Academic journal article Academy of Educational Leadership Journal

Merit Pay, COLAs, and the Return to Faculty Seniority

Academic journal article Academy of Educational Leadership Journal

Merit Pay, COLAs, and the Return to Faculty Seniority

Article excerpt

ABSTRACT

The distinction between annual COLA and merit increases at a unionized, public, liberal arts college allows us to estimate the return to faculty seniority with respect to total salary and its components, cost-of-living and promotion-adjusted starting salary and accumulated merit pay. We find that merit pay, which is awarded on the basis of faculty productivity, rises with seniority over a lengthy period. Due to chronically low budgets at this institution, cost-of-living adjustments have failed to keep pace with market trends for new Ph.D.s. Consequently, a seniority penalty with respect to cost-of-living and promotion-adjusted starting salary exists. Since the negative return associated with this salary component is greater than the positive return for merit pay, the net effect is a seniority penalty with respect to total salary. These results present the seeming contradiction of a seniority penalty for productive senior staff. The perpetuation of this circumstance can best be explained by high faculty mobility costs or by limited alternative employment opportunities for senior faculty.

INTRODUCTION

Do faculty salaries rise or fall with seniority? Recent empirical studies based on national and institutional-level faculty salary data fail to provide a definitive answer. For example, Ransom (1993) utilizes three national surveys of teaching faculty. Results from one of the surveys indicate a negative marginal effect of seniority whereas results from the other two surveys show no correlation between seniority and salary. On the other hand, Barbezat and Donihue (1998) and Monks and Robinson (2001) suggest that salaries rise with seniority over a relatively lengthy period. Results from studies based on institutional-level data are also mixed. For example, Ransom also reports a strong negative correlation between salaries and seniority among University of Arizona faculty, even after controlling for publication performance. Brown and Woodbury (1998) find similar results for faculty at Michigan State University. These authors also find that the link between internal and external (market) salaries diminishes with seniority. However, Hallock (1995) reports positive returns to seniority among the unionized faculty at the University of Massachusetts, Amherst. Finally, Moore, Newman and Turnbull (1998) examine data gathered from economics departments at nine state universities and report a negative seniority effect that disappears when detailed measures of publishing performance are included in salary estimates.

Many of these studies are motivated by a desire to reconcile faculty salary patterns with general theories and evidence regarding the relation between seniority and pay. Most studies of non academic labor markets reveal a positive relation between pay and job tenure. (1) Theoretical explanations attribute this positive relation to such factors as the higher productivity of senior workers (Oi, 1962; Mincer, 1974), or to incentive mechanisms that discourage shirking (Lazear, 1981). However, interest in this topic is more than academic as the interpretation of results provides an answer to the policy-oriented question of whether the seniority penalty is deserved. For example, Moore et al. attribute the lower pay of senior staff to their lower productivity, implying that the seniority penalty is deserved. On the other hand, Bok (1993) and Ransom (1993) imply that the penalty is not deserved. Ransom argues that lower pay for senior staff stems from the monopsony power of universities. Bok suggests that university budget constraints result in high, market-level, salaries for new faculty, but insufficient funds to reward the job tenure of more senior staff. If the seniority penalty is undeserved, corrective policies at the university level can be justified. The more practical applications of this literature are evidenced by the studies on methods of correcting inequities due to salary compression (Lamb & Moates, 1999; Moore,1992; Suskie & Shearer, 1983; Wall, 1976). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.