The theory of "merit pay" is that every year, those who make decisions on salary will: (1) assess your experience, skill, and performance, (2) determine where you belong on the salary scale, and (3) adjust your salary accordingly.  Theoretically, your salary could even go down; in practice, however, you would merely be denied an increase if your supervisor had judged that your performance had declined for any reason. Since inflation is always with us, this would effectively be a decrease in pay.

Merit pay as practiced by the UC administration
In practice, however, raises are not determined in this fashion. Instead, the administration creates a "merit pool" which combines the cost-of-living allowance (COLA) with the merit allowance given by the state legislature (these values are usually in the amount requested by the UC administration). In past years this amount hovered around 3.5% of salary base (2% for COLA and 1.5% for merit), but in recent years it has been less due to state budget problems.  Simultaneously, the salary ranges are increased by the amount of the cost-of-living allowance, which has typically been 2% regardless of actual inflation.

"Turnover" savings -- savings from replacing departing staff with lower-paid new staff -- are also supposed to be added to this pool of money, but in our experience it is never officially part of the pool. This amount is then divided up between all "merit pay" employees in a particular unit; the exact amount received by each employee is supposed to be based on his or her most recent performance appraisal.

There are no guidelines that require a supervisor to match the amount of the increase with the performance appraisal, and "normal" pay increases vary from one department to the next, and from one campus to another. 

For employees paid out of grant money, the same general rules are followed because UC policy forbids discrimination against employees based on funding source.  The principal investigator (P.I.) is told to budget a particular amount for raises, but may have to pay more or less than that depending on the actual amount of the raise.  There is therefore a financial incentive for the P.I. to not be enthusiastic in writing the performance appraisal.

The results of 20 years of "merit pay"
The UC administration has consistently underfunded this program; 1.5% for movement through the range is inadequate when virtually no one is "topped out."  As a result, a person can start at the minimum value in his or her salary range, perform well for over 15 years, and still not be at the range's midpoint at the end of that time.  (Reminder: midpoint is supposed to be market-level pay for an experienced employee performing at a satisfactory level.)

What can be done?
The "merit pay" program has proven to be a failure. Whether or not the theory is good, the UC administration has never consistently practiced the principles of "pay for performance" for all professional staff.

We reject the idea that professional staff cannot be adequately rewarded with a step-based pay program.  Professional employees with the federal and state governments, teachers at K-12 schools and community colleges, and faculty throughout the University of California system, perform very well with cost-of-living increases and step increases.  If the administration feels that the salary range is not wide enough under the step system, there is nothing stopping them from increasing the number of steps, or giving promotions based on experience and performance.

The administration needs to acknowledge that, due to inflation, our salary ranges have eroded dramatically over the last ten years, and they need to make it a top priority to ask for more funding from the state legislature. They have been paying lip service to this concept for years, but are unwilling to spend political capital to make it happen.

It's time we had a seat at the bargaining table in deciding how we are compensated. There are many fairer and more rational alternatives to the system that exists. To negotiate improvements, we need your support. Please join the union and to contact us to become more involved in organizing for collective bargaining rights for staff and administrative professionals.