Friday, February 26, 2010

 

Early Retirement Incentives

This story in IHE came along at the right moment. My state is apparently considering an early retirement program for certain kinds of public employees, which may wind up including many of the people who work at the college. Naturally, the rumor mill is aflutter. (I'm not sure if mills can flutter, but you get the idea.)

It's a strange time to try to purge staff, since we have more students than we can handle already. Reducing our staffing will only make it that much worse. But when costs are meaningfully separate from revenues, which they still are for us, it's not surprising that we'd be pulled in contradictory directions.

I'm conflicted. On the one hand, I've made no secret of my belief that part of the reason for the terrible job market for new Ph.D.'s is the lack of turnover in tenured positions. Assuming that at least some of the retirees would have to be replaced -- and in a time of record enrollments, that strikes me as a reasonable assumption -- then we could both cut costs and hire new faculty at the same time. Yes, some positions would probably be adjuncted-out for the usual reasons, but some would have to be replaced. If the pot were sweetened enough for some who feel ready to move on to the next phase, then we could hire some of the newest grads. And given the degree to which it's an employer's market these days, we could pick up some really amazing people. There's a real appeal to that.

On the other hand, though, these incentives are awfully blunt instruments, and they have weird side effects.

In a collective bargaining environment, the incentives would almost certainly have to be offered across the board to anyone who fits a set of bright-line criteria. (Years of service and minimum ages are the usual defaults.) There are good and fair reasons for that, but it also means a dangerous likelihood of the stars leaving and the, um, lesser stars staying. From a student perspective, this is not a happy outcome. (Yes, even at a teaching institution we have stars and lesser stars.)

Retirements can also be spotty by department, which can lead to some abrupt and very annoying staffing imbalances. With enough lead time and the flexibility to backfill as needed, of course, that can mean new openings. But if the lead time is too short, or backfilling is verboten, then we could easily wind up with, say, a top-heavy English department and a completely vacated math department. Not good.

Over time, too, early retirement incentives can become an expectation, and even a sort-of entitlement. I have had faculty tell me, to my face and in all apparent seriousness, that they're only still around because they're waiting for the next incentive. Once that expectation is out there, you live with it for a long time. A quick burst will be followed by a long lull. If the lull lasts into the next recession, then we're right back where we started, which is exactly what some people are counting on. It's a sort of perpetual motion machine that feeds on money, and that money has to come from somewhere.

Ethically, I'm a little uneasy with the idea that we have to exploit the daylights out of the young so we can pay off the old to stop working. Something about that just seems wrong. If the effects are generally positive, I'm willing to put my misgivings aside, but there they are.

If it were up to me, we'd have something closer to the Danish system. We'd have a generous welfare state combined with a relatively fluid, performance-based employment model. Instead, we have a winner-take-all system in which the immovably employed have to be bought off to create opportunity for the desperately underemployed. But you play the hand you're dealt.

Wise and worldly readers, have you seen an early retirement incentive scheme done especially well? If you have, what made the difference?

Comments:
Yes, I have seen it work well. Details are not bloggable, but what the idiocracy commentariat misses is that some of the worst teachers are not happy and will gladly retire a few years earlier.

At our college, the savings when a senior person retires and a junior person is hired full time are enough to pay incentives and still come out ahead in the same year, not to mention next year. You just have to be careful that you don't hire a "star" who really wants to do basic research rather than teach or it will be out of the frying pan and into the fire.
 
IT'S A TRAP.

Seriously, adjunct nation.
 
From the International Longevity Center: Ageism
The Pervasive Sources of Ageism
Posted by: Anti-Ageism Task Force Guest Expert Erdman Palmore, Ph.D

Many people are learning to recognize that ageism, like racism and sexism, is a form of prejudice and discrimination against a category of people – in this case, old people. Yet few recognize the many sources of ageism in our culture.

Here are some of the main sources:

* ECONOMIC ADVANTAGE (READ 3 TIMES). If older people can be eliminated from the competition by compulsory retirement and other employment discrimination, younger people will have more advantage in getting jobs and promotions.
* Jokes and birthday cards about old people. These jokes and cards may be amusing, but they are usually based on negative stereotypes about old people that have little or no basis in fact. This tends to reinforce these stereotypes.
* The machine analogy. This is the false belief that the human body is like a machine that inevitably “wears out” in old age. In fact, the human body is unlike a machine in that the body can usually repair itself, even in old age, unless there is some pathology preventing the repairs.
* Rationalization. This is the common tendency to justify discrimination with some kind of false stereotype, such as old people are slow and stupid.
* Scapegoating. This is like rationalization in that old people are falsely blamed for social and economic problems such as unemployment, high taxes, the federal budget deficit, and expensive health care.
* Selective perception. This is the tendency to “see what you expect to see.” In this case, people who are slow or impaired tend to be perceived as “old”, while people who are quick and active tend to be perceived as “young” even though they may be chronologically old.
* Stereotypes in the media. Many portrayals of old people in the media (TV, movies, commercials, magazines, and newspapers) tend to show them as decrepit, dependent, demented, weak, and useless. This tends to reinforce the stereotypes that all old people are this way.

