The Superstar Labor Market in Television
Abstract
Using literature from labor economics, this paper argues that the labor market
in television is a "superstar" market in which a few collect large salaries and
a large number of applicants vie for jobs. This is because of imperfect
substitution among sellers in the market and the inability of applicants to
accurately assess their chances of success. It suggests the effects of a labor
market on individual behavior and continuing low salaries for new television
journalists.
_
The Superstar Labor Market in Television
Joseph Graf
Graduate Student
Stanford University
(415) 949-2904
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Mailing Address:
Stanford University
Department of Communication
McClatchy Hall
Stanford, CA 94305-2050
The Superstar Labor Market in Television
Introduction
Media scholars have maintained a steady interest in the wages of working
journalists primarily because of our role in training new journalists and our
close relationship with the media industry. We have studied the salaries of new
reporters in order to tell journalism students what to expect, and we have
studied the salaries of all newsworkers as one of the conditions and constraints
under which they work. This paper attempts to broaden our thinking about the
effect of salaries on journalism training and the behavior of journalists by
looking at a literature in labor economics alternately called "winner-take-all"
or "superstar" labor markets. We will argue that economists have a model of
understanding the labor market in television broadcasting that is helpful. This
model forces us to consider that a lopsided labor market with salaries of
television news anchors nearly one hundred times those of new reporters is
functioning exactly as we should expect, and that this market has a pernicious
effect on journalists' behavior. We will end with the suggestion that a better
model of the media labor market should include a consideration of political
power in the workplace.
A large number of college graduates want to enter the field of television news,
and starting wages are typically low. Industry observers have speculated that
the large number of new job seekers in television drives down salaries, which
will increase when these workers, unhappy with poor pay, leave the field.
Scholars have taken an interest in this, looking at the success of new graduates
in getting jobs or the pay of newsworkers in general and its relationship to job
satisfaction and turnover.[1] At the other end of the pay scale, the high
salaries of news anchors is of little scholarly but great mass media interest.
Both extremes are in the same labor market, and this paper assumes that they are
more closely related than previous work suggests.
In a superstar labor market supply and demand do not counterbalance each other
and reach equilibrium in the familiar manner we expect. If the labor market for
television is best described as a superstar labor market, where few actors reap
enormous rewards, then low pay for starting television journalists will not
drive new college graduates to look elsewhere for jobs. The market will never
reach equilibrium, or "clear," but will remain flooded with applicants. Several
economists have suggested that this kind of labor market affects the behavior of
actors within the market and promotes competition between workers that is
socially wasteful. We suggest that there are policy implications of this for
journalism educators.
While economists have developed a rich body of work in labor markets, it is
work that often ignores political or social factors in determining wages.
Sociologists have developed wage models that pay greater attention to social
relations and political power. Communication scholars bring to this discussion a
recognition of the unique characteristics of the mass media and its labor force,
such as the constraints of professionalism. Our interest here is ultimately not
the labor market, but the effects of the structure of that market on issues such
as diversity, media content, and the behavior of the wage earners.
Literature
It seems that every television journalist who writes his or her memoirs is
obligated to include a passage about the dismal pay when they began as a cub
reporter.[2] Most early television reporters came from radio and earned low
wages in the new medium. There were exceptions, and some prominent journalists
earned high salaries even when the feasibility and public acceptance of
television news was still a gamble. These high salaries have never been the
norm, but are the upper end of the salary structure. This review will first
address the growth in salaries of prominent television journalists. Much of this
evidence is anecdotal, and some of the reported salaries are estimates made by
historians or other researchers. This is one reason why these salaries are often
not part of labor market analyses. We then look at survey data about the broad
labor market, the scholarly research in journalism salaries, and finally the
theoretical work in labor markets.
When Douglas Edwards left radio in 1948 to anchor the first television news
program he doubled his pay. American television executives chose to use their
anchors as the centerpiece of the shows, such as Edwards for CBS, John Cameron
Swayze for the "Camel News Caravan" or the ABC Evening News with John Daly, best
known as the moderator of "What's My Line?" Swayze's salary was $110,000 a year.
Matusow, in her history of television news anchors, notes that this emphasis on
personalities is distinctly American. Television news in some other countries
emphasizes the news over the anchor, employing news readers "who make no
pretense of involvement with the material they read." Despite emphasizing the
anchor before the camera, in the early days of television the producer behind
the camera, not the reporter or anchor, had the authority over stories because
of the complex technical nature of putting together newscasts.[3]
The 1948 political conventions in Philadelphia were the first large news events
covered by television, but radio news was still king. Until the mid 1950s the
15-minute evening news programs were not considered great investments by the
networks. The news shows were not profitable, but were seen as part of the
networks' public service role. Television became an important force in political
life for the first time at the 1952 political conventions. Walter Cronkite took
center stage for CBS and the term "anchorman" was coined, in reference to the
strongest person in the booth, akin to the anchor leg of a relay team. The
political conventions again highlighted up-and-coming news stars in 1956, Chet
Huntley and David Brinkley.
