Insecurity in the Ivory Tower: Direct and indirect effects of pay stagnation and job insecurity on faculty performance

Abstract

Despite unprecedented cuts to public funding of state universities, little research has examined economic stressors in academia. This study addresses this gap in research by examining the direct and indirect relationships of pay stagnation and job insecurity to performance among a sample of 355 faculty members from a public university in the United States undergoing major budget cuts. In line with job stress and psychological contract breach theories, among tenured faculty, both job insecurity and pay stagnation were indirectly related to lower performance via job satisfaction. Among non-tenured faculty, only pay stagnation had a significant adverse relationship with job satisfaction. Given the difficulty of guaranteed job security or pay raises during times of austerity, organizational interventions designed to improve job satisfaction may be more efficacious. Such interventions might help ameliorate the negative impact of economic stressors on the performance of tenured faculty.

Keywords

Faculty job insecurity job satisfaction pay stagnation performance

Introduction

The global economic crisis of 2008 resulted in substantial budget cuts to many public colleges and universities (EUA, 2015; SHEEO, 2015). Since the onset of the economic crisis, tenured and non-tenured faculty have experienced unprecedented economic stress as institutions eliminate non-profitable departments, enact furloughs, and freeze salaries (AAUP, 2015; CBPP, 2015). Economic stressors can be employment- or income-based, and can be subjective or objective (Probst, 2005). For example, job loss is an objective employment-based economic stressor, whereas job insecurity is a subjective or cognitive evaluation of the potential for job loss (Shoss and Probst, 2012). Similarly, low income is an objective financial stressor, while pay stagnation is a subjective perception of inadequate pay increases (Shoss and Probst, 2012). The impact of such economic stressors on faculty performance is not well understood and there is a dearth of research examining the combined effect of job insecurity and pay stagnation on job satisfaction and performance. Therefore, the current study addresses a major limitation in economic stress research by testing a model of direct and indirect effects including: (1) the unique effects of two different economic stressors (i.e., job insecurity, pay stagnation) on performance among university faculty; (2) job satisfaction as a mediator linking economic stressors with performance; and (3) the moderating effect of tenure status (i.e., tenured vs. non-tenured faculty) on the relationships between economic stressors, job satisfaction, and performance.

A test of this proposed model provides several contributions to the literature. First, although job insecurity and pay stagnation have been linked to job satisfaction and performance independently (Ahmad et al., 2010; Gneezy and Rustichini, 2000; Sverke et al., 2002), to the best of the authors’ knowledge, this is the first study to include both job insecurity and pay stagnation simultaneously as coexisting predictors of job satisfaction and performance. This is important because the simultaneous consideration of these job stressors reduces the possibility of overestimating the predictive power of a single economic stressor. Second, we examined job satisfaction as a link from economic stressors to performance, thus exploring the potential of satisfaction-based interventions for maintaining high levels of faculty performance in the face of unavoidable organizational changes caused by budget cuts. Third, we examined tenure status as a moderating variable in the relationship between economic stressors and job satisfaction and performance, thus demonstrating who might be most negatively impacted by funding shortfalls in the university sector. Finally, we collected data from a sample of public university faculty experiencing repeated budget cuts, allowing us to better understand economic stress within academia and the outcomes of decreased public funding for higher education.

The following sections provide a foundation for the proposed model and hypotheses by integrating theory with empirical evidence to assess the impact of economic stressors on job attitudes and performance among tenured and non-tenured faculty.

Economic stressors as a direct predictor of job satisfaction and performance

Both conservation of resources (COR) theory (Hobfoll, 1989) and expectancy theory (Vroom, 1964) explain why job insecurity and pay stagnation can lead to adverse outcomes. According to COR theory, stable employment and income are resources valued by employees not only for their own purpose, but also for the attainment of other valuable resources (e.g., housing, social status). Both job insecurity (i.e., uncertainty of retaining one’s job) and pay stagnation (i.e., investment of energy, time, and effort at work without pay increases) imply a threat to employee resources. Job insecurity was conceptually defined in this study as a subjective perception that the future of one’s job is uncertain or at risk (Probst, 2003), thus taking a quantitative perspective on job insecurity (by focusing on the threat of job loss), rather than a qualitative perspective which considers threats to valued features of the job itself (e.g., work tasks, office location; Hellgren et al., 1999). As employees strive to cope with the loss of resources, their job performance may be at risk. Similarly, expectancy theory (Vroom, 1964) predicts that low instrumentality (e.g., ‘effective performance will not benefit me’) leads to low performance. In other words, perceived job insecurity and pay stagnation (low instrumentality) might discourage employees from working hard.