The bottom line is, become aware of these sources of ageism and try to overcome them in order to reduce ageism in our culture.
Dr. Erdman Palmore was born in Japan to missionary parents and was raised in Virginia. He received a B.A. degree from Duke University, M.A. from the University of Chicago, and Ph.D. from Columbia University, all in Sociology. He taught at Yale University and did research for the Social Security Administration prior to coming to Duke University in 1967. At Duke, he has been Coordinator for the Duke Longitudinal Studies and Principal Investigator of several research projects. He is now Professor Emeritus of Medical Sociology and Editor of the Aging Center newsletter. Dr. Palmore has written or edited 15 books, including The Encyclopedia of Ageism, the Normal Aging series, International Handbook on the Aged, Handbook on the Aged in the U.S., Facts on Aging Quiz, and Ageism. He has also written 20 chapters in other books and over 70 articles in professional journals. His books and papers have received several awards. He is a Fellow of the American Sociological Society, the Gerontological Society of America, and was President of the Southern Gerontological Society, which gave him an award for Distinguished Academic Gerontologist. His research and teaching interests include ageism, knowledge about aging, race relations, retirement, longevity, life satisfaction, health, and international gerontology. Back
 
There are a few things that keep the early retirement programs from effectively clearing out the deadwood:

First, many professors and instructors cannot imagine doing something else with their lives. This even goes for those who are miserable at work or are lousy teachers. If being a prof is your main identity, why would you give that source of psychological satisfaction up? One of my colleagues, who is in his 80s, does not want to retire because he is pretty sure he will die if he does not have classes to teach.

Second, the financial incentives to stick it out as long as you can are strong. If you are on a defined benefits pension plan that is keyed to the average salary of the past five years, then you would be an idiot to leave before you spent five years at the highest rung of the salary scale. This is especially true if your pay was miserable for the first decade of employment. Once you get to the top, then you can coast all you want without any penalty and in fact, your pension gets better the less you work. It only makes sense to take the state or university for all you can.
 
One dysfunction I see has to do with the pension system. At my university, if I were to retire at 55 with 30 years of service, I'd get essentially bupkus from my defined-benefit pension plan, but if i retire at 65 with 40 years, I get great benefits. It's highly nonlinear. That incentivizes senior faculty stay on much longer than they are interested to say on.

I don't think it's in any interest to keep around senior faculty who don't really want to be there, and are just marking time because their pension requires it -- if you don't have the passion and internal motivation, you're not going to be a great teacher or a great researcher or a great mentor to students. Yet that's exactly what our pension play does.
 
My experience in the private sector is that bad things come to badly run institutions. When we offered a retirement plan like this at a private company, those who could retire did, but that was not many.

Much more serious was the fact that the folks who had enough talent that they could find another, better job took the deal as well. Thus the program, which was only designed to cut employment costs, turned out to create a talent drain from a company that needed talent.

All my good bosses who were eligible took the deal, and those who were not eligible were gone in six months. Within two years, the company was sold. I got another job long before that happened.
 
At my university, if I were to retire at 55 with 30 years of service, I'd get essentially bupkus from my defined-benefit pension plan, but if i retire at 65 with 40 years, I get great benefits. It's highly nonlinear. That incentivizes senior faculty stay on much longer than they are interested to say on.
**************************************
A 403K will do the same if it tanks. People will then stay well beyond 65 to have their retirement accounts recover despite really wanting to retire. While interviewing this past year, I had a few faculty mention they had been planning on retiring in a year but because of the decrease in their 403s they looked to be retiring in three plus years.
 
Eli wants his Final Award for Research and Teaching
 
I've heard a similar early retirement incentive in my state as well. Some were more than happy to accept the offer and I've heard that there's one who sold his house, and later on moved to Charlotte retirement community with all his money. Thinking about it, the early retirement incentive might be good for many. I, for one, if offered this kind of incentive would happily take it and live in one of the finest active adult communities. Charlotte City will be happy with the influx of early retirees if that happens.
 
I think with a good incentive and savings, people choose to live in places like the retirement communities long island. Many people live there because of the support they receive. They also consider the amenities and condominiums that make living fun and satisfying.
 
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?