June 7, 2019

University Goes Corporate

Considering grad student picketing through economic lens provides legitimacy for actions of GSU.

In my experience, labor unrest, pickets, and strikes are almost always a result of management (or administrative) failure. Graduate Students United (GSU) has called off its strike action, but that doesn’t diminish or remove its underlying grievance; indeed the University’s refusal to even recognize it may have made it worse. The very modest economic considerations the graduate students are otherwise continuing to seek are simple to resolve, and represent a very small burden on University finances. So why is there such resistance, intransigence, and lack of imagination from the University administration? 

There are a number of reasons, but there may be one primary one. The GSU protest is a case study in changing university business economics and suggests that more is going on than just a strike: There is a fundamental shift in the traditional working arrangements among faculty and graduate students. What is occurring right in the University’s own backyard is a trend otherwise in corporate outsourcing that is being used in many older businesses, and that many universities are copying (largely as a result of influences from trustees that come from that business world) where one group of workers (in this case the professors and administrators, or “A-scale”) are increasingly subsidized by a large pool of others (the adjuncts, part-time and grad students, or “B-scale”). This allows the “corporation” (the university) to expand without incurring (or by reducing) many traditional employment costs such as insurance and other benefits, and to avoid labor unions or make them more difficult to organize.

In so doing, however, Chicago’s administration is further isolating itself culturally from the larger group of University employees, and further reinforcing a class division, or even “tribal” university society. They are economically antagonistic by taking care of their pay and benefits over others, and oddly unimaginative—there are numerous ways to share with graduate students some of the many benefits they help create, including a form of “profit,” revenue, or efficiency sharing. A good example is Southwest Airlines. They are the most unionized airline in the country, yet the most efficient and profitable. They have an enviable reputation of team spirit and high morale, and their culture of cooperation, trust and an open, flat administrative model is reinforced with shared benefits, opportunity and rewards. It isn’t perfect, but it’s an example of the right kind of enlightened business model that better recognizes human potential and motivation.

The old system of bureaucracy and hierarchy, otherwise, is showing signs of fatigue if you compare it to advances being made in other industries and organizations that are less bureaucratic, fully team-based, and more financially equitable, like indeed Southwest, or Tesla (the electric car company founded by PayPal founder Elon Musk). It is as if the University of Chicago were the General Motors of higher education, rather than a Silicon Valley (or UChicago Polsky Center) technology venture that has a “flatter” more democratic organization, and more evenly distributed economic benefits (not to single out Chicago because nearly all universities are the same). One would think that, of all places, a university or college administration would inherently avoid or reject such old hierarchical social order and embrace the new.

In the end, the administration has only itself to blame for the recent GSU strike, and in many ways has made the problem worse by stonewalling and ignoring it. Yet the management model and uneven executive rewards that the administration continues to defend may be increasingly untenable as students and families struggle with tuition costs and debt (total U.S. student debt as of year-end 2018, according to the U.S. Federal Reserve, is over $1.5 trillion, with $100 billion in default, $110 billion in forbearance, and both categories growing). The GSU strike may have been a bellwether.

The graduate students should be praised for their leadership in confronting a system of inefficient, unnecessary and increasingly fragile administrative privilege, and for their instinctive insight into an unsustainable “command and control” university business model, one that is regularly rejected or even vilified in strategy classes at Chicago’s own Booth School of Business for its failure to produce higher levels of human and institutional performance. 

Matt Andersson, M.B.A. ’96