After what might have been the weirdest month of my life (I was on a plane to Europe on business 12 days after 9/11, whereas now most of us will be on lockdown for months), much remains uncertain about the world’s economy, politics, livelihoods, and of course sickness and health. Not wishing to join the chorus of people who claim overnight expertise in public health and epidemiology, I can say a little bit about how fast the world of higher education has been upended.
Let’s start with instruction. Obviously colleges and universities are moving to online course delivery fast and furiously. This process relies on software: content management systems were sub-branded learning management systems, and one LMS recently instructed its instructors to call it a Digital Learning Platform. Then there are video bolt-ons, Zoom being the flavor of the month — except for that part where it sells user information to Google et al. Overall, online instruction seems to work really well except when it doesn’t: labs, studio courses, and testing are hard to get right. In addition, student privacy in the US has its equivalent of HIPAA called FERPA, and lots of online tools being pressed into service (Facebook Live?) lack the necessary protections when student IDs and other PII are exchanged, as in a testing scenario. Going forward, we will hear from rural people who lack broadband for online learning, telework, and telemedicine: synchronous video can be finicky and lost frames/speech are quickly frustrating. Our dean wisely advised us to prepare for low-bandwidth scenarios, which fortunately seem not to have materialized in the US (overseas is another story).
The virus's effect on research will be fascinating to track: there are so many conflicting forces emerging. Pro: people have more time in solitude to think and write. Con: it's hard to maintain concentration on research when existential questions -- Central Park hosts a field hospital; predicting 200,000 U.S. deaths constitutes optimism -- confront us daily. (The Stones' "Gimme Shelter" and Talking Heads' "Life During Wartime" are in heavy mental rotation around here.) Pro: there are so many natural experiments running before our eyes, from air pollution measurements to industrial policy to cell-phone tracking of people under various levels of lockdown. Con: labs are closed or staffed only minimally for animal feeding and such. Pro: the virtual infrastructure seems to be performing admirably to deliver needed resources, whether compute cycles or network uptime. Con: student workers including research assistants are pretty much barred from campus. Pro: libraries are offering a lot of services over the wire, though most work with archives and artifacts is halted. Con: academic travel and meetings are shut down. Pro: academic travel and meetings are shut down. Overall, the research output of the next few years will be informed by this chapter of epidemiological history in ways nobody can foresee.
It’s a tough year to be a graduating senior. Internship and job offers can’t really be extended if the hiring company is closed and/or losing money. Students in the travel and hospitality fields, the arts, and retail (Macy’s just furloughed 130,000 people yesterday; TJX has closed more than 4,000 stores worldwide) will be desperate, but even big manufacturers like Boeing and GM face huge uncertainty. Accounting/consulting as a field is rapidly adapting to work from home, raising the question of client-site travel down the road. I doubt it will rebound to previous levels as both managers and clients identify areas for lifestyle improvement and cost savings with no loss of service quality. Given such dismal job prospects, MBA admissions would stand to improve: applications often run counter-cyclically as people step out of a bad labor market to improve skills and earning prospects. Given the timing of this pandemic, that effect -- if there is one -- won't show until September 2021.
Late winter is the culmination of hiring season in many academic disciplines, and new PhDs are usually flying to various on-campus presentations and interviews in January-March. Absent flights, these proceedings are harder to move to video modes of interaction: taking the candidate out to dinner often reveals important cues about his or her cultural fit with the institution. Also in the travel vein, we see hundreds of academic conferences being cancelled or postposed. These are also important in some hiring processes as schools can see as many job candidates as they want at the big professional meetings (the American Psychological Association meeting sees 10,000+ attendees). Doctoral workshops, catching up with colleagues, and networking all are more difficult in a video scenario, which some groups are piloting as we speak. Papers will still get published, albeit without the often valuable feedback one can get in a live room. Also, I recently witnessed our first-ever online PhD defense that went extremely smoothly, so established academic practices are already adapting.
For sake of argument assume a new PhD made her flight to the school that wanted to hire her before everything shut down: I’m hearing of schools that are already rescinding offers. Other departments’ offers are being honored, but all their other in-process searches are being cancelled or frozen. The reason for this is university finances, which are about to be stress-tested to the extreme. Here’s how.
New York is but one state that is delaying state income tax filing because of the pandemic. This delays the state’s budgeting process. Without budgets in the summer, state colleges and universities don’t know what they will have to spend in the academic fiscal year that starts July 1 or thereabouts. (Wild guess: it will be less than last year.) It gets worse. Many schools are issuing refunds of room and board after campuses were closed. This was far from expected: one university official said on the record that Penn State’s liability is more than $40 million. Furthermore, many schools in the US have cultivated pipelines of international students, particularly from China and India. With the combination of travel bans on potentially both sides of the trans-Pacific flight, those tuition dollars might not make it to campus for the fall semester (if there is an in-residence fall semester). The University of Iowa is particularly dependent on China, but fell out of favor last year for a variety of reasons. The University of Illinois, meanwhile, has a $424,000 policy with Lloyds of London to insure against the loss of $60 million from Chinese business and engineering students who cannot attend for specified reasons (pandemics may or may not be on the list.) For their part, Iowa could be in very deep yogurt this fall, and they are not alone. According to Moody’s, about 30% of US colleges and universities, both public and private, were operating at a deficit before Covid-19. Only 5% of private institutions had 90 days of cash on hand.
Stateside, the US is witnessing the single biggest spike in unemployment claims in history. How many parents or grandparents will pull financial support from a student come fall? Students on scholarship, meanwhile, might be funded by proceeds from a college/university endowment, and with the stock market’s recent tumble, endowment proceeds will come in far below projections. Given family financial hardship, lower state appropriations, and smaller investment returns, budgets will get out of whack pretty quickly. Athletic revenues already took a hit with the cancellation of the NCAA basketball money-fest, and fall football is no sure thing. Precarious liberal-arts colleges, and more already-marginal law schools, will be forced to close.
Markets are often efficient, and it may be time for a culling of the herd given so much oversupply (in law schools, for example). What can we expect as the situation stabilizes? First, instruction will benefit as new hybrid models of face-to-face and online delivery are configured in clever ways. Second, asset utilization will likely improve: expect university real estate to keep its lights on longer, potentially including Saturday classes, in order to contain costs to appeal to cash-strapped families who realize how good virtual instruction can be. Third, as with the world of business and non-profits, professional meetings will increasingly have an online component as everyone sees how good WebEx/Zoom/Teams can be in the crisis. They will become the default for certain kinds of conferencing rather than the exception. The video provider with the best technology, business model, and interoperability could realize dominant market share of a newly huge market. Microsoft squandered Skype’s first-mover advantage; might Teams prove the company’s redemption? Other providers — online testing comes to mind insofar as cheating is a massive issue — will occupy new niches in the hybrid ecosystem. Overall, education is but one locus of what will be a wave of what Schumpeter called “creative destruction.” Where else will old rules be rewritten?
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