Well…this is my opinion as to why job security matters in academia. Your mileage may vary.
A lot of people will say that it is about “academic freedom”, i.e., being able to talk about controversial or provocative issues that the students might complain about to their mommies and daddies and deanies. That’s probably true for the fields where it is necessary to bring such issues into the classroom, and probably even more true for the fields where people insist on bringing such issues into the classroom for their own personal reasons. However, this is not universal.
In a nutshell, here is why job security (i.e., tenure or something similar) is so important for most of us:
1) The job cycle has an 8-12 month lead time. Yes, that’s “month”. Although there is a range, most tenure-track jobs (which are usually the only ones that might turn into something with any security and/or decent pay) have application deadlines in the calender year before the August start of your job. Some jobs searches do run out into January, February, March, and even April, but that’s often from schools that have “issues” or situations where someone is leaving unexpectedly.
2) If you happen to be let go during the end of this job cycle, you have to wait another year to get another full-time job. At my school, the “drop dead” date for non-renewing a faculty member is March 1st. It’s almost impossible to find a good job that late in the hiring season, which could leave you unemployed for more than a year.
3) If you lose your job (which can be through no fault of your own, just like in other industries) and/or have a one-year gap in your career, you have very little chance of ever getting a tenure-track job again because of that “problem” on your record.
4) The longer you have worked at a particular institution, the harder it is to get a job somewhere else, with the exception of the very small portion of the professorate who are research stars. This is the least obvious, but perhaps most important factor for a lot of us.
Sticking myself into this essay, I have more than a decade of full-time experience as a college professor, mostly at my current job. I have tenure and have been promoted to Associate Professor, the middle of the three faculty ranks. I consistently receive the highest rating category in my annual reviews in teaching, research, and college service. I could give a lot of examples and data here, but suffice it to say, I’ve very nicely cleared the bar in terms of institutional expectations of my job and in terms of what is typically expected at other institutions like mine. Yet, it would be difficult for me to get a job at another institution of similar quality at this point. Research stars can be relatively “portable”, but not those of us at institutions where undergraduate education is the primary goal. There’s always some hot young thang (gender non-specific) who looks like they have more potential than the actuality of hiring someone with experience, let alone the fact that the newbie costs less. Unless the newbie flames out or leaves for greener pastures.
5) Even if you do manage to get another job, it could be anywhere in the country. Academia is a national market. I’m sure there are a large number of people in academia who applied for jobs in at least 30 different states to get where they are. In getting my current job, I interviewed at four schools in four different states spread across the entire width of the lower 48, out of the 20 or so states where I applied. In none of these states did I have family or anything like that, the locations just happened to have a school that was hiring in my field that particular year and seemed to want someone with my background.
You have to remember that the comparison for academia isn’t working in a factory or working in retail or something like that. The comparison is with other professional fields where you have to put in a decade or so of training to get a doctorate and perhaps additional post-doctoral experience before you can even work in the field. If an excellent doctor was in a practice that went out of business through no fault of their own, said doctor could probably join a practice in the same city or at least within a reasonable commute until the family had a chance to move. Same for a lawyer. Same for a doctor or lawyer who willingly left a practice for something different. If this doctor or lawyer wanted to move to a particular part of the country, there are some re-certification hurdles, but they could be working on that ahead of time and could probably go to the exact state where they wanted. Hell, doctors and lawyers can even do something batshit crazy like set up their own practice!!
Academia doesn’t work that way. This is mostly due to the relatively small number of jobs compared with medicine and law. Notice that I haven’t even talked about the fact that a highly rated college professor would be lucky to make $100K (I am well-paid by the standards of academia and I certainly don’t make that much!), while a highly rated doctor or lawyer would be hard pressed to make anything under $200K unless they were in a particularly low paying specialty and/or in a place with a low cost of living. I wouldn’t want to be a doctor or a lawyer, but those careers are on another planet when it comes to portability.
6) A final note. Because of the usual fairly rapid turnover in major administrative positions, it ends up being long-term faculty who are the guardians of academic standards. Sometimes this leads to stagnation, but having some President or Chancellor or Provost try to mold an institution into their own image within a few years – then leave for their next high-paying job – generally doesn’t work very well. Does any business thrive for decades when there is nearly complete employee turnover every few years?