Economics and integrity: a critical quantitative approach to pandemic-era layoffs in higher education

Abstract

State-funded public higher education institutions have missions of serving their state and local communities. Their nonprofit status reflects higher education's role as an important social institution and a source of public good. During the COVID-19 pandemic, colleges and universities across the United States faced unprecedented financial challenges as revenue sources threatened to run dry and new expenses added new demands on their operational budgets. To rebalance their budgets, many institutions turned to faculty and staff layoffs as a means of cost-cutting. Layoffs, a common practice in the corporate sector, are incongruent with higher education's mission as a public good. During the pandemic, news sources and press releases cited layoffs in higher education as an inevitable outcome of dire financial challenges, asserting the need for budget cuts and emphasizing the limited options available for higher education to reduce expenses. My study tests implicit assumptions around the connection between the financial crisis and the necessity of layoffs. I take a critical quantitative approach to interrogating layoffs in higher education from 2020 to 2023 at 146 institutions across five large, centralized state higher education system. I test the relationship between institutional enrollment and financial characteristics and the occurrence of layoffs using quantitative methods. Of the 47 variables tested, I found three variables had statistically significant relationships with layoffs. Out-of-state student enrollment in the 2019-20 academic year, receiving more federal emergency funding per full-time equivalent (FTE) enrolled student, and having a higher percentage of students receiving Pell Grants in 2019-20 all had statistically significant relationships with layoffs during the timeframe of my study. My findings challenge assumptions about institutions' financial situations that conduct layoffs and complicate broad narratives around institutional financial health and faculty and staff layoffs during the pandemic.