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.