The Harvard Works Progress Administration

Let’s get something straight: Harvard is not a public institution and it does not exist to provide jobs. While no organization should layoff employees without reason, Harvard is under no moral or legal obligation to keep positions simply because they currently exist. While I sympathize with the individuals who lose their jobs from layoffs, an employment system where positions cannot be eliminated once created is a dangerous path towards unsustainable organizational design and financial instability that will inevitably cause more damage and pain than the purposeful layoff of employees.

Change is a necessary and beneficial part of any organization. Sometimes change requires an organization to hire new employees, but sometimes change requires fewer employees. In part because of its ineptitude for internal communications and public relations, Harvard predictably received a swift negative response to downsizing announcements. Claims are made that Harvard “owes” some nebulous category—the individuals laid off, the local community, the City of Cambridge, the State of Massachusetts—a certain number of jobs, but Harvard exists to provide education, not employment. While such education could not be provided without employing many people, preventing Harvard from laying off employees would likely result in a smaller workforce in the long run. If Harvard were never allowed to reduce its workforce, the university would consequently be more hesitant to hire new employees whenever a need arose, since any new employees would essentially have tenure.

The notion that Harvard owes the City of Cambridge a certain number of jobs is absolutely absurd. Harvard is the largest employer in Cambridge and, aside from the Massachusetts Institute of Technology, the remaining top 10 employers have almost an order of magnitude fewer employees. As Harvard grows, the number of people it employs will grow, but saddling the University with the burden of not being able to layoff employs will only slow or reverse the rate of growth. Furthermore, Harvard’s presence is responsible for attracting many firms and industries to the Cambridge area. Harvard’s operational spending contributes significantly to the revenue of many businesses that provide employment locally, not to mention the sizeable portion of the Cambridge economy driven by the tourism (and parking ticket revenue) that Harvard attracts. What Cambridge and Massachusetts lose in tax revenue from Harvard’s nonprofit status, they more than make up for in the economic activity Harvard provides.

The argument is commonly made that Harvard should keep jobs simply because it can afford to provide them with its $32 billion endowment, but this claim only displays an ignorance of the University’s funding structure. First, the endowment is not one consolidated fund that the central administration can allocate accordingly. Harvard is (in)famous for its “every tub on its own bottom” funding structure, and funds from any one independent unit within the University—be it a school, department, House—are not accessible to any other unit. Second, even if the money were accessible, much of it comes from donations, which are oftentimes tied to a specific use and cannot be used for anything other than that purpose. If an alumnus provided a contribution for Harvard to buy more comfortable toilet paper, the amount would show up in the University endowment but it would not be able to support employment or payroll costs. Third, even if the money were accessible and unrestricted, donors often specify that Harvard can only use a certain percentage of the interest earned by investing the donation and never spend down the principle itself. If Harvard wanted to spend $32 billion to buy, say, Princeton and Stanford, it would not be able to do so since it could only spend the interest earned on a sizeable percentage of endowment funds. Harvard cannot simply cover employment costs by shrinking its endowment and, even if that were possible, doing so would be irresponsible since a growing endowment provides Harvard the ability to provide more jobs in the future.

While Harvard is not breaching any moral standard by laying off employees, none of this is to say that layoffs should be the first step in cost-cutting measures. When layoffs are made, they should be communicated unambiguously, and it should be clear where layoffs fall within the prioritization of budget cuts. Perhaps there are other areas where Harvard could find less painful and less education-impacting cuts. Perhaps the growth of some segments of the University, such as the number and scope of deans, is disproportionate to staff reductions in other areas. Many arguments can be made about when and where layoffs are appropriate relative to other alternatives. However, at the end of the day, Harvard can and should be able to lay off employees when it has a legitimate reason to do so. Harvard is a private institution, and the number of employees it chooses to have is a matter of neither public policy nor popular consensus. Harvard is not the Works Progress Administration.

Justin Lanning ’12 is an applied organization studies concentrator in Pforzheimer House.