In the 1960s the networks tried to raise the news anchor to a position of
"moral and intellectual authority," hoping such prestige would return higher
ratings and advertising revenues. Television executives began to consider the
anchor as the most important factor in the popularity of a news program. Matusow
writes that television executives "frenetically" believed that the success of
whole news divisions relied on the anchor persons, and these anchors extended
great personal control over the news operations.[4]
Until the early 1970s, salaries for news anchors were very good, but they would
dramatically increase in the next decade. During this time news became a
profitable enterprise for all three networks. In 1970 Harry Reasoner, at the
time in the upper echelon for anchors, left CBS to co-anchor the ABC Evening
News at an annual salary of $200,000.[5] Raiding other networks for talent
became more common. NBC hired several key executives away from CBS, which had
the reputation as the finest television news network.
In particular, Roone Arledge of ABC was known for offering top notch producers
huge salary increases to jump ship and come to ABC.[6] He was even more generous
with on-air employees: He offered Charles Osgood, a writer and radio
broadcaster, a salary raise from $120,000 to $500,000 if he left CBS for ABC.
Osgood turned down the offer after ABC made a counter offer of more than
$400,000 a year. Barbara Walters signed the first million-dollar contract when
she agreed to co-anchor ABC's Evening News with Harry Reasoner in 1976.[7] Her
salary was paid for equally by the news and entertainment divisions of ABC, and
Reasoner was given a raise to $500,000 a year.
One of the most well-publicized bidding wars erupted for the services of Dan
Rather of CBS in 1979, pushing up salaries, forcing the venerable Walter
Cronkite into partial retirement and causing Roger Mudd, another highly paid
reporter and occasional anchor, to angrily defect to another network. Arledge
offered Rather almost $2 million a year in salary and, in addition,
unprecedented power in running the news division.[8] Cronkite was earning about
$650,000 a year at the time. A furious bidding war broke out until Rather
eventually re-signed a ten-year contract with CBS for about $22 million. Several
observers believe this episode significantly and permanently increased salaries
for top talent in broadcasting, although salaries were certainly large prior to
1979.[9]
This growth in salaries continued in the 1980s. In 1980, most top producers as
well as correspondents earned more than $100,000 a year. Reporter Geraldo Rivera
earned $1 million a year. At ABC in 1986 executive producers earned up to
$300,000, producers up to $125,000 and some correspondents more than
$500,000.[10] Ten years later salaries for star anchors and reporters are very
high, and this has spread to the large regional, non-national markets. Analysts
estimate Dan Rather and Diane Sawyer earn about $5 million a year, Peter
Jennings $7 million and Barbara Walters $10 million. At the regional level,
established anchors in New York, Chicago, Detroit and Los Angeles all earn more
than $1 million a year.[11]
These stars are a very small percentage of the journalists working in
television. While the mass media focus on these high salaries, particularly
whenever someone signs a new contract, the scholarly literature is concerned
almost exclusively with the salaries of the more typical workers.
