Annual Faculty Salary Increases at Universities and Colleges: The Effects of Inflation and Recession

The annual rate of growth of the average salaries of faculty at universities and colleges has fluctuated considerably from year to year. Analyses annual academic year data on salaries from 1971‐72 to 1991‐92. Results are presented for continuing faculty (faculty on staff in both the reporting year and previous year), and for total faculty, in both cases disaggregated by rank. Two macroeconomic variables, the expected rate of inflation and whether or not the economy is in recession, provide a good explanation of how large the percentage increase in salaries will be for the forthcoming academic year, and in conjunction with the actual rate of inflation, the behaviour of real salaries of academics. The estimates provide a gloomy outlook for real academic salaries.