discussions of possible changes in Emory employee benefits make
this a timely occasion to offer a potential framework for an ethical
audit of the patterns of compensation and benefits Emory offers
Let me acknowledge at the outset the seriousness of the fiscal challenges
we face as a result of eighteen months of a stagnant economy, the
fallout from September 11, Enrons collapse, and a depressed
stock market. Emory has been seriously affected by these national
conditions. Also, the universitys debt structure makes no
allowances for economic slow-downs. We must continue to pay for
our investments in buildings, landscape architecture, and ongoing
maintenance as well as scholarships and salaries.
Moreover, the university is trying to maintain joint benefits for
employees in Emorys hospitals and healthcare institutions
as well as in the university. This is important because it keeps
the insured population as large as possible, for actuarial reasons.
It is also important because of the decrease in federal support
to hospitals, which seems likely to continue, by Congressional action,
at 6 percent per year. This has had disastrous results for many
university-related hospital systems. This is the context in which
we are being asked to consider, with administrative leaders, proposals
for changing the university benefits provisions.
The proposals in question focus primarily in three areas: 1. reducing
the amount and duration of courtesy scholarships for qualified dependents
or partners of employees; 2. reducing university contributions to
403b retirement plans, resulting in increased costs to employees;
and 3. reductions of university contributions to retirees
coverage for health care. I will not go into the details of these
proposals in this writing. Rather, my intent is to explore with
you an ethical frame for considering necessary cuts in terms of
fairness and impact on the common good for Emory people. In what
follows, I invite you to imagine another
way we and the universitys administration and trustees might
consider approaching our budgetary challenges.
AVEIL OF IGNORANCE
Let me begin with the proposal of an ethical framework that may
be useful for organizing our reflections. John Rawls, emeritus Harvard
philosopher and ethicist, developed what he called an Ideal Contractual
Theory of Justice. Rawlss thinking about equity and justice
fits well, I believe, with the challenge of shaping an ethical audit
regarding the cost-cutting proposals under consideration. Let me
give a brief sketch of Rawlss model, then indicate how it
may help us think about the decisions on our agenda.
Rawlss method involves three reflective steps:
1. We are asked to imagine that we are temporarily unaware of our
present role and position at Emory. This temporary amnesia entails
forgetting our actual role and status at Emory by imaginatively
stepping behind what he calls the veil of ignorance.
Thus we would have an equal concern about whats right and
fair in compensation and benefits for all members of the community,
since we could be in any employees position in any department
or sector of the university.
2. We are invited to consider what ethical guidelines or principles
we would propose for guiding any change in the distribution of monetary
rewards, benefits, or burdens for Emory employees. Not knowing what
our role or status might be, we would be careful to think through
the legitimate grounds for differences in compensation. We would
think about variations due to differences in talent, education,
or training; to the rarity or the wide availability of our skills
and qualifications; and to the weight and uniqueness of our responsibilities.
3. At the same time, we would likely think about what level of
support and benefits is really fair for those whose positions involve
the lowest compensation. In this connection, how much, in terms
of salary and benefits provision, is truly enough at any of the
range of positions we might occupy?
It is in relation to this last issueof what is truly enoughthat
Rawls points to a final step: employing the test of the difference
principle. This principle states that any proposed change
in the giving-getting patterns of an economy or an institution,
if it is to be ethical, should take care to see that it benefits
the worst off in the community first. Before deciding on changes
or increases for persons at other income levels in the community
or institution, we need to consider the proposals impact on
those whose compensation packages are at the low end. If we are
temporarily behind the veil of ignorance and have no idea what our
status or reward level would be in the institution, it would be
prudent to insist upon paying attention to this provision. Special
care should be taken to ensure protection for those most adversely
affected by a change of policy or practice. We might be among them.
ETHICALLY IN A TIME OF STRINGENCY
From Rawlss standpoint, Emory might have a number of options
for dealing with the lean years that should be alongside
the three presently under consideration. Consider the following
First, we might look at our policies of providing annual raises.
We have been told that the rate of raises for the coming year will
be 3 percent, and that the provision of raises will be tied to merit,
not given across the board. One factor this guideline does not address
is that a 3-percent raise at $30,000 ($900) is significantly less
than a 3-percent raise at $80,000 ($2400) or at $125,000 ($3750).