Three comparable national surveys were conducted with similar research goals in
1971, 1983 and 1992. Johnstone, Slawski and Bowman surveyed journalists in 1971
and found the median salary for a television journalist was $11,875. This
compared well with journalists in other media. Two other studies of 1970
broadcasting salaries, one using census data and the other a survey of station
managers, found salaries somewhat lower. In 1983, Weaver and Wilhoit found the
median income of journalists had risen to $19,000. The salaries of television
journalists were lower, at $17,031 a year. In 1992, Weaver and Wilhoit found the
median income of all journalists was $31,297 and for television journalists it
was $25,625. The income growth over the 21-year period did not keep abreast of
inflation, so the purchasing power of all journalists declined, and for
television journalists it was a more significant decline.[12]
Surveys of broadcast news managers by Stone reached similar conclusions, but
his work illustrates salary differences in broadcast journalism due to the
division of labor and the size of the media market. In 1994 workers at
television stations in larger media markets generally earn more than their
counterparts in smaller markets, and workers in positions of authority such as
executive producers and news directors earn more than workers with less
authority. Top anchors at stations in large markets earn the highest median
salary, and this is disproportionately larger than workers in other areas at the
station. This proportion increases with the size of the market. Specifically, in
a market ranked between 51 and 100, the median salary for a top anchor is 2.7
times the median salary of a reporter. In a market ranked between 26 and 50, top
anchors earn 3.3 times a reporter. In the top 25 markets anchors earn 4.3 times
the reporters. While workers in any position earn more when they move to
large-market stations, the earnings difference due to the division of labor
grows as well (see chart 1).[13]
The labor market in television news is estimated to be about 30,000 workers. Of
those, only roughly 30 percent work in a top 25 market and only a handful of
them can compete for the top salaries. The television news labor market consists
of a large pool of newsworkers generally earning low salaries, less than their
counterparts in other media. Differences in earnings are determined by the
division of labor and the size of the market. A variety of non-structural,
individual factors also affect earnings, such as age, number of years in the
profession, gender and education, but we do not consider those factors here. At
the top of the market is a select group of anchors and reporters, most of them
in the national market, who command salaries as much as one hundred times that
of a starting television reporter.[14]
Becker, Stone and Graf began to analyze this market with a study that was able
to test a formal neoclassical model of supply and demand in the labor market for
entry-level journalists.[15] This study was unique in that it not only used
survey data for the labor supply of entry-level workers (new graduates from
journalism schools looking for jobs), but it also had a measure of market demand
(news media managers reported number of employees hired in the past year). They
found a gross oversupply of labor in the television job market.[16] Becker et al
suggested that the glamour and prominence of television broadcasting in American
society acted as a "wage differential." Positive wage differentials are salary
rewards given to those willing to accept difficult or dangerous working
conditions, such as hazard pay for dangerous assignments or a night differential
given for those willing to work at night. Negative wage differentials are losses
in pay workers are willing to accept for more pleasant working conditions. The
theory of wage differentials in this market would suggest that the public
visibility, job satisfaction and perceived glamour act as "benefits" that may
offset low pay.[17] Frank has suggested that relative prestige of a profession
compared to others may also act as a differential, and higher prestige positions
may be able pay less in exchange for greater status.[18] Because different media
draw from a labor pool that overlaps (some workers move between media, for
example, from newspapers to television) the hypothesized impact of wage
differentials in the media labor market would be both as a negative differential
allowing broadcast employers to pay less and a positive differential requiring
other media employers to pay more in order to attract labor.
There are several confusing aspects of the broadcasting labor market that defy
this description. First, some research about attitudes among journalists
suggests that wage differentials do not play a major role. Surveys consistently
find that television journalists are not more satisfied with their jobs, nor do
they report having greater autonomy or prestige than other journalists report.
Often television journalists report less job satisfaction. In a 1991 survey,
more journalists in television than in other media reported that they chose
journalism because of "the engaging nature of the work or a general
'fascination' with it," but television journalists were not more likely than
other journalists to report other psychic rewards from work, such as an aptitude
for journalism or idealistic notions of the press. Among prospective
journalists, one survey of college students found that broadcasting students
(including radio) had less pride in their chosen field and placed greater
emphasis on salary, the one benefit they should not expect to receive. None of
these surveys truly captures the concept of a wage differential, nor do they
address the possibility of a perceived differential among students in the form
of greater prestige. However, the data do not suggest the existence of greater
job satisfaction among television journalists that acts as a sort of wage
differential.[19]
The second and related aspect of the broadcasting market that has not been
adequately explained is the continued large numbers of applicants attempting to
enter the market. Although accurate measures of the labor demand do not exist
prior to 1991, there is anecdotal evidence that television station managers have
for some time felt that there was a large pool of entry-level applicants. Market
theory is unclear on how long it should take before the market should reach
equilibrium, which is the point when the labor supply and demand roughly
stabilize. While poor information about job prospects and the lengthy training
period through college might create a lag of years between an oversupply induced
decline in salaries and the expected decline in entrants into the labor market,
it is reasonable to argue that we should have seen the market work as expected
by now. Nonetheless, despite low financial rewards workers continue to enter the
television news labor market.
Theory
While communication researchers have been interested in what journalists earn,
economists and sociologists have been more concerned with why they earn it.
There are large bodies of labor literature in both disciplines. Economics has
built upon a foundation of neoclassical assumptions and regarded the forces of
the market as the most important factors in determining wages, while sociology
has looked at the importance of structural factors and social relations in the
labor market as important factors that economics ignores. An organizational
theory of structural economy stakes out a more middle ground that includes a
consideration of power relationships in determining income while not completely
rejecting the neoclassical explanation.[20]
Simply put, neoclassical theory extends the general theory of value to the
labor market and holds that market forces determine workers' salaries by
ensuring they are paid in accordance with their marginal productivity.[21] Wages
are the price of labor and, barring any extraneous influences, they are
determined by supply and demand. Wages adjust to the point where supply and
demand are equal, and the market "clears," or reaches equilibrium. If the supply
of labor is too great (too many workers) some will be unemployed and willing to
work for less, driving down wages. The law of marginal productivity is based on
an assumption of the perfect market, an abstraction that makes clear the
relationship between production, a fixed labor supply and wage levels. Labor
theory has been broadened and expanded upon by human capital theory and the
theory of compensating differentials. Human capital theory argues that the
productivity of workers is not simply their working efficiency, but it is
embodied in their skills, training, education and experience. This is why highly
educated workers can often command higher salaries.[22] Compensating wage
differentials are increases in salary for work that is disagreeable or
dangerous. Both theories fit into the neoclassical framework.
