The larger issues touched on what may be a bit of dysfunction in the way in which academic units operate. More general, and perhaps more depressing still, may be what the Texas compensation story tells us about the culture of academic governance in the 21st century.
Should Compensation Be Transparent?
The Texas kerfuffle has raised many questions, some of which have already been discussed at length on other law blogs. But for me, the news brings up a larger question that I’ve been thinking about for a while now: should law school compensation be transparent, at least to other faculty members?
Some schools – for example, many public schools – have very little choice in the matter of whether to reveal salary information, as state statutes require them to reveal that data in some manner. For example, Illinois appears to publish all salaries in the Daily Illini, which I assume is a legislative mandate, rather than a choice on the University’s part (Illini insiders should feel free to correct that impression, if erroneous).
But there appears to be a great deal of variation, even among schools operating under some sort of transparency mandate. For example, I have seen schools that interpret the requirement to make salaries publicly available to mean that they are in a file in the central library, such that one has to make an affirmative effort to discover them. I have seen others distribute salary information in a yearly memo to faculty, such that everyone is confronted with everyone else’s salary, whether you want that information or not. And I have seen some schools following what appears to be the Texas model, under which the reported salary numbers give little useful information about total compensation, because so much compensation comes in the form of benefits that are not required to be reported – children’s tuition, housing, loans, foundation grants and fellowships, etc.
But what I want to address is a different question: assuming flexibility in the matter of whether faculty compensation is transparent to other faculty members, should it be? I’m going to answer that question with a tentative “no” despite the admitted costs of secrecy in compensation information.
As many Loungers already know, there is a reasonably large body of research on salary transparency. Although I’ll draw on that for some of this discussion, I also think that academic institutions – with their limited ability to fire nonperformers and the relative lack of professor mobility, as compared to some other occupations and industries – may not be the best fit for some of that research. Moreover, law schools -- which tend to have less external quality verification, such as grants and peer review – may present different challenges than other academic units. I’ll leave that question to others with more comparative knowledge.
Let me begin with some assumptions about the ideal academic salary system. First, it should be meritocratic, meaning that faculty members are rewarded for excellence in the pursuit of shared institutional goals – for example, scholarship and teaching. Second, it should be fair, in the sense that faculty are neither rewarded nor penalized for traits, behaviors, and the like, unrelated to those goals. For example, the system should show no race or gender bias, “squeaky wheels” should not be able to increase their compensation beyond their due through constant complaints to the dean’s office, nor should more unassuming faculty be passed over for deserved compensation. Third, it should be transparent, in that each faculty member is aware of the total compensation of other faculty members. This transparency enables verification of features one and two – i.e. that the system is meritocratic and fair.
Ideally, a law school’s salary system should embody all three of these characteristics: meritocracy, fairness, and transparency. In my experience, however, real-world law schools rarely embody all three traits. And having worked under both the transparent and non-transparent systems, my vote (for today anyway) is for the imperfect, but better, non-transparent model.
What happens when compensation is not transparent? Well, the fear, supported by some research, is that decision-makers will indulge biases. Some argue that pay secrecy exacerbates pay inequity and the gender wage gap. Others argue that salary secrecy can fuel inequity fears, even when wages are being set fairly.
What happens when compensation is transparent? In a recent NBER working paper, David Card and his co-authors find that pay transparency reduces aggregate employee utility – below-median workers experience lower job satisfaction while those above report no greater satisfaction. Fine, but what does this mean in terms of real life around the law school water cooler? Like most of you, I have seen people obsess nearly to the point of needing medical attention about the one person making $372 more than she is, even if – in the absence of information – this individual would feel perfectly content with her salary. Forget above and below the median – most of us freak out at even the smallest perceived pay inequities. And unlike the widget factory, where there are concrete and objective measures of quality to point to in defense of salary disparities, law schools have only contested and somewhat subjective measures of quality with which to defend disparate salary structures.
Now, I don’t mean to overstate the indeterminacy of academic quality here – usually there are some superstars and some non-performers about which almost everyone can agree. But in between those extremes, salary distinctions have to be defended through a set of contested and subjective criteria about both quality, and the importance of the various aspects of the law school mission. How much does good teaching offset poor scholarship? How do we judge scholarly quality? How much do we rely on objective measures such as citations and downloads?
What is the end result? My experience – which, of course, is not universal – is that extremely transparent systems lend themselves to lock-step compensation based on easily identifiable criteria, such as seniority. Because then the dean always has a clear non-discriminatory metric to point to in defense of pay structure, and the rest of us don’t have to argue about difficult things, such as quality.
And this, to me, is not a good place for a law school to be. The system may be fair (nondiscriminatory), but it is not meritocratic. Nearly everyone feels cheated anyway and the highest performing young folks – i.e. those most likely to be picked off by another school – legitimately so. It just seems to me to be a recipe for a system under which almost everyone is unhappy, there are few incentives for productivity, the highest quality folks have every reason to try to leave, and those who are geographically constrained for family or other reasons (and who, as long-termers might otherwise be institutional building blocks) feel cheated by the institution and thus are less likely to give back.
Now, before someone extols the virtues of lock-step systems (long the norm at many law firms, but increasingly under pressure), I agree that there are some arguments in its favor: the reduction of internal conflict and competition and the fostering of a collective sense of purpose. But law schools are not law firms. The lesser mobility of academics, the reduced ability to fire non-performers, and the lack of the big “carrot” of partnership profits at the end of the day render the two environments too different to map one compensation system onto the other.
These outcomes aren’t inevitable, of course. I’m sure it’s possible to craft a compensation system that is fair, meritocratic, and transparent. But are most law schools inclined to do so?