While this is the first study to include both job insecurity and pay stagnation as predictors of job satisfaction and performance, there is ample evidence for the adverse outcomes of these two variables individually. Over two decades of research, including two meta-analyses (i.e., Cheng and Chan, 2007; Sverke et al., 2002), have demonstrated the negative consequences of job insecurity on job-related outcomes such as job satisfaction and general employee performance. Moreover, research has linked job insecurity to negative job-related attitudes among university faculty, even after controlling for organizational communication, tolerance for ambiguity, and tenure status (Adkins et al., 2001). Based on this literature, we propose the following hypotheses:

Hypothesis 1: Higher levels of job insecurity will be related to lower performance among university faculty.

Hypothesis 2: Higher levels of job insecurity will be related to lower job satisfaction among university faculty.

In line with COR theory and expectancy theory, empirical research indicates that low levels of pay are related to lower job satisfaction (Ahmad et al., 2010) and performance (e.g., Gneezy and Rustichini, 2000; Kepes et al., 2009). Moreover, when employees perceive a strong link between their performance and earning potential, they are more committed (Chiang and Birtch, 2010; Jan et al., 2009), satisfied, and have lower levels of turnover intentions (Chiang and Birtch, 2010). Within academia, research indicates faculty with higher salaries have higher levels of satisfaction with research, resources, promotions, and have lower levels of turnover intentions (Kerlin and Dunlap, 1993).

Yet, pay satisfaction and absolute levels of pay are distinct from pay stagnation. Economic research indicates that employee incomes have remained relatively flat (after adjusting for inflation) since the 1970s (Pew Research Center, 2014). Importantly, real weekly increases have only been seen among workers in the top 10% of all wage earners. Such pay stagnation (i.e., depressed or flat wage growth below the rate of inflation) can be viewed as a violation of the psychological contract with one’s employer, due to increasingly lower levels of relative compensation in exchange for completion of work tasks over time (Cropanzano and Prehar, 2001). Importantly, psychological contract violations, such as pay stagnation, have been found to be related to neglect of in-role job duties and reduced job satisfaction (Turnley and Feldman, 2000). Based on this, we propose the following hypotheses:

Hypothesis 3: Higher levels of pay stagnation will be related to lower performance among university faculty.

Hypothesis 4: Higher levels of pay stagnation will be related to lower job satisfaction among university faculty.

Job satisfaction as a mediator of the relationship between economic stressors and performance

In addition to simultaneously examining job insecurity and pay stagnation as direct predictors of job satisfaction and performance among university faculty, this study aims to examine possible mediation effects. Early social psychology theorists emphasized the importance of examining job satisfaction as a link between job characteristics and performance, and emphasized how one’s attitude has behavioral consequences (e.g., Fishbein, 1973; Fishbein and Ajzen, 1975; Strauss, 1968). Ajzen’s (1991) theory of planned behavior suggests that behavioral intentions (and eventual behavior) are predicted by one’s attitudes toward the focus of the behavior, in that more favorable attitudes elicit stronger intentions to perform resulting in higher levels of performance. Other researchers suggest that ‘In general, people who evaluate an attitude object favorably tend to engage in behaviors that foster or support it, and people who evaluate an attitude object unfavorable tend to engage in behaviors that hinder or oppose it’ (Eagly and Chaiken, 1993: 12).

Multiple meta-analytic studies support the theory that job satisfaction is an important factor related to performance (Fried et al., 2008; Harrison et al., 2006; Judge et al., 2001; Riketta, 2008). In one of the most comprehensive early meta-analyses, Judge et al. found an estimated population correlation between job satisfaction and performance of .30. Moreover, Riketta (2008) found that job satisfaction was a significant predictor of performance; however, performance had no predictive utility for job satisfaction, thus, helping to establish the direction of causality between these variables. Further, Fried et al. (2008) found that the effects of role ambiguity and conflict on supervisor ratings of performance were partially mediated by job satisfaction, suggesting that the impact of job-related stressors on performance may be mediated by satisfaction.