The theory of structural inequality in sociology challenges this model in
several ways. First, proponents of structural inequality have argued that the
assumptions of the neoclassical conception of the labor market, such as perfect
information available to all actors in perfectly competitive markets, are so
abstract and distant from reality that the model is not useful. And second,
neoclassical theory is considered fundamentally flawed because it does not
consider the role of power in determining wages. In the broadcast news labor
market, high wages are sometimes associated with power in the workplace. Highly
paid anchors who are nonetheless not part of management can exert great
authority in hiring and news decisions.
We want to focus on work on labor economics that is clearly within the
neoclassical camp, and some extensions of that work that move beyond the
limitations of the model. Rosen attempted to explain why salaries for a select
few "superstars" were so high in labor markets in fields such as professional
comedy, classical music, and the mass media.[23] He suggested there were several
common elements to these markets that made them "superstar" markets, or
"winner-take-all" markets, which is a term coined by Frank and Cook.[24] This is
a bit of a misnomer. Frank and Cook identify markets where a small group of
individuals reap rewards far greater than everyone else in the market. (There is
no single winner.) Along with Rosen, they identified several key aspects of
these labor markets. We will use both terms interchangeably.
The market is the mechanism that matches buyers with sellers and sets prices.
The market that allocates workers to jobs is the labor market. The buyers are
employers and the sellers are workers. The term "television labor market" will
refer to buyers and sellers of labor engaged in producing and distributing
television news content. Some workers can move fairly easily between the
television news labor market and other media labor markets, such as journalists
who move back and forth from broadcast to print, and workers can be in more than
one labor market at the same time. So while the television labor market is fluid
with movement of participants, it is conceptually distinct.
Rosen noted two common elements in winner-take-all markets, or what he called
the "phenomenon of superstars."[25] First, the market and the rewards are
dominated by a small group of individuals, presumably the most talented in that
activity. Labor theory does not offer any explanations for this talent, what
economists call "box office appeal," and despite the great effort television
professionals make to cultivate and identify their talent, there is no guarantee
of what characteristics make an individual more appealing in the market.[26] The
second element of a superstar market is the strong relationship between the size
of the market the individual can reach and salary. Rosen calls this "one's own
market" and he means essentially the availability of that person's talent to
others.
Rosen proposes a formal model to explain these labor markets. In a superstar
labor market, the function for the seller looks like a convex curve much more
steep than the ordinary labor market and this convexity explains much of the
observable consequences. This convexity means that at the top of the pay scale
small differences in talent mean disproportionately larger differences in
earnings and at the bottom small differences in talent mean almost no increase
in pay (chart 2 is a simple illustration of the model). For most superstar labor
markets, including broadcasting, the proportion of earnings to talent becomes
magnified as it nears the top of the scale. The top ten tennis players earn
millions of dollars, while the rest of those ranked only among the top 100 earn
much less. This skewed distribution of earnings is possible because of imperfect
substitution among sellers. If you prefer watching your favorite anchor,
watching two hours of another news show is not an adequate substitute. In
winner-take-all labor markets that imperfect substitution is more pronounced
than in other markets. As Rosen put it:
Lesser talent often is a poor substitute for greater talent. The worse
it is the larger the sustainable rent accruing to higher quality sellers
because demand for the better sellers increases more than proportionately:
hearing a succession of mediocre singers does not add up to a single
outstanding performance. If a surgeon is 10 percent more successful in
saving lives than his fellows, most people would be willing to pay more
than a 10 percent premium for his services. A company involved in a $30
million lawsuit is rash to scrimp on the legal talent it engages.[27]
The second feature of superstar markets is the strong relationship between the
size of the market the individual can reach and salary. The potential size of an
individual's market in the media is closely related to changes in communication
technology. Frank and Cook pay particular attention to the impact of
communication technology in creating and sustaining these markets. When the
phonograph was invented suddenly the finest symphony orchestras expanded their
markets around the globe and salaries correspondingly rose for a select group of
musicians and conductors.
