Over the last half-century, the U.S. economy has undergone a profound transformation, one that has consistently shifted wealth, power, and risk from labor to capital. Nowhere is this transfer more evident than in the American university. Once celebrated as engines of mobility and knowledge, colleges and universities have become laboratories for the financialization of labor and the exploitation of debt, producing both highly educated workers and precarious employment. The story of U.S. higher education mirrors the broader trajectory of labor in the postindustrial economy: the erosion of wages, benefits, and job security, replaced by indebtedness, contingent labor, and privatized risk.
In 1969, union membership in the U.S. reached historic heights, covering nearly one-third of workers, and wages broadly tracked productivity. Universities, like other sectors, offered stable employment, pensions, and health benefits for faculty and staff. Students could pursue degrees without accumulating crushing debt. Yet this stability faced systematic challenges. Rising global competition, stagflation in the 1970s, and growing corporate influence over politics and law set the stage for a deliberate weakening of labor. Influential business leaders, inspired by the Powell Memo of 1971, invested in reshaping regulations, judicial appointments, and cultural attitudes to protect capital and undermine collective worker power.
The higher education sector became a testing ground for these strategies. Universities increasingly adopted anti-union policies, aggressively resisting faculty organizing. Tenured and tenure-track positions stagnated, while the majority of teaching staff shifted to contingent and adjunct roles. Adjunct faculty, who now comprise the majority of instructors at many institutions, are paid a fraction of full-time salaries and frequently lack basic employment protections. Retirement and medical benefits are often unavailable, leaving adjuncts dependent on precarious contract work while navigating an academic labor market that demands high productivity and expertise. Meanwhile, students are encouraged to shoulder growing tuition costs through loans, creating a generation of indebted graduates whose economic vulnerability mirrors that of the adjunct faculty teaching them.
This debt-driven model reflects a broader trend in U.S. labor. As real wages stagnated across most industries, households turned to credit cards, home equity loans, and student loans to maintain living standards. Medical debt and inadequate access to health insurance became commonplace, and pension security eroded as defined-benefit plans gave way to 401(k)s tied to volatile financial markets. Universities, simultaneously relying on contingent labor and student debt, became both emblematic and instrumental in this shift. They profited from a system that exploited the labor of instructors while binding students into decades-long financial obligations.
The 2008 financial crisis and the COVID-19 pandemic further exposed these structural inequalities. Wall Street recovered rapidly through bailouts and financial consolidation, while millions of workers—including adjuncts and early-career academics—experienced housing loss, unemployment, and financial insecurity. Universities, too, leveraged these crises to consolidate programs, increase online offerings, and further casualize labor. Inflation fears and budget shortfalls became convenient rationales for suppressing wages, cutting benefits, and delaying retirement security.
By 2025, a new wave of labor activism is emerging, both inside and outside the academy. Union drives at Starbucks, Amazon, hospitals, and universities reflect widespread discontent, yet union density remains below ten percent. Legal obstacles, from Janus v. AFSCME to state-level right-to-work laws, continue to suppress organizing. Capital, for its part, has adapted. Endowments, private equity firms, hedge funds, and sovereign wealth funds dominate sectors from housing to healthcare to higher education. Pension funds, once a safeguard for workers, have been financialized into instruments that profit the very institutions and executives who outsource or eliminate labor protections.
The consequences are stark. Since 1969, productivity has more than doubled, but real wages for most workers have barely changed. CEO pay has increased by over a thousand percent, while median worker pay stagnates. Household debt exceeds seventeen trillion dollars. Universities, which were once supposed to provide pathways to mobility, increasingly rely on adjunct labor and student indebtedness to function. Workers in both corporate and academic sectors are often left without reliable health coverage or retirement security, forcing them into perpetual economic vulnerability.
Higher education exemplifies the paradox of U.S. labor in the postindustrial era: it produces a highly credentialed workforce while exploiting its own employees and saddling students with debt. The burden of sustaining American capitalism—through longer hours, reduced benefits, and relentless indebtedness—has shifted decisively onto labor. Whether this growing discontent can coalesce into a new labor movement or whether capital—including universities—will continue to restructure society in its own interest remains one of the central questions of our time.
Sources
Gordon Lafer, The Job Training Charade (2002)
Michael Hudson, The Bubble and Beyond (2012)
Maurizio Lazzarato, The Making of the Indebted Man (2011)
Economic Policy Institute, State of Working America Data Library
U.S. Bureau of Labor Statistics, Historical Tables
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