While a great deal of past research shows job insecurity, an increasingly pervasive job stressor, is negatively related to job attitudes and performance (Cheng and Chan, 2007; Sverke et al., 2002), only a few studies have examined job satisfaction as a mediator of the relationship between job insecurity and performance. In an exception, Probst and Brubaker (2001) reported that job insecurity was related to lower levels of job satisfaction, which in turn was related to decreased safety performance. Therefore, we propose the following hypothesis:

Hypothesis 5: Job satisfaction will mediate the relationship between job insecurity and performance.

Although less is known about job satisfaction as a potential mediator of the pay stagnation–performance relationship, a meta-analysis from Williams et al. (2006) suggested pay discrepancy predicts pay satisfaction, which, in turn, leads to performance and withdrawal intentions. Another suggests that employees who are more satisfied with their pay level, pay structure, pay raises, and benefits appear to be better performers (Currall et al., 2005). Moreover, Turnley and Feldman (2000) found that job dissatisfaction mediated the relationship between psychological contract violations (including pay stagnation) and completion of in-role job duties. Given the need to more thoroughly examine the theoretical mediating mechanisms linking pay stagnation to performance, our study attempts to address this gap while also focusing on an understudied population (university faculty). Based on theory and available research, we propose the following hypothesis:

Hypothesis 6: Job satisfaction will mediate the relationship between pay stagnation and performance.

The moderating role of tenure status

One of the key goals of this study is to examine the potential differential impact of economic stressors on two different groups of university employees: tenured and non-tenured faculty. Tenured faculty are assumed to have earned a certain immunity to dismissal, whereas untenured tenure-track and non-tenure track faculty do not enjoy such job security. Although tenure-track faculty aspire to obtain tenure, it is understood that there is no guarantee of tenure ultimately being granted; moreover, non-tenure track faculty do not even have the opportunity to gain such job security. Thus, comparing tenured and non-tenured faculty provides a unique opportunity to examine how differences in career expectations and opportunities may influence the outcomes of budget crisis in academia.

Based on psychological contract theory (Rousseau, 1995), we suggest tenured faculty will react more negatively to job insecurity than their non-tenured counterparts. Psychological contract is referred to as ‘individual beliefs, shaped by the organization, regarding terms of an exchange agreement between individuals and their organization’ (Rousseau, 1995: 9). Psychological contract breach (PCB) occurs when employees perceive that the organization fails to meet the obligations they have to their employees (Turnley and Feldman, 1998). According to social exchange theory (Blau, 1964), employees who perceive PCB become unwilling to meet their own obligation to the organization. Once employees’ trust is violated through PCB, it is difficult for them to stay motivated and satisfied with work because the link between performance and reward has been violated (Porter and Lawler, 1968). Therefore, under conditions of PCB, employees may try to resolve the social exchange imbalance through negative job-related affect (Bal et al., 2008; Robinson and Rousseau, 1994; Zhao et al., 2007) and decreased performance (Restubog et al., 2006; Zhao et al., 2007).

As previously mentioned, while tenured positions are among the most protected occupations, such protection may cease to exist in times of program elimination and downsizing. In a context where tenured faculty expect job security, the implementation of budget cuts resulting in faculty layoffs among tenured faculty can be considered a severe PCB between the university and tenured faculty, whereas untenured faculty by definition do not have such (implicit or explicit) guarantees of security. Further, in line with the tenets of PCB theory, empirical research suggests that job insecurity has a more negative effect on job satisfaction for permanent employees in comparison to fixed-term or temporary employees (De Cuyper and De Witte, 2006; De Cuyper et al., 2009), likely due to differences in initial expectations regarding organizational provision of job security. As such, we propose the following hypotheses:

Hypothesis 7: The relationship between job insecurity and performance will be stronger for tenured compared to non-tenured faculty.

Hypothesis 8: The relationship between job insecurity and job satisfaction will be stronger for tenured compared to non-tenured faculty.

It is worth noting that we did not anticipate significant differences in the relationship between pay stagnation and job satisfaction based on tenure status. Tenure does not come with the promise of continued pay increases, so differences in PCB resulting from pay stagnation would not be expected based on tenure status.