The market for classical music has never been larger than it is now, yet
the number of full-time soloists on any given instrument is also on the
order of only a few hundred. ... Performers of first rank comprise a
limited handful out of these small totals and have very large incomes.
There are also known to be substantial differences in income between them
and those in the second rank.[28]
Radio allowed vaudeville performers previously confined to a stage to expand
their potential markets across the country, and a select group of highly paid
stars emerged. One television anchor can command a huge market; millions of
people tune in for his or her services of reading the news. The concentration of
output in the market on a few individuals is possible because of communication
technology, which has also limited the size of the market. Technological and
policy limitations on the number of radio and television stations early in the
history of broadcasting created a market that was small. High barriers to entry,
particularly for the national market, made the addition of more competitors
unlikely.[29]
The better sellers can and do handle more buyers. More talented sellers have
markets and salaries that are exponentially larger than their talent would
indicate. As the overall market grows in size the most talented receive the
greatest salary increases and the distribution of salaries becomes more skewed.
Conversely, as the market decreases in size we should expect the range of
salaries to contract. The implication for the individual worker is that it is
advantageous to operate in the largest possible market. As a worker moves up the
salary scale by gaining "box-office appeal" or by moving across the division of
labor (a reporter becoming an anchor, for example) it becomes proportionately
more advantageous. A reporter who moves to the anchor slot in a small market
enjoys a nice raise. The same job change in a top market makes the reporter a
multi-millionaire.
Rosen proposes that at least two elements must be present in order for a
winner-take-all market to arise.[30] The first is the previously mentioned point
that poor talent is an inadequate substitute for greater talent. The second is
that the activities in question allow a duplication of services such that an
individual can deliver his or her services to an enormous audience. The role of
communication technology at this point is crucial. In many (but not all)
winner-take-all markets media allow a duplication of effort with very little or
no cost to the seller. The media act as what Rosen calls a "cooperating
resource" in sustaining large personal markets. The cost of producing a
broadcast does not rise in direct proportion to the size of the market, so it
still costs the same to produce the news regardless of whether 10 million or 20
million people choose to tune in.
Bowbrick, another economist, makes the point that what is important is not only
attractiveness or talent of superstars, but the lack of repulsiveness. He cites
the finding by a pollster that some movie stars have a negative appeal, where
their presence in a film repelled more movie-goers than it attracted, and notes
the strong possible effects of this. As he wrote, "If the Magnificent Seven had
each been hated by a different 14.28 percent of the population, there would have
been no audience."[31] It is important then that news broadcasters not only be
preferred, but that they not be disliked by the audience. This becomes more
important when we consider that television news viewing is often a social act,
and one viewer in a group could reject a broadcaster for the entire group.
We want to turn now to work by Frank and Cook that is less constricted by
mathematical economic models and more cognizant of the real-world effects of
winner-take-all markets. They address the wasteful social costs of superstar
markets. First, these markets attract too many contestants and second, they
encourage unproductive consumption and investment among contestants vying for
the top spots. Rosen's economic model describes a market with a large number of
low paid workers, but it does not explain why more people are clamoring to enter
the market. There is an enduring observation in television that students are
attracted to "glamour, recognition and respect, all of which are endearing
elements of the business."[32] This is belied by the poor ratings of job
satisfaction among broadcast journalists, but we must remember we are talking
about people hoping to enter the labor market, not those already in it. Frank
and Cook argue that superstar markets attract contestants not because there is a
demand for their services but because of our own inability to accurately
estimate our chances of success. This is similar to the reason why we play the
lottery. We overestimate our chances of success and our own abilities because we
don't know or can't accurately estimate our chances of winning. There is a
social cost to this. These are workers who could be producing more output and
greater social benefit doing something else, but instead are competing for low
wages in broadcasting. The second social cost of the superstar market is its
incentives for participants in the market to engage in wasteful behavior.
According to Frank and Cook, "The winner-take-all payoff structure encourages
another form of waste in that it invites -- indeed, virtually compels --
competitors to take costly steps to enhance their prospects of winning."[33]
In the early days of television, journalism tenets and organizational practices
served to restrain competition for the services of the top anchors. Networks
hired from their own ranks, often moving well-known radio announcers to
television. As the profitability of newscasts grew the pressure to break these
unwritten rules grew. Roone Arledge of ABC ignored them altogether and
dramatically drove up the salaries of network anchors when he bid for the
services of Dan Rather at CBS.
