SALARY COMPRESSION IS EFFICIENT? Smith College's James D. Miller applies the logic of compensating differentials.

Assistant professors in many ways have harder jobs than tenured professors do. They have more pressure to publish. They usually spend more time on class preparation because they have taught their classes relatively few times. And, keeping in mind their looming tenure bids, they often feel compelled to be more deferential to their senior colleagues than they would prefer. Those who care about economic fairness consequently should support the idea of assistant professors making more than tenured professors. And those who care about markets should understand that the less pleasant the job, the higher salary you must pay to attract top talent.

Job security is a large part of tenured professors’ compensation. So even if a tenured professor has a somewhat lower monetary salary than an assistant professor does, he probably, over all, receives more total compensation than his non-tenured colleagues. After all, I suspect few tenured professors who are not superstars or close to retirement would agree to exchange, say, $3,000 in extra salary in return for abandoning tenure.

I'm not persuaded by a passage that follows.
For reasons economists don’t fully understand, employers almost never decrease their workers’ nominal salaries. So if a college gives a raise to a tenured professor, it is stuck paying this raise until the professor retires. In contrast, if an assistant professor becomes too expensive the college can simply not reappoint him.
All tenure means is that the faculty member will be paid. The college can authorize a nominal salary increase that is a real salary decrease, or to avoid having to lay people off, not authorize a salary increase at all.

Such a salary policy will induce people who have more discipline-specific human capital (current grants, and recent publications) to look elsewhere. I don't deny the possibility of an assistant professor becoming "too expensive," but that suggests professional jealousies or other dysfunction in the department or in the college.

Perhaps Professor Miller is hinting at such dysfunction with this passage.
I’m actually surprised that the academic market doesn’t induce more colleges to pay greater salaries to assistant professors than to non-superstar tenured professors. Tenured professors, however, have on average vastly greater bureaucratic power than their untenured co-workers and perhaps such power discrepancies explain why at most colleges tenured professors earn more than assistant professors.
The essay does not address other influences on pay, such as unionization, seniority, or egalitarian tendencies. I'm not sure whether the ensuing bull session has turned into a bar-room brawl. It's instructive reading.

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