Method

Participants and procedure

To test our hypotheses, all tenure- and non-tenure track faculty members at a large public land-grant university system in the northwestern United States were invited via email, announcements, and newsletters to participate in a secure online survey. In the aftermath of the economic recession in the US, this university lost half of its state-supported funding between 2008 and 2011, which prompted numerous budget cuts within the university, resulting in the elimination of several hundred positions and widespread pay freezes lasting several years. Thus, this seemed to be an ideal sample within which to test our hypotheses.

A total of N = 647 faculty members from all colleges within the university participated in this study, representing a response rate of 35%. Of the 647 participants, 355 participants provided their annual performance review rating (and were thus included in the final analysis). The final sample mean age was 50.66 (SD = 9.97), 51% male; 35% non-tenured, 58% tenured (7% did not disclose their tenure status) with an average of 14.29 (SD = 9.40) years employed at the university.

Measures

All measures were coded such that a higher number reflected a higher level of the construct. All scales has a high degree of internal consistency with Cronbach’s alpha above .70 (see Table 1).

Table 1.

Reliability coefficients, descriptive statistics, and Pearson correlation coefficients for all study variables.

	M	SD	1.	2.	3.	4.
1. Job insecurity	1.44	1.14	.95
2. Pay stagnation	5.67	1.19	.17**	.73
3. Job satisfaction	2.04	0.48	−.24**	−.42**	.84
4. Performance	4.08	0.55	−.17**	−.09	.25**	—
5. Tenure status	—	—	−.34**	.13*	.01	.07

Notes: n = 355. Cronbach’s alpha reported along diagonal for raw items. * p < .05, ** p < .01. Tenure status coded as 0 (not tenured) and 1 (tenured).

Job insecurity

The nine-item version of the Job Security Index (JSI, Probst, 2003) was used to measure perceptions of job insecurity. Respondents indicated on a three-point scale (yes, ?, no) the extent to which the nine adjectives or phrases described the future of their job (e.g., ‘unpredictable,’ ‘my job is almost guaranteed’ – reverse coded).

Pay stagnation

Three items from the erosion subscale of Rousseau’s (2000) Psychological Contract Inventory were used to measure pay stagnation: (e.g., ‘I receive stagnant or reduced wages the longer I work here’ and ‘I work more and more for less pay’). Responses to these items could range from 1 (strongly disagree) to 7 (strongly agree).

Job satisfaction

Satisfaction with pay (e.g., ‘paid well by industry standards’), promotions (e.g., ‘good chance for promotion’), co-workers (e.g., ‘The people I work with are frustrating’), supervisors (e.g., ‘My department chair praises good work’), and the work itself (e.g., ‘The work I do is satisfying’) were measured using the Job Descriptive Index (JDI; Smith et al., 1969). Respondents indicated on a three-point scale (yes, ?, no) across six items for each satisfaction subscale.

Performance

In order to have a standardized objective measure of performance across all departments, faculty members were asked to provide their most recent annual review rating. These review ratings ranged from 1 (low performance) to 5 (high performance) and are based on published departmental criteria for faculty performance. In order to avoid ceiling or floor effects, the university provost has preset criteria for the proportions of faculty which can receive ratings at each level. Faculty members receive their annual review ratings following an evaluation conducted by an elected departmental committee and the departmental chair. Thus, these ratings provide a university-wide common metric of performance.

Analysis strategies

To maximize the reliability and parsimony of our complex structural equation model, item parcels were created in SPSS for construct measures with more than three items by sequentially assigning items per parcel based on the highest to lowest item-to-construct loadings/correlations, as recommended by Little et al. (2002). Subsequent analyses were conducted with Mplus 6.1 (Muthén and Muthén, 1998–2010) using maximum likelihood estimation.

Results

Prior to examining the measurement and structural models to test hypotheses, zero-order correlation coefficients were computed for all possible relationships among variables in the study. As seen in Table 1, all variables were significantly correlated, with the exception of the relationship between pay stagnation and performance, although this was in the expected direction (r = –.09).

