Merit-Based Pay Cuts for Academics?

George Mason economist Bryan Caplan has an interesting post advocating merit-based pay cuts for academics:

Many universities now have pay freezes or even nominal pay cuts. Under the circumstances, several professors have told me that there’s little point in doing faculty evaluations. If there’s zero – or negative – money for raises, why bother saying who’s doing well and who’s not?

It amazes me how much these remarks take for granted. Suppose a department is 5% over-budget. It may be obvious that it needs to cut total compensation by 5%, but it isn’t obvious that any particular professor’s salary needs to be cut by 5%. If raises can depend on performance, so can cuts! If a chairman normally gives a 0% raise to his worst performer, and a 5% raise to his best performer, why not respond to fiscal austerity by simply changing the range from -7.5% to -.2.5%?

I agree with Bryan’s argument, though I suspect many of my fellow academics won’t. One possible objection is that the criteria for evaluating “merit” in academia are too subjective. But academic departments already have merit criteria for making hiring and promotion decisions. If our criteria are good enough to decide whether or not someone deserves to be hired or offered lifelong employment, they should be good enough to make much less consequential judgments on whether a given scholar should get a 3% pay cut as opposed to 1%. A department that lacks good criteria for evaluating merit ought to get some pronto – whether it intends to base pay cuts on them or not.

The real reason why Bryan’s proposal is unlikely to be implemented is academic politics. Any law school dean or department chair who tried it would face enormous resentment from faculty members whose scholarship was judged deficient (or just not as good as that of their peers). To be sure, he or she might also win some gratitude from superior performers. But, as a general rule, people resent pay cuts more than they are grateful for increases. Obviously, people also don’t like equal across-the-board cuts. But administrators can blame those on budget cuts or economic conditions. By contrast, if the administrator saddles professor X with a 5% pay cut while Professor Y gets off with only 2% because her work is better, X is likely to blame the administrator.

In private industry, owners might nonetheless institute merit-based pay cuts because they stand to profit directly from rewarding good performers and penalizing bad ones. Such incentives are weak or nonexistent in the case of academic administrators. If you want to be a successful academic administrator, the first rule you have to follow is to not antagonize the faculty. For that reason, Bryan’s merit pay cut proposal is unlikely to be implemented at very many schools.

UPDATE: I am sure clever commenters will suggest that Bryan and I are among those academics who deserve a merit-based pay cut. All I can say in response is that if a merit-based pay cut system were adopted, I would be more than willing to have my work judged by the same standards as those applied to my colleagues.