Senior academics tell juniors that an assistant professor does not have to get tenure at his or her current university, but “in the profession”, i.e. at some university. To extend this reasoning, one does not have to get tenure at all, just guarantee one’s ability to pay one’s living costs with as low effort as possible. Government jobs are also secure – not quite tenure, but close.
Economically, tenure is guaranteed income for life (or until a mandatory retirement age) in exchange for teaching and administrative work. The income may vary somewhat, based on research and teaching success, but there is some lower bound on salary. Many nontenured academics are obsessed about getting tenure. The main reason is probably not the prestige of being called Professor, but the income security. People with families seem especially risk averse and motivated to secure their job.
Guaranteed income can be obtained by other means than tenure, e.g. by saving enough to live off the interest and dividends (becoming a rentier). Accumulating such savings is better than tenure, because there is no teaching and administration requirement. If one wishes, one can always teach for free. Similarly, research can be done in one’s free time. If expensive equipment is needed for the research, then one can pay a university or other institution for access to it. The payment may be in labour (becoming an unpaid research assistant). Becoming financially independent therefore means giving oneself more than tenure. Not many academics seem to have noticed this option, because they choose a wasteful consumerist lifestyle and do not plan their finances.
Given the scarcity of tenure-track jobs in many fields, choosing the highest-paying private-sector position (to accumulate savings), may be a quicker and more certain path to the economic equivalent of tenure than completing sequential postdocs. The option of an industry job seems risky to graduate students, because unlike in academia, one can get fired. However, the chance of layoffs should be compared to failing to get a second postdoc at an institution of the same or higher prestige. When one industry job ends, there are others. Like in academia, moving downward is easier than up.
To properly compare the prospects in academia and industry, one should look at the statistics, not listen to anecdotal tales of one’s acquaintances or the promises of recruiters. If one aspires to be a researcher, then one should base one’s life decisions on properly researched facts. It is surprising how many academics do not. The relevant statistics on the percentage of graduates or postdocs who get a tenure-track job or later tenure have been published for several fields (http://www.nature.com/ncb/journal/v12/n12/full/ncb1210-1123.html, http://www.education.uw.edu/cirge/wp-content/uploads/2012/11/so-you-want-to-become-a-professor.pdf, https://www.aeaweb.org/articles?id=10.1257/jep.28.3.205). The earnings in both higher education and various industries are published as part of national labour force statistics. Objective information on job security (frequency of firing) is harder to get, but administrative data from the Nordic countries has it.
Of course, earnings are not the whole story. If one has to live in an expensive city to get a high salary, then the disposable income may be lower than with a smaller salary in a cheaper location. Non-monetary aspects of the job matter, such as hazardous or hostile work environment, the hours and flexibility. Junior academics normally work much longer than the 40 hours per week standard in most jobs, but the highest-paid private-sector positions may require even more time and effort than academia. The hours may be more flexible in academia, other than the teaching times. The work is probably of the same low danger level. There is no reason to suppose the friendliness of the colleagues to differ.
Besides higher salary, a benefit of industry jobs is that they can be started earlier in life, before the 6 years in graduate school and a few more in postdoc positions. Starting early helps with savings accumulation, due to compound interest. Some people have become financially independent in their early thirties this way (see mrmoneymustache.com).
If one likes all aspects of an academic job (teaching, research and service), then it is reasonable to choose an academic career. If some aspects are not inherently rewarding, then one should consider the alternative scenario in which the hours spent on those aspects are spent on paid employment instead. The rewarding parts of the job are done in one’s free time. Does this alternative scenario yield a higher salary? The non-monetary parts of this scenario seem comparable to academia.
Tenure is becoming more difficult to get, as evidenced by the lengthening PhD duration, the increasing average number of postdocs people do before getting tenure, and by the lengthening tenure clocks (9 years at Carnegie Mellon vs the standard 6). Senior academics (who have guarateed jobs) benefit from increased competition among junior academics, because then the juniors will do more work for the seniors for less money. So the senior academics have an incentive to lure young people into academia (to work in their labs as students and postdocs), even if this is not in the young people’s interest. The seniors do not fear competition from juniors, due to the aforementioned guaranteed jobs.
Graduate student and postdoc unions are lobbying universities and governments to give them more money. This has at best a limited impact, because in the end the jobs and salaries are determined by supply and demand. If the unions want to make current students and postdocs better off, then they should discourage new students from entering academia. If they want everyone to be better off, then they should encourage research-based decision-making by everyone. I do not mean presenting isolated facts that support their political agenda (like the unions do now), but promoting the use of the full set of labour force statistics available, asking people to think about their life goals and what jobs will help achieve those goals, and developing predictive models along the lines of “if you do a PhD in this field in this university, then your probable job and income at age 30, 40, etc is…”.