Measurement model results

Using a two-step approach (Anderson and Gerbing, 1988), we first ensured the adequacy of fit for the measurement model prior to examining the relative fit and parameters of the structural models. The performance construct was the only variable measured with a single item and was fixed to have no residual variance unexplained by the single item. Each indicator had statistically significant (p < .01) factor loadings on its assigned construct, with all standardized values greater than 0.53. As seen in Table 2, the initial four-factor measurement model was an excellent fit to the data and all aspects of the measurement model are invariant across tenured and non-tenured faculty (ΔCFI < 0.01; Cheung and Rensvold, 2002).

Table 2.

Summary of goodness of fit indices for measurement model invariance across tenured and non-tenured faculty.

Model	χ²	df	RMSEA	CFI	SRMR
Measurement model	57.583	30	0.051	0.985	0.036
Invariance of form	90.949	60	0.056	0.981	0.041
Invariance of like item loadings	97.422	66	0.054	0.981	0.048
Invariance of like item intercepts	100.333	72	0.049	0.983	0.048
Invariance of like item residuals	109.634	81	0.046	0.983	0.051
Invariance of like factor variances	120.348	85	0.050	0.979	0.096
Invariance of like factor means	122.051	85	0.051	0.978	0.097

Notes: RMSEA = root mean square error of approximation; CFI = comparative fit index; SRMR = standardized root mean square residual.

Structural model results

Prior to interpreting structural parameters, we wanted to rule out the possibility that bias from common method variance was inflating observed relationships between variables. As described by Podsakoff et al. (2003), we tested for common method variance utilizing the Harman single factor test. All indicator items utilized in the model were loaded into an exploratory factor analysis using SPSS. Results of this analysis produced 10 statistically significant factors with eigenvalues over 1.0, accounting for 66.78% of the variance. Further, the items consistently loaded on expected latent factors. According to the results of this analysis, it can be concluded that common method bias does not appear to have a strong effect on our results.

Next, we examined the relative fit of a partially mediated model (with direct paths from job insecurity and pay stagnation to performance) versus a fully mediated model (with no direct paths from job insecurity and pay stagnation to performance). As seen in Table 3, the partially mediated model provided a good fit to the data for the entire sample, but the fully mediated model did not result in a significant decrement in fit compared to the partially mediated model, Δχ² (2) = 5.349, p > .05, suggesting retention of the more parsimonious (fully mediated) model proposed by H5 and H6.

Table 3.

Global fit indices for the structural models and structural invariance.

Model	χ²	df	RMSEA	CFI	SRMR
Partially mediated model	62.491	31	0.053	0.982	0.065
Fully mediated model	67.531	33	0.054	0.980	0.069
Invariance of fully mediated model	160.294	94	0.065	0.960	0.131
Partially mediated model (tenured)	53.242	31	0.059	0.979	0.062
Partially mediated model (non-tenured)	54.207	31	0.078	0.961	0.118
Fully mediated model (tenured)	54.543	33	0.056	0.980	0.064
Fully mediated model (non-tenured)	55.787	33	0.075	0.962	0.119

Notes: RMSEA = root mean square error of approximation; CFI = comparative fit index; SRMR = standardized root mean square residual.

In addition to examining the relative fit of the partially and fully mediated models for the entire sample, we examined both models for tenured and non-tenured faculty separately. As seen in Table 3, results indicate the fully mediated model has an adequate fit (with a non-significant decrement in fit compared to the partially mediated model) for both tenured and non-tenured faculty. Further, the partially mediated models indicated non-significant (p > .05) structural paths from job insecurity and pay stagnation to performance for both tenured and non-tenured faculty. Taken together, these results fail to support H1 and H3 (no direct paths from job insecurity and pay stagnation to performance) and strengthen support for H5 and H6 (job satisfaction is the mediating mechanism linking job insecurity and pay stagnation to performance). As such, all reported results for structural relationships will be discussed based on the fully mediated model (see Figure 1).

Figure 1.

Standardized structural coefficients for the fully mediated model for tenured versus non-tenured (in parentheses) faculty.

Next, we tested the fully mediated model for invariance across tenured and non-tenured faculty. As shown in Table 3, there was a significant decrement in model fit once invariance constraints were imposed, suggesting a differential pattern of relationships between job insecurity, pay stagnation, job satisfaction, and performance for these two groups. As such, all structural paths in the fully mediated model will be interpreted separately for tenured and non-tenured faculty members (see Figure 1).

