Salaries — How it really works

Ray Butterworth — 2014 June 13

USG levels

Jobs at UW are advertised with salaries based on USG levels. These are usually listed as three numbers: the job value (or midpoint), a min value (20% less), and a max value (20% more). A new employee is typically told that they will be hired with an initial salary closer to the min value, but that if their performance is satisfactory that salary will quickly rise over the next few years and level out at a much higher value.

That much is true, but what is also implied, that the max value is achievable, isn't.

One's long-term salary is based on both USG level and one's personal annual merit rating. UW policy doesn't allow one to receive a perfect score of 5 each year, so even an ideal employee could at best receive 4.75 every time. Such a situation would produce a salary limit of 17.5% above the job value, not the 20% implied by the advertised max value.

And that is for an ideal employee. A more typical merit rating would be closer to 4.25, producing a limit of 12.5% above the midpoint. But even that would be a limit on the salary, not the actual salary, which will approach but never actually reach that limit. Realistically, a job advertised with a $40,000 to $60,000 range will in the long term end up paying somewhere around $55,000. And that's after many years, and only if one gets consistently good annual reviews.

The advertised max and min values are meaningless and misleading, as is the term midpoint. Everyone would be better off if they were never mentioned. It would be better to present the job value, and say that with good ratings one will eventually end up earning 10–15% more than that, and with poor ratings one should be looking for a more suitable job.

Merit pay rating during the later years


UW makes regular changes to the midpoint values of each salary level, as negotiated with the UW Staff Association, UW Faculty Association, and CUPE 793. Over the long term, these changes generally follow the inflation rate, so it makes it more convenient to simply ignore both inflation and midpoint adjustments in most of what follows.

One's position in the pay scale can be measured as a percentage of one's actual salary relative to the midpoint. This percentage is reported on one's Annual Salary Increase Statement. For instance if your position has a midpoint of $50,000 and your salary is $45,000, you are at 90%, and if you earn $55,000 you are at 110%.

Percent of midpoint targets and Merit ratings: 4.50 (115%) 4.25 (112.5%) 4.00 (110%) 3.75 (107.5%) 3.00 (100%) 2.00 (90%)

If one stayed at the same job rating for a long time (and most of us do exactly that), and got approximately the same Merit rating each year, a graph of one's relative salary over time would be a curve that initially goes up steeply and then levels off to almost horizontal in later years.

The curve that one's salary follows is determined by one's Merit rating. If we plotted the curves for several different Merit ratings, they would all start out at one's initial salary position, would all rise steeply, very close together, and then level out to the horizontal, much more widely separated.


Until now, we've been ignoring inflation, which in theory shouldn't matter, but in practice complicates the situation. For faculty, any merit increase is on top of the cost-of-living increase, while for staff, the cost-of-living increase is applied directly to the midpoint value. Normally, for an employee with consistent annual reviews, this isn't a problem.

What happens when an employee gets an occasional rating that is below what they normally get? If they haven't been at their current pay scale for long (e.g. recently hired or promoted), their salaries are still well below their long-term target and are on the steep part of the curve, so they will get a smaller, but still substantial, pay increase.

But what about long-term employees? They are on the almost horizontal part of their curve, very near their long-term target. If the current rating produces a target that is lower than their current salary, they will receive no merit increase, and, more significantly, they will receive no cost-of-living increase. This means that in real dollars, their salaries will actually go down by the amount of the cost-of-living increase.

If this punitive effect happened only as a result of a bad review, it might be justifiable. But employees that normally receive amazing reviews and then receive one that is only excellent will similarly be punished. For instance, consider an incredible employee (not I) that receives 4.75 ratings every year and is currently being paid at 117% of midpoint. If one year they get a 4.5 rating, they will receive no salary increase, and their salary, in real terms, will go down by the cost-of-living.

They are punished for receiving a rating that almost every other employee would have been rewarded for. And this punishment isn't a one time event; the salary reduction continues for the rest of their career and on into their pension.


When this major flaw in the system is combined with its other major flaw (very inconsistent ratings given by the various departments and by various managers), this serious loss of accumulated merit increases is almost certain to happen to many long-time employees. Having lost 8 years of merit increases myself due to being assigned a new manager that didn't understand the system, by a director that didn't understand it either, I know this all too well.

My own percent-of-midpoint graph for 2002 through 2013 shows increases of about .5% each year, followed by two years of 2% decreases (the midpoint inflation adjustment for those years), and then the curve resumes the same path it had been taking 8 years previously, with no possible way of ever catching up again.

To make this unintentionally excessive punishment even more arbitrary, the year it occurs in matters too. This was in 2008 and 2009, but had it occurred in 2012 and 2013 it would have been 3% each year (6%, or 12 years loss of merit increases), while had it been in 2010 and 2011, when there was a government recommended freeze on the midpoint, there would have been no decrease at all.

The final salaries used for calculating my pension will be about 4% lower than they would have been had I not had two reviews from a manager that didn't understand the system. And for the grave sin of having such a manager (and director), my after-tax life-long pension will be reduced by over a hundred dollars a month. And that will be quite a lot more than 4% of my disposable income.