needs to be accessible to low-income families.

  7. #7 John Novak
    December 21, 2009

    I’ll preface this by saying that I have no problem with tuition benefits for self and family for university employees, from full professors right down to the janitorial staff. I don’t feel strongly either way, but if pressed, I’d probably be in favor of it just because I like education opportunities distributed widely.

    Not to mention, there’s a long tradition of employee discounts in many fields, and if you work for an industry where you’re not interested in consuming the discount, well, that’s a choice.

    That said, the insurance analogy falls down dramatically for exactly the reason MRW points out– we know what causes children, these days, and people do have a choice. Comparing this to health insurance, or car insurance, or fire and flood insurance, or rental insurance is really kinda silly.

    And Michael seems to be bringing some baggage of his own, here– no one is saying, “Kids are a bad choice, you should be punished for it,” only that kids are a choice, and phrasing this in terms of insurance is highly questionable.

    I feel more strongly about the dopey analogy than I do the issue that generated it.

    (In the abstract, that is– when talking about employees who have participated in the system in good faith for fifteen years only to find themselves screwed at the last moment, that’s obviously no longer abstract. That’s concrete, and brutal. That rises to the level of an Actual Complicated Problem which is probably a little more complex than just pointing at the Evil Administrators. I’d be fascinated to see Dean Dad weigh in on the situation.)

  8. #8 MRW
    December 21, 2009

    MRW, the problem with your statement is that you are essentially saying that “having children is a poor decision, and people who make this decision must pay the consequences.”

    I’m not saying that at all. I’m also not arguing against this sort of benefit, and I’m not saying that it isn’t a “Good Thing”. I’m just saying that insurance is a poor analogy.

    Insurance is about guarding against risk. We would rather pay the comparatively small fixed price than risk having health expenses we can’t afford. Children’s education is not the same thing. We aren’t guarding against risk by buying this so-called kid insurance.

    Chad’s response is all valid, but I can’t see where it falls into the analogy. Tuition benefits help employers hire employees they otherwise couldn’t afford. I’ve got no argument with that. That doesn’t explain how it’s like insurance any more than reduced prices on basketball tickets are like insurance. Tuition benefits make higher education more affordable. I don’t have any argument with that either, but it still doesn’t make it “kid insurance”.

    Tuition benefits are a benefit, not insurance.

  9. #9 Chad Orzel
    December 21, 2009

    Tuition benefits help employers hire employees they otherwise couldn’t afford. I’ve got no argument with that. That doesn’t explain how it’s like insurance any more than reduced prices on basketball tickets are like insurance.

    Your employer is not under any obligation to provide you with health insurance (at least not at the present time). The calculation that leads many employers to offer insurance as a benefit is exactly the same as the one that leads many universities to offer tuition benefits: they feel that offering health insurance will help them attract and retain better employees than they would get without offering it. And it costs less than increasing everyone’s salary by enough to let them purchase their own insurance.

    Medical care is sufficiently important that it’s generally regarded as churlish to complain that the young and healthy employees are subsidizing a benefit used only by the old and sick, so you tend to hear that only from the most annoying subset of Libertarians/Objectivists. But the two benefits are, in a bloodless, assholish sort of way, pretty analogous.

  10. #10 MattXIV
    December 21, 2009

    The only reason it is significantly cheaper to get health insurance through an employer is because it’s tax exempt. There’s no reason to link insurance of any kind to a job beyond tax status – if anything it’s highly inconvienient since you lose your insurance while in between jobs. I can see why they’d do it if it’s a tax dodge like health insurance, but otherwise cash is a better deal whether you have kids or not.

    Also, I agree with MRW – insurance smooths risks related to events beyond your control and having children does not fall into that category.

  11. #11 EricD
    December 21, 2009

    In the current reality where many switch jobs quite often, offering tuition to future kids that wouldn’t be applicable for a couple decades is not much of a benefit to someone without kids (unless I am misunderstanding how the benefits work). If this benefit is offered to compensate for lower salaries, then I would expect those without kids to work elsewhere and try to move into a system with the benefit when it is applicable (I know that is easier said than done).

    I guess I just feel that calling the argument pretty stupid is pretty stupid. Some don’t have kids and don’t plan on having kids ever. Some don’t have kids and don’t plan on having kids while they are with their current employer. Offering lower salary for all to implement a benefit that will knowingly not apply to some (it isn’t like health insurance at all) is an issue worth discussing.

    However, this is why employers offer benefits like these. As Chad pointed out in a follow up comment, it is often cheaper to offer benefits that apply to some rather than offering increased salary to all.

    That said, people choose their employers based on the whole package. There should be some guarantee that the benefits you signed up for are available to you when you need them. I’m fine with offering different benefits to new employees, but it seems wrong to take them away from existing employees.

  12. #12 Jennifer
    December 21, 2009

    I work for a private university that does not offer the tuition benefits that some others in the area do, and it does sometimes come as a surprise to staff who assume there will be a tuition benefit for their families. Employees get a tuition benefit for their own use, but the only tuition benefit for families of employees is for tenured professors, in the form of available interest-free loans for tuition (actually, I’m not even sure we still do that). The most often-cited reason for not providing free or reduced tuition for children of faculty or staff is that it would put too much pressure on the admissions office. Either the admissions standards are altered (and the student population becomes less geographically diverse to accommodate all these local students), or it becomes less a benefit than a lottery.

    My personal suspicion is that there is also concern that having such a benefit (especially if it were one that could be applied to other schools) would attract/retain employees, but not always the ones you want to stay – as it is, we run into the problems of too-low turnover in some areas (this is on the staff side; faculty aren’t really an issue there until they’re of an age that their grandkids are out of college). The promise of free college tuition for your kids if you just stick it out and do enough to not get fired wouldn’t help.

  13. #13 MRW
    December 21, 2009

    Re: Chad@9

    I don’t disagree with the limited analogy based on them both being benefits. But that’s not where you stopped. What I take issue with is:

    the same logic leads to thinking that health insurance benefits are unfair to people who don’t become catastrophically ill.

    The same logic does no such thing.
    The fairness in everyone paying into insurance while only some benefit is based on reducing risk. That makes it fair even to those lucky enough (healthwise) pay in more than they get out. The same argument doesn’t hold for tuition benefits. Tuition benefits can be good for the employer and can even be a Good Thing without being fair in the way that insurance is.

  14. #14 Sharon Astyk
    December 23, 2009

    Tuition benefits do not in all cases discriminate against those who do not have children – in some cases they can be negotiated as part of a benefits package even for those who don’t have kids. For example, a friend of mine is professor at a University in Washington – he is childless and gay and does not at this time anticipate ever having children. Nevertheless, he was very anxious to receive tuition benefits, because they could be passed on to his two beloved nieces, and accepted a correspondingly smaller benefits package. An unmarried friend of mine in a low-paid staff position also was able to negotiate tuition waver for his nephew. It is true that this benefit doesn’t help people without younger folk they love in their lives, but they need not always be children.

    Sharon

  15. #15 Sharon Asty
    December 23, 2009

    Oops, that should have said “their children.”

    Sharon