As seen in Figure 1, the majority of relationships in the fully mediated model were significant for tenured faculty, but not for non-tenured faculty. For tenured faculty, job insecurity and pay stagnation had a significant negative relationship with job satisfaction (supporting H2 and H4). For non-tenured faculty, pay stagnation was the only economic stressor with a significant negative relationship with job satisfaction (failing to support H2, but providing additional support for H4). Taken together, these results indicate that job insecurity is only related to job satisfaction for tenured faculty and pay stagnation is equivalently related to job satisfaction for tenured and non-tenured faculty (providing support for H8). Job satisfaction had a significant positive relationship with performance for tenured faculty, but not non-tenured faculty. As such, job satisfaction cannot mediate the relationship between economic stressors and performance for non-tenured faculty. However, for tenured faculty, job satisfaction significantly mediated the relationship between job insecurity and performance (–.12, p < .01) and pay stagnation and performance (–.19, p < .01), thus providing additional partial support for H5 and H6.

Discussion

This study examined a mediated model of the effects of two economic stressors (job insecurity and pay stagnation) on performance via job satisfaction among university faculty members. Our results suggested that: (1) job insecurity and pay stagnation have unique effects on job satisfaction; (2) models of the effects of economic stressors on performance should include job satisfaction as a mediator; and (3) the effects of job insecurity and pay stagnation on satisfaction and performance differ for tenured versus non-tenured faculty. The following section discusses theoretical and practical implications for furthering the understanding of the overall impact of economic stressors on university faculty.

Theoretical and practical implications

The separate tenured versus non-tenured faculty models results suggested that job insecurity has small effects on satisfaction and performance for non-tenured faculty but significant detrimental effects for tenured faculty. These findings provide support for PCB theory (e.g., Zhao et al., 2007), given that tenure is accompanied by the expectation of job security. When that implied contract is broken, faculty dissatisfaction leads to decreased performance. However, perceived job insecurity does not constitute a breach for non-tenured faculty, who do not have implicit or explicit expectations of a guaranteed job. On the other hand, pay stagnation is equally dissatisfying for tenured and non-tenured faculty, likely because explicit or implicit expectations of pay increases do not generally vary by tenure status.

To the best of our knowledge, this is the first study to test the direct and indirect effects of two economic stressors on performance in the context of budget reductions (a theoretical antecedent of economic stress). Because of the simultaneous consideration of these job stressors, we reduced the possibility of overestimating the predictive power of a single economic stressor, and demonstrated that perceptions of stable employment and satisfactory income increases are both predictive of employee job attitudes and performance, particularly among tenured faculty.

Another implication is that university faculty, whose jobs are often anecdotally described as stable and secure, can also find themselves on the receiving end of the negative outcomes of economic crisis. Our results suggested that pay stagnation and job insecurity have significant influence on faculty’s job satisfaction and performance. This negative effect was especially prevalent among the tenured faculty, likely because of the common belief that their jobs are (or should be) impervious to external threats.

Finally, we found that job satisfaction fully mediated the relationship between economic stressors and performance for tenured faculty. Past research shows factors such as perceived organizational support (Rhoades and Eisenberger, 2002), high-quality leader–member exchange (LMX, e.g., Graen et al., 1982), organizational fairness (Colquitt et al., 2001), and trust (Albrecht and Travaglione, 2003) are antecedents of positive job attitudes. While these factors do not remove the threats posed by economic crises, the mindful implementation of organizational strategies to improve job satisfaction may buffer the negative effects of resulting economic stress on performance. Therefore, organizations and supervisors (i.e., administrators, department heads, and deans) can make efforts toward creating and fostering a caring and trustworthy climate despite diminishing resources and funds. If employees believe that they are supported, their job attitudes might improve, which may ultimately prevent the decline of performance during an economic crisis.

