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Enlarged Endowments and Wronged Workers

By Steve S. Li
By The Crimson Editorial Board
This staff editorial solely represents the majority view of The Crimson Editorial Board.

Harvard’s endowment just got bigger — like, $11 billion bigger. The Harvard Management Company returned 33.6 percent on its investments this fiscal year, pushing the endowment’s value to a colossal $53.2 billion: a sum roughly equal to Slovenia’s GDP. While the endowment isn’t exactly a bank account (much of the gifts that compose it are earmarked for specific schools and purposes), a sizable chunk of the multi-billion-dollar fund is unrestricted.

These returns, plus the University’s $283 million budget surplus, mean Harvard has emerged from the pandemic in great financial health. But what does this wealth mean to the workers that Harvard, when faced with financial uncertainty, cut loose?

The endowment’s increase, which defied expert concerns that the pandemic would cripple returns, fits a broader trend. Yale, MIT, and Dartmouth all reported investment returns of at least 40 percent this year, increasing their endowment, in proportion, more than Harvard. In this sense, Harvard lost — but we’re not convinced such comparisons are all that helpful.

HMC is open about its “lower risk” approach to endowment management. In the words of HMC’s CEO, “the tradeoff is, of course, higher returns versus a less volatile revenue stream.” This fiscal year, Harvard underperformed the S&P 500, which, during that period, went up about 40 percent. But this staple stock market index also plummeted 48 percent in just over six months during 2008’s Great Recession. The percent Harvard’s endowment shrunk was nearly half that. To us, this signals the value of Harvard’s endowment management strategy. With an endowment as large as ours, positive returns of any size rake in major rewards. That careful approach has served us well, and ought to continue — even if it means granting Yale a victory in percent returned.

Thankfully, this surge in higher education endowments hasn’t been limited to the Ivies. Duke reported a smashing 56 percent endowment return, and the University of North Carolina batted a strong 42. Ultimately, these returns mean more capital is available to support the pursuit of knowledge (the glorious mission of any university) and to support staff and students. We hope this cash influx offers some desperately needed relief to the financial struggles that have plagued American higher education for years, which were only worsened by the pandemic.

Yet at Harvard, the news of our swelling pockets stands in stark contrast with our administrators’ depressing choices, which have prioritized wealth over workers. Over the past year, citing fears that economic downturn might inflict long-lasting damage on our coffers, Harvard announced it would stop compensating most contracted workers idled by the pandemic, reduce pay for University staff, and freeze salaries and hiring. Even now, after our continued affluence has been affirmed, the University insists on denying graduate student workers a fair, inflation-adjusted raise, condemning the entire student body to a justified and disruptive three-day strike.

Of course, Harvard couldn’t have predicted that financial markets would boom following the pandemic any more than it could have predicted the pandemic itself. But our resilient prosperity highlights that there was another way forward. What if, when faced with a murky financial future, Harvard took a more generous approach and maintained the workers it stopped paying? What if the University, with the biggest financial cushion of any, had chosen to protect members of our community in a time of precarity, rather than discard them? Hindsight, surely, is 20/20. But it’s a little heartbreaking to think that Harvard could have withheld the pay cuts many custodians and security guards were hit with, not cut paychecks at all, and, financially, still have come out on top.

But even if things didn’t end up all right — if the economy didn’t spring back, if our endowment didn’t end up topping $53 billion — what if Harvard, as we urged it to, decided to suck up a potential financial loss and protect its workers anyway? We wish this chance for moral courage had been taken.

Harvard’s prioritization of its wealth over staff and their families’ wellbeing amidst a once-in-a-generation pandemic was always morally wrong; now, it has proven shortsighted and unnecessarily harsh. It was a call people were hurt by.

While the individual damage from Harvard’s austerity cannot be undone, Harvard can now strive for a more generous approach to what our endowment can mean for its staff. University administrators ought to remember that the same booming economy that helped enlarge our endowment also contributed to increasing costs of living across the United States. Cambridge, with its roughly 4 percent increase in average prices, is no exception. Offering graduate workers raises that don’t account for their salaries’ decreased purchasing power is simply unacceptable.

We all stand to benefit from a stronger, better-funded academic world. At Harvard, the individuals that breathe life into our institution — contracted workers and graduate students alike — should benefit too. After all, if we can’t look out for our own, what good is that $53 billion?

This staff editorial solely represents the majority view of The Crimson Editorial Board. It is the product of discussions at regular Editorial Board meetings. In order to ensure the impartiality of our journalism, Crimson editors who choose to opine and vote at these meetings are not involved in the reporting of articles on similar topics.

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