What Frank and Cook consider to be the greatest problem of superstar markets
are these "mutually offsetting, and socially wasteful, patterns of competitive
investment."[34] Television anchors are engaged in a positional arms race. The
rewards depend not only on their absolute performance (the highest ratings) but
on their performance relative to others (winning the time slot). Contestants
invest in improving their performance because the rewards of winning are so
high. Athletes in a superstar market push themselves to train because if they
improve only a tiny amount, if they add 5 mph to their fastball or their tennis
serve, the rewards are huge. Likewise, the individual rewards for a few ratings
points are huge, but the difficulty is that it is not clear exactly what an
anchor must invest in to improve ratings. Consequently, great investments are
made in the hopes of great reward. For some anchors, these investments have been
voice coaches, hairdressers, skills training or even plastic surgery. If two
anchors are evenly talented (i.e. popular) then even the smallest investment by
one would yield a slight advantage and a much greater personal reward. Networks,
too, are locked in this arms race. If they could agree to limit salaries they
would remove the incentive for individuals to make these investments. Instead,
networks make competing investments as well. ABC and NBC invest a great deal in
correspondent training programs that include voice coaches as well as
professional critiques and mentorship.[35]
There is a great incentive both for the individuals and the news organizations
to invest in news anchors. This is socially wasteful in real terms: If all news
anchors wore blue jumpsuits ratings would most likely remain the same and
society would be saved the wasted expense on clothes. Whether this is a valuable
insight in terms of journalistic norms is another question. Frank and Cook
clearly think so, and they see greater media scrutiny of elected officials and
media sensationalism as the result.
Winner-take-all markets in media and culture are of course nothing new.
Nor, for that matter, is our fascination with matters lurid and
sensational. So why have the offerings of popular culture been catering so
much more overtly to this fascination in recent years? ... The dynamic
processes just described are only part of the story. More fundamental has
been growth -- both in the top prizes at stake in cultural markets and in
the openness of the competition for these prizes. These changes not only
make it more tempting for any given player to break with tradition, they
also simultaneously weaken the social forces that hold industry norms
together.[36]
The Cable News Network (CNN) is worth special mention because it was an effort
to alter the rules of the marketplace to keep salaries low. When CNN was
launched, with a very low budget, it hired several dozen known correspondents
from the major networks, but it also hired hundreds of college students at
salaries far below usual wages.[37] At CNN, the story was preeminent, not the
reporter or anchor on the scene, and this altered the salary structure and
consequently the dynamic of news gathering. According to Jon Katz, a journalist
and media critic,
[CNN] has managed to avoid the cumbersome, expensive and increasingly
dubious anchor star system that has bogged down the networks. On CNN, the
story is the star, not the anchor. Few viewers can name CNN reporters yet,
a fact that leaves CNN producers free to pursue stories quickly, cheaply
and without regard to tender anchor sensibilities.[38]
Another observer wrote, "Turner's Atlanta-based empire tries to avoid the cult
of anchor personality because, as CBS, ABC and NBC all have painfully learned,
an anchor star means megabuck salaries."[39] One of CNN's most highly paid
anchors, Bernard Shaw, earned about $300,000 in 1989, much less than top anchors
elsewhere.
In economic terms, this is an effort by CNN to partition the market. A
partitioned superstar market is when a market served by one or a few superstars
is broken into more markets each served by a slightly different kind of
supplier. One example is cable television, which has expanded the possibilities
for comedians and musicians to appear, breaking up the market and offering
greater opportunities for more performers. As we saw before, a smaller superstar
market reduces the salaries of the most highly paid.
Discussion
Rosen's work is important for two reasons. First, it explains two of the most
interesting aspects of the labor market in broadcasting -- high numbers of low
paid workers and high salaries for a select few. Second, and much more
importantly, Rosen uses a neoclassical economic model. We should not
underestimate this point. The neoclassical model of how a labor market should
work is compelling and broadly accepted, and we use it here to explain a
phenomena that observers in our field argue is an aberration. It is not, but a
market working as it should. If the television labor market is best described as
a superstar market, then there are several implications. First, the low salaries
and large number of applicants will not change the market. The law of supply and
demand is at work here, but not in the manner in which we typically expect, so
the market is not going to "clear" and broadcasting salaries for young
journalists are not going to rise in the next few years. This is a pot of gold
we have promised to broadcasting students for many years and we should stop. The
market is already at equilibrium. We should not expect any change in the large
number of applicants and low salaries, nor any change in the labor market
because of those factors. Secondly, television managers do not need to raise
entry-level salaries in order to attract applicants into the field. In other
words, any changes in the demand side of the market will not be driven by
supply. As much as we would like to tell students that the salary structure will
change, it will not unless the fundamental structure of the market changes.
There may be a compelling reason to raise salaries in order to attract a
different type of applicant than those currently available, but there is no
reason to raise salaries to continue to encourage students to apply.
