The Dark Side of Merit Pay

Posted in Uncategorized on January 11th, 2010 by bl1y

UCLA recently held a debate between eidtor in chief and former editor in chief, Elie Mystal and David Lat. The topic of the debate was whether firms should stick with lock-step promotions or switch to merit based compensation, and part of the debate, as reported on Ms. JD, was that minority and women associates may end up on the losing end of a merit based system. The reason? Old white men with their old white man prejudices will rate women and minorities lower and thus compensate them less.

While I agree that merit based compensation could lead to women and minorities earning less, there is a less politically correct explanation that’s pretty likely. Instead of discrimination being the cause of lower pay, it could be affirmative action.

It’s no secret that law schools use affirmative action (aka: diversity) to admit more students from under-represented minorities (aka: black). What no one likes to mention is that black students generally have far worse undergrad grades and LSAT scores than their white counter parts. In fact, the numbers for the top 25% of black students tends to look like the bottom 25% of white students.

Now, you can chalk this up to black students having worse educational opportunities early on, and that might be the case. But, it still means that black law students are generally just not as smart as their white counter parts (so far as GPAs and LSAT scores measure intelligence). Common sense would say that this would end up getting reflected in their grades, and for the most part it does. Black law students tend to get lower grades, even in classes where grading is based on entirely anonymous exams.

Now, at most law schools, poor grades will result in poor job opportunities. But, at a top 10 school, you can be at the bottom of your class and still get a good job, because the bottom 25% of the top 1% is still really damn smart. Unfortunately, affirmative action means that the bottom 25% might not really be part of the top 1%. And to make problems worse, many top schools no longer give grades, GPAs, or class ranks.

So, law firms looking to recruit top talent will end up hiring minority associates who are in over their heads, and this will naturally result in them earning less under a merit based system. I’m not saying pay won’t be affected by racism, it probably will be. But, we also have to keep in mind the effects of affirmative action in law school admissions.

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