Then there are the costs of benefits, which are also based on salary
level. Benefits are set at 27.5 percent. That rate at $30,000 is
$8,250, at $80,000 is $22,000, and at $125,000 is $34,375. The equal
percentage of raises belies their unequal impacts across the spectrum
of wage and salary levels. Another not-discussed factor in this
proposal is that the annual raise system, whether at 4 percent or
3 percent increase across the board, steadily and annually widens
the salary gap between lowest paid employees and those in the middle
and the top ranges.
As a temporary measure, we at Emory might consider a scaling of
raises, so that for the next three fiscal years, employees from
the minimum $17,160 to $25,000 might receive 3-percent raises, employees
from $25,000 to $60,000 might receive 2 percent, and those above
$60,000 might receive 1.5 percent. This temporary address to the
shortfall in income might be embraced for three years without permanently
lopping off significant long-term benefits.
Second, it appears that a significant number of employees in the
lowest sector of income at Emory ($17,160 to $30,000) do not participate
in the health care provisions of our fringe benefits. I have not
been able to get precise percentages on non-participation. Apparently
it is difficult to tell whether those at this range of income who
do not participate make this election because a spouse has insurance
from another source, or because they judge that they cannot afford
insurance, or may not need it. For some families, though, this is
a devastating hazard. Uninsured families usually use emergency room
care when there is serious illness; medication costs can be overwhelming.
The cost per month for EmoryCares subsidized plan for a four-member
family is $330. This cost is the same for all families in the plan,
regardless of salary level. From the standpoint
of Rawlss perspective on justice, it would be more equitable
to have a graduated plan in which as salary grows higher, persons
would contribute more to the common funds that provide Emorys
self-insurance. Those at lower income levels would pay smaller percentages.
Third, in addition to recommending that we consider the options
mentioned above for dealing with our present lean years,
I suggest that we not make permanent changes or cuts in the three
areas under consideration. With a large endowment which should retrieve
some of its value and income level, Emory is unusually blessed.
The early signs of economic recovery have begun to emerge. Three
years of the kind of stringency suggested above, coupled with strengthened
efforts at increased fund-raising and grants, could give the universitys
endowment time to refill the well. In the meantime,
we should look at equity and fairness in relation to the giving-getting
ratio for those who serve Emory across the spectrum of roles and
It is striking that the three proposals presently on the table all
involve reductions or forfeiture on benefits with long-term impact
on present employees or retirees. Most significant, I believe, are
those that represent a change of contract in health care coverage
for already retired faculty and employees. Cuts in our contractual
obligations with the already retired will place unexpected and serious
burdens on many on fixed incomes. In the veil of ignorance
mode, we really need to take the perspective of loyal past faculty
and employees who will be harmed by the proposed reductions.
As regards the proposed cuts in contributions to employees
403b retirement plans and to courtesy scholarships, we need to try
to evaluate their impact in terms of diminished loyalty and diminished
attractiveness of Emory to present and future potential employees.
In an environment where Emorys salaries and wages are in the
mid to low range for many fields, the strength of our benefits package
gives Emory an edge and commands employee loyalty. Among those benefits
that mean most to some employees are the courtesy scholarships.
Many have given up better paying positions to work at Emory in order
to enable their children to attempt to qualify for Emorys
tuition waiver benefit. The proposed reduction of this benefit brings
deep hurt and resentment. For a larger group, the health care provisions
are a vital attraction. Though hard to calculate, we should give
serious thought to the long-term impact of these proposed cuts on
employee good will and trust, and on Emorys ability to recruit
and retain the quality of employees and faculty with which we are
presently blessed. In facing the necessity of dealing with exorbitant
rises in cost, we all need to find a place on the same page.
I hope consideration of the usefulness of Rawlss ideas can
help guide our discussions and test ethical frame for the decisions
facing Emory. Considering the interim option I have proposed could
provide a space for constructive considerations, with good will,
about how we face present and future fiscal challenges. Both plans
involve painful cuts and belt-tightening. What is the most just
way for us to address a set of problems that affects us all? This
is a good community and a great educational institution. We need
to care for it, for each other, and for those ahead of us and behind
us at Emory.