How merit-based raises hurt DEI
MIT must make a stronger commitment to DEI through its pay practices
Recently, MIT Human Resources announced that it will be instituting across-the-board 3% raises for all staff making under $75,000 in 2021. This is a welcome reversal of a policy that MIT announced last April, suspending all merit-based raises for the year due to financial concerns related to COVID. According to MIT’s 2020 Quality of Life Survey (conducted before the pandemic), 65% of staff reported increased cost of living as a source of stress, and 61% said the same about the cost of housing alone. With the additional financial pressure of the pandemic, the wage freeze threatened to push staff even deeper into economic precarity.
While this announcement is a relief for staff who are feeling the pain of increased economic insecurity, it comes with some restrictions and raises important questions around the nature of merit-based raises in the first place. The recent policy does not apply to staff making above the $75,000 cutoff, many of whom are part of single-income households, supporting family members or even extended family due to increased unemployment rates. This is especially hard to accept considering that MIT’s 2020 Report of the Treasurer shows record highs in revenue ($3.95 billion), net assets ($24.21 billion), and endowment ($18.38 billion). It also raises the question of deep inequities in MIT’s compensation policies.
This guaranteed 3% cost of living increase will replace the usual yearly merit-based raise that staff are eligible for, as determined by their supervisor, typically with a 3% maximum. If a supervisor finds an employee’s performance unsatisfactory, they can decrease that raise. Factoring for inflation (approximately 2% per year) and the increased cost of living and utility use due to working from home, this can easily turn into a pay cut.
Although merit-based raises are supposed to reward hard work, the statistics around compensation bias (particularly regarding race and gender) show how unjust the reality is.
Professor Emilio J. Castilla of MIT’s Sloan School of Management conducted a 2012 study showing that there are significant racial and gender biases in merit-based performance reviews.
Professor Roberto M. Fernandez, also from Sloan, had a similar study in 2018 comparing the starting salary offered to men and women who graduated from the same MBA program, finding that women were offered nearly $8,000 less than men on average.
According to U.S. census data, Black women in Massachusetts make only 58 cents on the dollar compared to their white male counterparts.
MIT has made a commitment to diversity, equity, and inclusion (DEI). This was strongly reaffirmed in the wake of the protests over George Floyd’s death this past summer. What better way to show that commitment than to make a concrete policy which would protect employees from compensation bias, supported by MIT’s own research?
There are many ways pay transparency and equity must be addressed. If MIT can’t guarantee the fairness of how merit-based raises are awarded, then it is obligated to battle this inequity by making this year’s non-merit-based cost of living increase a permanent policy.
For those who are skeptical about whether this is feasible, look no further than Harvard University. Around the same time that MIT announced its wage freeze, Harvard announced it would guarantee staff pay which includes a 3.5% non-merit-based raise for all workers with over a year of employment.
Do we want MIT to be an environment that merely pays lip service to issues of diversity, equity, and inclusion or one that demonstrates its commitment to DEI through strong action? Do we want an administration that supports the economic security of its employees through the toughest of times or one that treats them as just another budget line item to be slashed without the input of those who are affected? Do we want a compensation policy that is fair, transparent, and unbiased or one that is shrouded by an opaque and questionable meritocracy? If MIT wants to engender a work culture that truly values all of its employees, these are the questions it must consider.
Caleb Larson is an Administrative Assistant in the MIT Energy Initiative.
Gabby Ballard is a Program Assistant in the Office of Engineering Outreach Programs.
Brandon Milardo is a Senior Administrative Assistant in the Department of Earth, Atmospheric, and Planetary Sciences.