With Yeshiva University laying off 60 employees, the suggestion has been raised that the school should have cut senior salaries to make up for the shortfall, as in the reporting of the Jewish Star:
An angry YU employee who lost her job on Monday spoke to The Jewish Star on the condition that she not be identified. “They affect the little people, the people that make the university run,” she said. “The administration is the bread and butter of the university. Had all the senior staff taken a two percent cut it wouldn’t have been necessary to cut all these jobs for the people that aren’t making that much money… Richard Joel makes half a million dollars a year. Why didn’t he take a pay cut?”
Interestingly, that approximately 2% number is also picked up by Jewlicious:
Yesterday, Yeshiva University let go of closer to 120 people (if you include forced retirements)… in what many are saying is a massive screw up by the people on top. Rather than having the senior level staff take 2-5% paycuts, they decided to let go of al the “little people”, people who in fact make the university run. I wonder how the rabbis in the various departments are going to get stuff done without their trusty assistants. Only time will tell.
Is this correct? Probably not: assuming the average laid-off employee had a total compensation package of $45,000 (likely a too-conservative assumption, but we’ll just go with that for lack of a better example), then the 60 employees cost YU $2.7 million annually.
According to YU’s 2007 form 990 filing (available at Guidestar), the total compensation of “current officers, directors, key employees, etc.” was $3,965,502; of which that $2.7 million would be a very hefty 68%. So, had YU’s truly top people taken a 68% pay cut, and had all the laid-off been willing to work at total compensation packages of $45,000, these jobs could have been preserved.
The numbers get very different from there when you try to plug in some actual compensation figures: salaries and wages of employees other than those listed above comprise a total of more than $270 million dollars. Given it’s been reported that these 60 staffers were 2.5% of YU’s workforce, that means the average employee not in that elite grouping is compensated to the tune of $112,772.39 per year. Obviously that includes a lot of extra-large salaries that raise the mean — such as the five medical school professors making $475,000 or more, as listed on page 10 of the form 990 — but those salaries are even more difficult to suggest could be cut, since professors are far more likely to get hired away by other universities if YU doesn’t compensate them competitively (in the area of administration, it’s hard to believe that President Richard Joel, whose religious outlook is part of what makes him fit to be YU’s president, will have to respond to offers from competing universities anytime soon; though other Jewish institutions could of course come calling).
But even if there were 60 such professors making more than $475,000 per year (which there aren’t), and even if all the laid-off staff were willing to work for total compensation $45,000 per year (which they presumably aren’t), that’d mean the fictional 60 professors would actually have to donate nearly 10% of their salaries to make up for the shortfall. Plug in the likely mean for upper-tier salaries of well below $300,000, and it’s yet a greater chunk of their income that’s being called for.
So, clearly, the idea that the most-compensated could save the laid-off with a simple haircut to their salaries is very distant from reality, and ignores the fact that much of operations at YU, like all non-profits, is actually funded by mega-donors and not small amounts of $10,000 here or there.
But what’s more separated-from-reality about this idea is the notion that senior management of non-profits should essentially donate even 2% or more of their compensation to that same institution, just so it can keep people employed. Why would they do this? YU, like all non-profits, does not find ways to make profits and thus generate greater compensation for its employees when it does. A public company might freeze or cut high-level executive salaries to avoid layoffs, because those layoffs will mean less productivity, sales, and thus a smaller bonus pool/stock price for those in leadership. But at a non-profit, there are no such motivations.
This kind of call is essentially saying to senior personnel at YU, “please, give me a hand-out, because I work for the same institution you do.” In doing so, they’re prioritizing themselves as worthy of a level of charity equivalent to their previous full-time salaries, when plenty of others affected by this economy are, at best, living off of government assistance and savings that don’t even approach the level of a full-time salary.
It’s a selfish attitude that is surprisingly out of sync with the realities of charity and poverty in today’s world. Had those making these calls for hand-outs been more in touch with those realities while employed by an institution that ostensibly stresses a strong engagement with Jewish values of tzedakah, perhaps they’d be holding their tongues.