The country’s colleges and universities will likely face significant labor cost pressures for the next year, according to a higher ed sector financial analysis released last week by Moody’s Investors Service. 

The Moody’s report, noted by business and higher education media outlets, predicts that increasing costs of labor, food, utilities and construction will spur difficult decisions and force higher education leaders to reprioritize how they allocate resources. 

Employee compensation may be the most difficult expense to manage in the coming years, Moody’s noted, as collective bargaining efforts increasingly seek to close the gap between wages and the rising cost of living. Over the last year, higher ed has been in organized labor’s crosshairs as employees resort to work stoppages and other job actions to push for wage increases exceeding inflation as well as more costly terms and conditions of work for regular, part-time, and nontenured faculty as well as graduate student workers.

What can Higher Ed Leaders Do?

A proactive strategy to labor relations is a must, whether a university seeks to remain union-free or strategically prepare for and manage labor costs in contract negotiations. Labor relations risk assessments and strategic planning with counsel with higher education labor law experience can help protect against academic disruption caused by labor strife and insulate the institution’s budget from labor cost pressures amplified by today’s inflationary environment.