The Best Colleges and Universities by Faculty Salary

What if we made money the sole criterion for identifying the academic quality of an institution? As it turns out, data from the (2018-19) Carnegie Classifications of Institutions of Higher Education detail the salaries that colleges and universities pay their faculty (available at data.chronicle.com). It’s therefore possible to rank these schools by the salaries they pay their faculty.

The data on faculty salaries cover not only full professors, but also associate and assistant professors as well as instructors and lecturers. Since the senior faculty at an institution best define it, we therefore focused on full professors in this ranking of colleges and universities by salary.

If we simply ranked these schools by the average salaries of their full professors, we would be repeating a ranking readily available at the Chronicle of Higher Education and through the Carnegie Classifications. We repeat this ranking here, for the top 100 schools by salary, because it shows which schools are paying the most to their senior faculty.

Nonetheless, we also regard such a ranking as inadequate, even from a purely monetary perspective, because certain parts of the country are far more expensive to live in than others. The same amount of money earned from one school will go a lot farther than money from another school.

Thus, after ranking the top 100 colleges and universities simply in terms of average salary of full professors, we then rank the top 100 colleges by salary as corrected by the cost-of-living index by state. As we will see in this second ranking, professors incur quite a “prestige premium” for becoming faculty at elite schools.

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The Top Colleges and Universities by Faculty Salary (Unadjusted)

Jump to faculty salaries adjusted by cost of living

This ranking of the top 100 schools by faculty salary correlates nicely with many standard rankings of the top colleges and universities (including our own custom college rankings). That should not be surprising. After all, it makes sense that the better schools would pay their faculty more, and that the better faculty would tend to teach and do research at the schools that pay them more.

Still, there are some interesting patterns in this ranking. Private schools tend to rank ahead of public schools, paying their faculty more, at least among elite institutions. Full-fledged research universities offering a range of doctorate degrees tend to pay their faculty more than top four-year colleges.

Thus the top-paying research university is Stanford, on average paying its senior faculty $254,000. But to get to a top four-year school on this list means going down to number 33 spot, which is Barnard College at $176,000. There are only 14 four-year colleges on this list, the rest being full-fledged research universities.

The Cost-of-Living Correction

The cost-of-living index indicates how expensive it is to live in one state versus another. To calculate the index, one computes the average cost of living across the United States, which corresponds to the number 100, and then one adds or subtracts how much less or more expensive it is to live in that state. The cost-of-living index is readily available online: see the one at World Population Review.

Jump to faculty salaries adjusted by cost of living

The most expensive state in which to live is Hawaii, with an index of 192.9 (which rounds up to 193). The state which is closest to the national average in cost of living is South Dakota, with an index of 99.8 (which rounds up to 100). So, for every $100 you spend in South Dakota, you would, on average, expect to spend $193 in Hawaii. It makes sense that Hawaii would be so much more expensive given that that just about anything except pineapples needs to be imported from the mainland.

For the purposes of this article, the cost of living indexes for California, New York, and Massachusetts become particularly important. Seventeen schools on this list are from California, thirteen are from New York, and fourteen are from Massachusetts. Their respective cost-of-living indexes are 151.7, 139.1, and 131.6. Other states with schools appearing on this list that have a high cost-of-living index include Washington DC (index = 156.5), Connecticut (index = 127.7), Maryland (index = 129.7), and New Jersey (index = 125.1). Together, these states account for almost 60 of the schools listed on the previous list.

Suppose now we divided all these average school salaries (and those now listed) by the cost-of-living index of the state in which the school is located. Let’s treat the cost-of-living index as a percentage, so dividing by it yields the effective purchasing power of a salary across the United States. Essentially, dividing by the cost-of-living index therefore indicates the adjusted salary that corresponds to what a school is effectively paying its senior faculty.