Limitations and future directions

Despite the strengths of this study, there are limitations which should be noted and addressed in future research. First, the study was cross-sectional in nature, in part because we wanted to obtain honest and accurate information regarding faculty job performance ratings, and therefore could not conduct a longitudinal data collection which would have required identified linked responses. Nevertheless, although the structural equation modeling approach has the ability to frame and answer increasingly complex research questions (Kelloway, 1998), it only allows testing the model–data fit, and thus causal relationships are only theoretically driven. Ideally, future research would incorporate longitudinal research designs to address this shortcoming. Such an approach would greatly aid our understanding of the experiences of economic stressors, particularly in light of the fact that cognitive appraisals, emotional reactions, and behavioral responses to objective stimuli are likely to unfold over time.

Second, in addition to conducting longitudinal studies, future work could delineate the influence of economic factors on different types of performance. In this study we relied on a single, university-wide numerical indicator. While this operationalization was advantageous in that it utilized an objective measure of performance while also allowing us to draw meaningful performance comparisons among faculty in different academic disciplines, more precise indicators of performance would have been more useful. As such, future studies might examine other measures of performance (e.g., willingness to serve on university committees or grant writing) as elements that might suffer due to economic cutbacks.

Third, the study relied solely on self-report data. One problem of the self-report approach is the increased possibility of observing a mono-method bias (Podsakoff et al., 2003). However, evidence from a Harman’s single factor test (Podsakoff et al., 2003) offered evidence that the results of this study were not primarily attributable to this bias. To further counter this, we solicited actual annual review ratings, rather than self-assessments of performance. While we cannot guarantee the provided annual review ratings were accurate, the anonymity guaranteed during the data collection process should have alleviated any concerns pertaining to the disclosure of this information. Nonetheless, we recommend that in the future, and when possible, researchers collect data from multiple sources to overcome these potential problems.

Finally, our results were based solely on university faculty within a single public US university. While this data source was fitting given (a) our interest in economic stress within academia, (b) the unique status offered by tenure to university faculty, and (c) the decline of public funding of higher education, it arguably limited our ability to generalize the findings across public and private universities and to different industry sectors. In the future, researchers might extend the test of our underlying hypotheses to diverse occupations and geographic regions to examine whether there are similarities in regard to their susceptibility to negative effects of economic stressors. For example, König et al. (2011) suggest that regional differences in social programs and uncertainty avoidance lead to differential effects of economic stressors, such as job insecurity, on employee job-related outcomes. Further research is warranted to untangle the effects of governmental practices and regional differences on employee reactions to budget cutting measures.

Conclusion

This study provided empirical evidence for the links between economic stressors (perceptions of job insecurity and pay stagnation), job satisfaction, and performance in academia. Moreover, we demonstrated both job insecurity and pay stagnation have independent and unique effects on these outcomes which differ based on the tenure status of university faculty. These results are important in light of decreasing public investment in higher education and the prevalence of the economic stressors of job insecurity and pay stagnation.

Footnotes

Declaration of conflicting interest

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

This study was supported by the National Science Foundation (NSF) under Grant No. 0810927. Any opinions, findings, and conclusions expressed in this material are those of the authors and do not necessarily reflect the views of NSF.

Author biographies

Wendi L Benson is an Assistant Professor of Psychology at Nevada State College. Her research interests include examining job, health, and psychological outcomes of workplace aggression, job insecurity, and organizational climate, and effects of growth mindset interventions, group projects, and distributed practice on psychological and academic outcomes of statistics students.

Tahira M Probst is Professor of Psychology at Washington State University Vancouver. Her research focuses on economic stressors, with particular interest in job insecurity and its effects on employee health and well-being. She is currently co-editor of Stress & Health and an editorial board member of Journal of Occupational Health Psychology, Occupational Health Science, Military Psychology, and Journal of Business and Psychology.

Lixin Jiang is an Assistant Professor of Industrial and Organizational Psychology in the Department of Psychology at the University of Auckland, New Zealand. The majority of her research involves the use of multilevel modeling to identify the sources of workplace stress, and prevent and attenuate the negative consequences of workplace stress.

Kristine J Olson is an Associate Professor of Psychology at Dixie State University. Her research is focused on work–life integration, harassment, discrimination, and diversity in the workplace.

Maja Graso is a Senior Lecturer of Management in the College of Business at the University of Otago in New Zealand. She teaches courses on leadership and organizational behavior. Her research interests mostly include organizational justice, job insecurity, and cross-cultural issues in organizational psychology.

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