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<p>Not necessarily true. Pay scales at UC Berkeley, for example, are on the whole lower than at many elite privates. Yet Berkeley has historically had little trouble recruiting and retaining top faculty in almost every discipline. Why? Well, academics like to be paid, just like everyone else. But at least at the top levels, they tend to be driven as much or more by academic prestige. Many will join a more prestigious faculty over a less prestigious faculty, even if the latter pays more, because being on the more prestigious faculty is a marker of professional success. And once they’ve been there a while, family commitments and lifestyle choices may lock them in. </p>
<p>Now it’s true that if there’s a faculty recruiting battle between two equally prestigious schools and one pays more, the higher pay may be a factor. So in the long run Stanford’s ability to outbid UC Berkeley may make a difference. But so far the faculties are remarkably competitive despite (I presume) substantially higher average pay at Stanford.</p>
<p>Indeed, in my hypothetical, giving an across-the-board pay raise to everyone currently on the faculty might create a different kind of problem. Academic job markets are sticker than most because of tenure; a decision for a faculty member to leave is almost always unilateral. A school that overcompensates its faculty relative to its peers may lock in its existing faculty. Fewer may leave for opportunities elsewhere; it’s generally harder to swallow a pay cut, even if it comes with added prestige, than it is to opt for lower-paid prestige at the outset. But that may mean fewer new hires, less fresh blood and fewer fresh ideas coming into the school, and more senior people hanging on longer, past their prime years of productivity. This will generally pad pay scales even more, because faculty salary structures tend to reward seniority. But it may tend toward retention of overpaid deadwood, and less bang for the faculty buck because the salary of one dinosaur may easily equal the salaries of two young, energetic, up-and-coming faculty members.</p>