A cost-of-living index over 100 is therefore going to pull the effective salary down from the nominal salary (as it appears on the previous list). Schools in California and other states with high cost-of-living index will therefore drop considerably, some off the list entirely. On the other hand, states like Tennessee (index = 88.7), Georgia (index = 89.2), Texas (index = 91.5), Illinois (index = 94.5), Pennsylvania (index = 101.7) will see their top schools perform very well with this adjustment to salary.

The change in ranking of colleges and universities that results from adjusting raw salary by cost of living makes for a striking change in the rankings. The number one school on the unadjusted ranking was Stanford. It now drops to number twenty-five. California schools, of which there had been seventeen now drop to two. Other states with a high cost of living also show a precipitous drop in the rankings of their top schools. New York drops from thirteen to two schools, Massachusetts drops from fourteen to five. The number of colleges that rank in the top 100 when salaries are adjusted now drops from fourteen to seven.

On the other hand, states with schools having a low cost-of-living index now do very well. Texas, which on the unadjusted list had seven schools now has twelve. Illinois, which had three on the unadjusted list, now has seven. Moreover, two of its schools now land at the number one and number three positions (University of Chicago and Northwestern University, respectively).

Among the top ten in this adjusted ranking, big winners include Washington University (Missouri), Vanderbilt, Rice, Duke, Notre Dame, and Emory. The only Ivies to make the top ten are University of Pennsylvania and Princeton, with Princeton at number ten.

The Prestige Premium

What’s the lesson in all this? The lesson is twofold: (1) faculty are willing to forgo a significant portion of their real or effective salary in order to be associated with prestigious institutions (e.g., the Ivies and the big California schools, as in our first ranking); (2) schools that pay their faculty a higher effective wage are undervalued in conventional academic rankings and deserve a second look.

It seems that faculty take a cut in real or effective salary in order to be associated with a more prestigious schools, such as a Yale rather than a Vanderbilt or a Columbia rather than a Notre Dame. This cut can be described as a “prestige premium,” where the prestige premium offsets the loss of effective salary.

The contrast between unadjusted and adjusted rankings given above is instructive, and schools that do particularly well in the adjusted rankings deserve our attention, if only because faculty at these schools may be preferring real value over prestige. In fact, these schools probably deserve even more attention than our adjusted rankings suggest.

That’s because many of the elite schools are located in cities where the cost of housing is prohibitive, so much so that the cost-of-living index for the state doesn’t even begin to reflect the financial challenges of housing in those cities.

California may have a cost-of-living index of 151.7, compared to that of Illinois, which is at 94.5. But the two top schools in Illinois are in the Chicago area (University of Chicago and Northwestern University), and the median cost of a house in Chicago is about $291,000 whereas the median cost in Los Angeles is $883,000. In San Francisco it is $1,471,000. In Palo Alto, right next to Stanford, the median cost of a house is $3,325,000 (for these median housing costs, see BestPlaces.net).

At the very least, these rankings based on unadjusted and adjusted salaries are interesting. Certainly, they pick out schools that by any other standards are solid and noteworthy. Whether these salary-based rankings should affect where one decides to attend school as an undergrad or grad student is debatable. But it’s certainly additional information one may want to consider.

Perhaps the biggest takeaway, here, however is for prospective faculty deciding where to settle their roots. Raw or unadjusted salary (the first ranking in this article) certainly seems like an unreliable guide for choosing to take a faculty position at a school. The effective or adjusted salary (the second ranking in this article) is, we would suggest, better if financial considerations alone are in play.

Of course, especially at top-tier research universities, the main consideration for prospective faculty persons is to find a school and department where they can thrive and where they have close colleagues. But where two schools are equivalent on research potential and collegiality, choossing a higher effective or adjusted salary, especially in the face of the prestige premium, may be the wiser course.

One Chicago accountant noted that many of her clients who had gone to California returned to Chicago because “they got tired of using most of their income to service their mortgage.” The top schools on our adjusted salary list avoid paying undue homage to the prestige premium.

The Top Colleges and Universities by Faculty Salary (Adjusted by Cost of Living)