At UC Berkeley, It Pays Well to Worry About Inequality

Steven Greenhut

This article originally appeared in The American Spectator.

Former Clinton-era Labor Secretary Robert Reich, now a public-policy professor at the University of California at Berkeley, has warned that “we are heading back to levels of inequality not seen since the Gilded Age of the late 19th century,” invoking the term applied to a society festering in poverty but covered by a veneer of gold. “The dysfunctions of our economy and politics are not self-correcting when it comes to inequality,” Reich added, stepping up the sense of doom.

It would be easier to admire Reich’s commitment to equality if the University of California hadn’t paid him $327,000 in total compensation in 2015. Obviously, professors at top universities tend to earn big bucks, but U.C. Berkeley also is home to the Center for Equitable Growth, which produces “research toward achieving economic growth that is widely and fairly distributed.” And as the California Policy Center’s Marc Joffe explains, it really pays to be concerned about inequality.

Transparent California data finds that Center for Equitable Growth Director Emmanuel Saez received a total compensation package of $412,000 in 2015, with its three advisory board members each earning between $365,000 and $525,000 in total compensation as University of California professors. Furthermore, Joffe reports that the City of Berkeley has an international inequality rating approaching that of Haiti. Think of it as Port-au-Prince with more aggressive homeless people.

None of this would really matter if the 10-campus U.C. system and its 198,000 employees weren’t so dependent on California taxpayers for direct subsidies and on federal taxpayers who fund the easy student credit that helps propel the spending train. Sure, around three-quarters of its funds come from medical centers, private donations, government contracts and sales, but the remaining “unrestricted” funding comes from us.

When Reich and Saez complain about income inequality, they don’t seem concerned that general taxpayers and U.C. parents — who typically earn far less than they do, and might not get one of those cushy government pensions — have to pay more to keep them living large. I have yet to hear of an organized effort by, say, the Center for Equitable Growth or the professoriate in general to share in the pain of the latest proposed tuition hike.

Yes, U.C. officials are yet again calling for significantly higher tuition and student-services fees. I’d argue that U.C. doesn’t need the money because it misspends many of the billions of dollars it has and it faces little pressure to control costs. It seems so obvious, but don’t expect that point to even get a hearing during legislative proceedings.

The U.C. system threatens such hikes every few years. The last big push was in 2014, and the Legislature — after complaining that U.C. officials were holding it hostage — gave in to its demands and increased state funding. The regents recently voted yes, with Lt. Gov. Gavin Newsom complaining that the increases take pressure off the Legislature to give the system more dollars. Tails you lose, heads I win.

Immediately after the last time we played this game, the Board of Regents hiked the pay of the system’s highest-paid employees, as the Los Angeles Times reported in October 2015. “The number of those making at least $500,000 annually grew by 14 percent in the last year, to 445, and the system’s administrative ranks have swelled by 60 percent over the last decade,” the article added.

Students need to realize the real cause of the problem is standing right before them in the classroom and behind them in U.C.’s administrative bureaucracies, especially the massive Office of the President. In general, U.C. officials can’t stop spending. The current $29 billion budget is up about $5 billion from the last time the university demanded more cash. State support fell during the 2007 recession, but its budget is up more than 40 percent since then.

What else could we expect?

Former Obama administration Homeland Security Secretary Janet Napolitano was named U.C. president by the system’s Board of Regents in 2013. She’s a “veteran at managing and perpetuating bureaucracies,” wrote Richard Vedder in Bloomberg, and “one well-connected enough to keep the federal flow of support coming and to shake more money from the state’s already overburdened taxpayers.” She’s also a master at political correctness, someone who has launched a campaign against “microaggressions.”

The latter point alludes to another good argument against the latest U.C. tuition hike. Sure, students ought to pay market rates for their tuition. But bolstered by a never-ending and inflationary sea of public subsidies, the university system never has to make tough choices. Its priorities are askew. After it blows the money building luxury dorms and creating departments that dish out PC rubbish, it complains there’s no money left. It then frets in public about the quality of the education it can provide given its level of destitution.

“We’re at the point where if we don’t do this, if we don’t invest, the quality of education is going to suffer,” U.C. spokeswoman Dianne Klein told the Los Angeles Times last month. And so the scare tactics begin, and legislators scurry. The unions representing the universities’ nonfaculty workers know how to play the game, too. At a recent rally at U.C. Santa Barbara, protesters cited work from the Reich-founded Economic Policy Institute, complained that U.C. clerical workers can’t afford to live in Santa Barbara and that 70 percent of them suffer from “food insecurity.”

Well, no one can afford to live in Santa Barbara these days. Its median home price is more than $1 million, thanks to all those growth controls supported by the Democratic politicians these union blowhards routinely help elect. The food-insecurity nonsense is based on responses to a highly subjective online study. It’s hard to believe that U.C. union workers have a Gilded-Age level of hunger given that they earn nearly 50 percent more than the median income for a typical Californian — and don’t get me started on their pensions.

U.C. employees don’t receive the most generous pension formula in the state, but their system has a special provision that lets employees accrue benefits until 40 years of service, per the CPC report. For instance, the absurdly generous “3 percent at 50” benefit common in California public-safety fields lets employees receive 90 percent of their final years’ pay at age 50. But it stops accruing after 30 years. Often, these employees retire and then start double dipping at another agency, but that’s another story.

At U.C., however, the dollars keep accruing. Joffe notes a professor of psychiatry at UCLA who received $354,000 in pension payments in 2014, plus cost-of-living adjustments. Meanwhile, the university contributed $2.52 billion last year in pension contributions, which works out to $9,800 per student. He’s right that this has “proven very expensive for students and taxpayers.”

Well at least that professor — caught on YouTube explaining to his colleagues the university’s retirement benefits — isn’t lecturing the rest of us about income inequality. I promise I won’t complain about paying the extra tuition for my daughter if U.C.’s inequality police agree to slash their compensation in order to help the less fortunate.

Steven Greenhut is senior fellow and Western region director of the R Street Institute, and a contributing editor to the California Policy Center.

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