No longer forced out

WHY SHOULD ACADEMIC institutions or their faculty care about the end of mandatory retirement for tenured faculty, which became effective in January 1994? From the perspective of an individual tenured faculty member who wants to continue her career beyond age seventy, the elimination is a welcome event. In the past, faculty members who wanted to remain active after reaching seventy had to negotiate their status with institutions that were under no legal obligation to allow them to continue. Now, however, tenured faculty members have the legal right to continue indefinitely in their tenured appointments. From the point of view of an academic institution, the elimination imposes two types of costs. First, to the extent that some faculty members at an institution postpone their retirements, the flow of new faculty into an institution will diminish. Fewer new hires means fewer faculty with fresh perspectives and ideas. Fewer new hires also reduces an institution's ability to diversify its faculty along gender, racial, and ethnic lines. And fewer new hires can make it difficult for an institution to shift faculty resources into exciting new areas of inquiry.

Second, retirements generate funds for salary increases for continuing faculty, because most full professors are replaced by lower-paid assistant professors. The difference between the salary of a retiring full professor and that of his replacement can be distributed to other faculty members in the form of salary increases. Postponement of retirements at an institution reduces the amount of such funds available in a year, and the institution must either make up the difference with other funds or reduce the salary increase that it provides for its faculty.

Cornell's Response to the End of Mandatory Retirement

AS AN ECONOMIST WHO STUDIES THE ECONOMICS OF higher education, I worried that the end of mandatory retirement at my institution, Cornell University, might create serious problems. When I accepted the position of vice president for academic programs, planning, and budget at the university, I did so with the understanding that this would be one of the first issues I would address. In fall 1996, the provost and faculty senate appointed a joint faculty-administrative committee to deal with the issue, with me as chair.

Our committee suspected that many Cornell faculty members might not want to retire for fear of breaking their ties to the university. In my own case, Cornell's former president had been so effective in protecting my academic freedom when several members of the university's board of trustees tried to block my promotion to full professor that I had developed a deep loyalty to Cornell. My attachment to Cornell is not unique. Many faculty members at the university consider themselves lucky to live in an idyllic college town and work at an institution with such excellent students, colleagues, and research facilities. The turnover rate of tenured faculty at Cornell has historically been low; only about 1.5 percent of the tenured faculty leave the university each year for reasons other than retirement. This attachment to the university exists despite the fact that faculty salary levels at Cornell are not among the highest in the nation.

Adding to the committee's doubts about our colleagues' eagerness to retire were studies conducted before the end of mandatory retirement that suggested that the elimination would mainly affect major research universities, where faculty members are often so tied to their work that they cannot conceive of leaving their positions unless compelled to do so.2 As a major research university, Cornell was cognizant of this prediction and worried what the change would mean for it.3

Cornell's Retirement Plans

CORNELL UNIVERSITY IS UNIQUE AMONG MAJOR AMERIcan research institutions in that it is a hybrid of private and publicly assisted colleges. Six of the colleges located on its Ithaca, New York, campus are private colleges that charge tuitions comparable to those at other selective private institutions. Faculty in these colleges may participate in the definedcontribution retirement programs of either TIAA-CREF or Fidelity. Under a defined-contribution program, the employer contributes a specified percentage of the faculty member's salary each year into a fund, which is then invested to provide benefits for the faculty member in retirement. The fund "belongs" to the faculty member, and as long as the return on the assets in the fund is positive, definedcontribution pension plans do not give faculty strong economic incentives to retire.

The faculty at Cornell's publicly assisted colleges-Agriculture and Life Sciences, Human Ecology, Veterinary Medicine, and Industrial and Labor Relations-are covered by benefit programs provided to the State University of New York campuses by the state of New York. They have a choice of participating in a defined-benefit retirement plan sponsored by the state or a TIAA-CREF defined-contribution plan.