This discussion generates more posts than any other on the CIC and CCCU Deans listserves. It's a thorny question, to which in a recent exchange, resident CCCU CAO wonk Dale Simmons noted that Calvin, Taylor, Bethel and others have tried to resist "market" or "differential" pay, and for good reason. Here's my, as usual, lengthy reply.
I tend to agree with anything Dale says, and in general, I believe he's on target here as well, that we should resist "differential" or "market" pay (or whatever you want to call it) as much as possible. But I feel compelled to add a few nuances to Dale's fine analysis.
1) From what I've seen, it's the "top tier" schools that appear to have been able to resist the "differential pay" pressures, in part, I would argue, because they are "top tier" and can therefore attract faculty in hard-to-fill fields with inducements that some of us don't have available (higher salaries across the board, national reputations, strong denominational affiliations, etc.). Therefore, despite being a Calvin grad myself, I'm not sure Calvin is the most appropriate model for most of us when we have these kinds of differential pay discussions.
2) "Fudging" pay scales by adjusting teaching loads or granting "terminal" status to MFAs, JDs, MBAs, etc. (with some years of professional experience) is "differential" pay, just by another name. We've followed the "fudge the scales" solution at John Brown University as well, except with Engineers where ABET pressures ultimately caused the institution to cave a couple decades ago, but we're under no illusion that this isn't market pay by another name. And some still think we should can the pretense and do "market pay" more directly.
3) Very little of this "inside the guild" discussion of pay scales is actually much connected to student learning outcomes. However you want to define those outcomes (via student evaluations, placement rates, acquisition of basic knowledge, development of critical thinking skills, etc.), according to the few national studies I've looked at, there isn't much evidence that we pay faculty according to what they actually help our students accomplish. Admittedly, that's an incredibly difficult issue to sort through, so I'm not suggesting that we jettison all of these "market pay" discussions in favor of more focus on "merit pay," but I am suggesting that much of this debate (which generates a lot of the posts on the CIC list) is a diversion from our main task, promoting student learning. Just to give a JBU example, this last summer we tried to analyze a combination of overall student evaluations, difficulty ratings, Integration ratings, and so on and then correlate them to various cohorts among our faculty. Our highest paid cohort (male full professors with terminal degrees) ranked near the bottom, and the lowest paid cohort (female assistant profs and instructors without terminal degrees) ranked at the top. So explain to me again why our pay scales should reward the first group at double and triple the pay rates of the second group?