This College Is Trying To Tie Its President’s Pay To Its Janitors’ Wages

CREDIT: Flickr user MDGovpics

Maryland Gov. Martin O'Malley (D) speaks at St. Mary's College commencement in 2013.

A radical policy to combat runaway chief executive pay could get its American debut at a small Maryland college, depending on how a faculty vote goes on Thursday.

Students at St. Mary’s College have been pushing to cap their president’s salary at 10 times what the school pays its lowest-paid employees. The school’s janitors — who used to make just $15,700 until a multi-year campaign by students raised their pay to $24,500 — would serve as the anchor for the pay ratio. The school’s current president, Ian Newbould, earns $325,000 currently, and declined to comment to the Huffington Post on the proposal because salary issues are negotiated with employee unions.

A faculty group is expected to vote on the idea Thursday. If it passes, the school’s Board of Trustees will have to weigh in on it.

The St. Mary’s effort comes amid high and rising costs for higher education throughout the country. The cost of college sextupled from 1985 to 2010. From 2007 to 2012, four-year college tuition, fees, and living costs rose 27 percent even after inflation. While presidents’ pay is hardly the main source for those accelerating costs, college heads’ salaries do strike an alarming contrast with how support staff at places like St. Mary’s are compensated and how resources for students are shrinking. A record number of private college presidents, 42, earned at least a million dollars in 2011, the most recent year for which data is available, and the median salary for private college heads hit $410,523 — more than enough to qualify the majority of college presidents for membership in the top one percent of American earners.

The specific mechanism that St. Mary’s students and faculty are proposing — not a pay cap in absolute dollars, but a cap on the ratio between highest and lowest salaries at the college — reflects a growing movement toward pay ratios outside of the higher education world. Swiss voters recently considered (and ultimately rejected) a similar 12-to-1 pay ratio cap on all companies in the country. New rules under the Dodd-Frank financial reform package require American financial firms to report the ratio of their CEO’s pay to that of the typical worker at their firm.

Unlike a hard cap on top earners, ratio mandates serve to lift pay at the bottom just as effectively as they curb excess compensation at the top. With the ratio of CEO pay to worker pay hitting 273-to-1 in 2012 and mounting evidence that executive compensation has become detached from actual executive performance, and stagnant wages driving the middle class into extinction, policies that attack extreme inequality from both ends are especially potent.