Anyone impacted by the financial meltdown?
Corie Lok
Thursday, 09 October 2008 16:14 UTC
I’m wondering if anyone has any stories to share about how the credit and financial crisis is affecting science and research? Have any projects been slowed or halted? Hiring freezes? Any supplier companies or biotech companies suffering?
If you or someone you know has been directly or indirectly affected, those stories might make for good blog posts.
Here in Boston where I’m based, Boston University recently brought in a hiring freeze and a moratorium on new construction projects as a precautionary move. One of the reasons given: saving internal resources for a possible rise in demand for financial aid, now that student loans from banks have dried up.
Has anyone seen similar stories elsewhere? What sorts of impacts might we expect to see?
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The aftermath for researchers might still come. With public budgets (i.e. debts) expanding this dramatically because of the money used to rescue the finance industry and the broader economy, I don’t think there will be much room for manoeuvre for science budgets – my guess is the are far more likely to go down rather than up. This would of course have quite some consequence on research funding further down the line.
To bring the figures into context – the NSF budget is about $6.5 billion, the recent bank rescues are in the hundreds of billions. Now there’s a dream of what good science could have been done with that much money!
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See here for what you need to know, and what to do, about the financial crisis.
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Second Maxine’s comments (about a big hit to pension values as being the most likely universal consequence), plus Brian Derby’s above. Speaking as an old postgrad admissions tutor, it is a given that in times of recession more people (not less) want to do PhDs, since the alternative is the plunge into a depressed job market.
Re the wider funding climate, we have just been talking about this over at Physiology News for an upcoming editorial. Research funded by the Research Councils and charities is, at least in the UK, relatively insulated from recession. Publicly-funded research certainly does not shed jobs the way (e.g.) retail and hospitality industries do. However, the employers are likely to want to put the brakes on wage increases over the next 2-3 yrs. There may also be a freeze on academic hiring. Of course, in the UK the RAE 2008 results (due out just in time for Christmas – oh goody) would be expected to cause hiring freezes in some places, recession or no recession.
Industrial research is probably a bit worse. Pharma was already on a big “downsizing” trend, and my Pharma friends all reckon this is set to continue in a big way.
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Although we tend to focus on the declining stock market as impacting pension funds, universities who rely heavily on investment income are likely to be hard hit. I’m thinking of places like Harvard, Yale, Stanford, Princeton, MIT, and others with large endowments
Stanford’s Provost, John Etchemendy, recently gave a clear outline of how he thinks the university’s budget is likely to be affected in the Stanford Report. Etchemendy notes that “sponsored research revenue has been declining in real terms over the last three years” and that they do not feel it would be fair to raise tuition, especially at a time when families are finding it hard to make ends meet. They are projecting the need to cut $45 million from their general funds budget, the budget “that pays for most faculty and staff salaries, central administrative operations and the non-research expenses in the schools”. This suggests a possible hiring freeze, a very likely salary freeze, and potential staff cuts.
The New York Times had a fantastic article that detailed how the credit crunch was having many unforseen impacts, such as causing Wisconsin public schools and the NYC subway system to basically rely on the German government providing a credit lifeline to one of their banks (which did happen earlier this week). The article is a chilling reminder of how globalized our financial system is, and indirectly hints that bank closures and financial problems anywhere in the world could have a real and direct effect on universities’ budgets.
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Yes, the contrast between the publicy-funded Univ system (and research) in the European countries, and the private Univs in the US, is quite interesting.
We have been hearing a lot of talk lately in the UK about how the leading Univs need to build up endowment income “to compete in the international research big league”, with some suggestions that the Govt. should reduce funding and ask the research-intensive Univs to raise more of their own money privately. Of course, at a time of recession it is actually more comfortable to be publicly-funded – see also bank rescues.
I seem to recall that Boston U, which Corie mentioned at the start as bringing in a hiring freeze, is another rich (and expensive) private school.
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Public Universities (UK model) have nationally agreed pay awards (5% thanks) but a budget increase for salaries this year of 4%. There may be public funds but they are shrinking too.
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A second comment concerns charities. Most of the large charities (Wellcome, Action, Leverhulme, Rowntree, B & M Gates) generate their income from (large) holdings of shares, bonds etc. The credit crunch will impact on their income and hence the funds they are able to award for research.
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I second Brian’s (second) comment. Also, any charities that rely, even partially, on private donations are likely to be hurt. Private donations will decrease as large benefactors see their investment income/wealth drop.
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