Because of this, Frank and Cook's conjecture about the effects of a superstar
market is interesting. They state, without much evidence, that the superstar
market squelches diversity in the market of media content. That is a sweeping
claim, but intuitively appealing. There is a sameness to broadly popular prime
time television and network news. It seems that the economic structure of this
market must have an impact on such things as the media content produced by the
newsworkers in the market. Likewise, it seems that the market and journalistic
professionalism are closely related. Journalistic values promote a similarity of
product. This similarity of product makes the product more substitutable, and
the communication technology makes it more of a public good; nearly costless to
reproduce and hence available to everyone.
Despite the insights from thinking about the labor market with this economic
analysis, the initial criticisms of a neoclassical market raised early in this
paper remain. Rosen's analysis offers useful insights, but it does not address
power in the labor market. As anchors rise to the top of their profession they
acquire political power along with high pay. Network anchors have enormous
authority over the content of the news, the appointments to the top reporting
assignments, and the hiring of substitute or co-anchors.[40] Much has been
written about the power of news anchors in the political arena, but this is
power exercised in the workplace. Any complete analysis of the broadcasting
labor market must consider it, as well as a greater consideration of the effects
of the labor market on the behavior of broadcast journalists, the implications
for the training system for journalists and the importance of economic
structural factors in the construction of news.
NOTES
[1] . See Lee B. Becker, Gerald M. Kosicki, Thomas Engleman and K. Viswanath,
"Finding Work and Getting Paid: Predictors of Success in the Mass Communications
Job Market," Journalism Quarterly 70 (Winter 1993): 919-933; David H. Weaver and
G. Cleveland Wilhoit, The American Journalist: A Portrait of U.S. News People
and Their Work (Bloomington, IN: Indiana University Press, 1991), 80-87; and
Weaver and Wilhoit, The American Journalist in the 1990s: U.S. News People at
the End of an Era (Mahwah, NJ: Lawrence Erlbaum Associates, 1996), 91-98.
[2] . Chet Huntley began his broadcasting career in 1939 at $75 a week See
Barbara Matusow, The Evening Stars: The Making of the Network News Anchor
(Boston: Houghton Mifflin, 1983): 90; Harry Reasoner, Before the Colors Fade
(New York: Alfred A. Knopf): 25-28; and Sam Donaldson, Hold on, Mr. President!
(New York: Random House): 34-35.
[3] . Matusow, The Evening Stars, 51-74.
[4] . Ibid, 3, 7.
[5] . Ibid, 135.
[6] . "He thought nothing of offering a producer who was making $35,000 a year
at CBS an additional $50,000 a year to come to ABC." Ibid, 20.
[7] . Ibid, 20, 27.
[8] . Ibid, 27.
[9] . Ibid, 37. Estimates of Rather's 1979 contract including benefits begin at
about $20 million for 10 years and run as high as $35 million for 10 years. See
Cecilia Capuzzi, "The ABCs of Making News Profits," Channels (March 1989):
30-35.
[10] . Gunther, Marc, The House that Roone Built: The Inside Story of ABC News
(Boston: Little, Brown and company), 233.
[11] . Elizabeth Lesly, "Time to Say Goodnight, Dan?" Business Week, 26 August
1996, 27; Bill Carter, "Sawyer Makes a New Deal with ABC," The New York Times,
17 February 1994, section C, p. 22; LaWanda Edwards, "Baltimore's television
salary sweepstakes." Warfield's Business Record, 4 March 1994, 1; and Tim Kiska,
"Anchors away," The Detroit News, 9 May 1996.
[12] . John W.C. Johnstone, Edward J. Slawski and William W. Bowman, The News
People: A Sociological Portrait of American Journalists and Their Work (Chicago:
University of Illinois Press, 1976), 134, 132 & 235; Kenneth Harwood, "Earnings
& Education of Men & Women in Selected Media Occupations," Journal of
Broadcasting 20 (Spring 1976): 233-237; Irving E. Fang & Frank W. Gerval, "A
Survey of Salaries and Hiring Preferences in Television News." Journal of
Broadcasting 15 (fall 1971): 421-433; Weaver and Wilhoit, The American
Journalist, 80-85; Weaver and Wilhoit, The American Journalist in the 1990s,
92-95.
[13] . Vernon Stone (1996). Television and Radio News Research [WWW document].
URL http://www.missouri.edu/~jourvs/
[14] . These estimates are taken or derived from data provided by Stone,
Television and Radio News Research.
[15] . Lee B. Becker, Vernon A. Stone and Joseph D. Graf, "Entry-Level Pay: Is
Oversupply an Explanation for Low Wages?" Journalism & Mass Communication
Quarterly 73 (autumn 1996): 519-533.
