What is this “merit increase” thing?

Have you worked in a job at a time when people with your skill set was so in demand that people would throw you bags of money?  Did you notice that, come raise time, the barely competent among your peers received increases nearly twice the rate of inflation? At the same time, the superstars would receive about 1-2% more.

Meanwhile, in less exuberant times, the superstars have to claw and scratch to keep pace with inflation.

Sometimes, these pay raises are termed “merit increases”.  Many times, they’re not even cost-of-living adjustments.  In any case, if money was to be a motivating factor and effort required a demotivating factor, the employee who is doing barely enough to earn a “merit increase” is coming out ahead.

If money isn’t supposed to be motivating, what’s the point of expending the effort to determine who should get what increase?  Just give a flat percentage or amount increase.  After all, all these calculations for who gets what result in a very small difference between employees, and can easily be seen by your superstars as a slight against them any way.

Back to the “merit increase” terminology.  Can we just can call it a “random crap shoot budget allocation” increase, or maybe if you work for a less coddling organization, a “you’re lucky you have a job” increase?