Monday, November 30, 2020

The bidding war to attract high level professionals that pushes up the cost of college and other things

In a thread about how much the cost of college and certain other things have gone up compared to average wages, I wrote.

Things like automation and globalization has brought down the relative cost for many goods and services. Wages for workers, providing those goods and services, are set by the prices businesses can charge for things. Businesses often, themselves, running on a slim margin.

Meanwhile the cost of assets, such as home values in many regions, goes up pushing up the price for renters and first time homebuyers.

Another problem is the relative rise in costs for some professional services compared to the cost of other things. So many things at Walmart cost less than higher level professional services. This drives up the relative cost of higher level professional services like medical care and education.

One of the problems is a bidding war between institutions who hire higher level professionals. Organizations trying to outbid one another by raising the salaries to keep and attract top level talent. Universities raising their president, top administrator and top professor salaries for fear that these professionals might leave for schools in another state that pay more or leave for the private sector. It's been a bidding war. Like the NFL Draft.

Add to that, the problem of anti tax attitude among voters. The percent that the state pays for higher education went down in recent decades. More of the cost of higher education, in the state supported schools where a lot of the students go, has shifted over to tuition; rather than the state subsidy. A higher percentage comes from tuition than 30 or 40 years ago. A higher percentage of a higher total cost. A double whammy.

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