[16] . Job applicants outnumbered jobs by nearly 10 to 1. This ratio declines
significantly if only highly qualified applicants are considered instead of
everyone seeking a job. However, the measure of labor supply did not include
those applicants from outside journalism education trying to enter the field.
About 91 percent of new hires in 1991 were from journalism programs, so
graduates from outside journalism were increasing the labor supply by roughly 10
percent. Clearly, there are many more job seekers in the field than jobs. See
Becker et al, "Entry-Level Pay: Is Oversupply an Explanation for Low Wages?"
[17] . See Ronald G. Ehrenberg & Robert S. Smith, Modern Labor Economics: Theory
and Public Policy (New York: Harper Collins, 1994), 244-245.
[18] . Robert H. Frank, Choosing the Right Pond: Human Behavior and the Quest
for Status (New York: Oxford University Press, 1985).
[19] . Weaver and Wilhoit, The American Journalist in the 1990s, 49-124. They
found that 25 percent of television journalists gave the "engaging nature"
response as opposed to 10 percent of the total population. See also Weaver and
Wilhoit, The American Journalist: A Portrait of U.S. News People and Their Work;
Johnstone, Slawski & Bowman, The News People; and Margaret H. DeFleur,
"Foundations of Job Satisfaction in the Media Industries." Journalism Educator,
47 (spring 1992): 3-15. One survey found more journalists in broadcasting
(including radio) agreed with the statement that they had a sense of pride in
their field, although fewer broadcasting journalists reported a commitment to
the profession. See Lee B. Becker, Jeffrey W. Fruit & Susan L. Caudill, The
Training and Hiring of Journalists (Norwood, NJ: Ablex): 149-150. The
professional values of journalism students are also discussed in Becker, Fruit &
Caudill, 49-50.
[20] . John H. Godard, "The Political Economy of Control: An Organizational
Theory of Structural Inequality," Work and Occupations 20 (3) (August 1993):
337-367.
[21] . J.R. Hicks, The Theory of Wages (New York, Macmillan, 1973).
[22] . G. Becker, Human capital: A theoretical and empirical analysis, with
special reference to education (Chicago: University of Chicago Press, 1975).
[23] . Sherwin Rosen, "The Economics of Superstars," The American Economic
Review 71 (December 1981): 845-858.
[24] . Robert H. Frank and Philip J. Cook, The Winner-Take-All Society (New
York: The Free Press, 1995), 2-5.
[25] . Rosen, "The Economics of Superstars," 845.
[26] . See Jon LaFayette, "Sawyer fight stirs issue of news pay." Electronic
Media, 14 February 1994, 1. '"What really can't be projected with any great
accuracy is the audience base that those people may or may not bring to a
program," says Eric Braun, manager of consultation and research at TV consulting
firm Frank N. Magid Associates. "The linkage between ratings and that sort of
qualitative evaluation is very difficult to draw."'
[27] . Rosen, "The Economics of Superstars," 846.
[28] . Ibid, 845.
[29] . Barriers to entry for national networks have been overcome first by
national and international cable networks and then by new non-cable networks
such as Fox.
[30] . Sherwin Rosen, "The Economics of Superstars," The American Scholar
(Autumn 1983): 449-460.
[31] . Peter Bowbrick, "The Economics of Superstars: Comment," The American
Economic Review 73 (June 1983): 459.
[32] . Terry Likes, "Monday memo; broadcasting education commentary."
Broadcasting, 3 September 1990, 17. See also Tomorrow's Broadcast Journalists: A
Report and Recommendations from the Jane Pauley Task Force on Mass Communication
Education (Greencastle, IN: Society of Professional Journalists, 1996).
[33] . Frank and Cook, 9.
[34] . Ibid, 126.
[35] . Jeff Gremillion, "On the Fast Track to Network News; Star School."
Columbia Journalism Review 33, January 1995, 32.
[36] . Frank and Cook, 198.
[37] . Whittemore, Hank, CNN: The Inside Story (Boston: Little, Brown and
company, 1990), 35.
[38] . Jon Katz, "Despite their power, a media critic argues, TV's pampered
stars are turning into an endangered species." The Newsday Magazine, 9 December
1990, 11.
[39] . Jay Sharbutt, "Bernard Shaw: Cable News' Mr. Anchor; CNN's No-Nonsense
Reporter has found a place alongside Rather, Jennings and Brokaw." Los Angeles
Times, 30 April 1989, 8.
[40] . See Jon Katz, "Despite their power, a media critic argues, TV's pampered
stars are turning into an endangered species." The Newsday Magazine, 9 December
1990, 11; and Matusow, 3, 27.
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