Colleges in the United States are facing an unprecedented financial crisis as COVID-19 threatens the very model of the on-campus experience. The University of Maryland, for instance, announced $80 million in losses in the spring term alone, and Harvard University projects revenue declines will reach $1.2 billion next academic year. To deal with these shortfalls universities have adopted a range of cost-cutting measures. Many have paused faculty hiring, causing the entry-level market to collapse for promising young scholars. Johns Hopkins, Georgetown, and Duke have frozen retirement contributions. Others, including Stanford, Harvard, UMass Amherst, and the University of Kansas, have created retirement incentive programs to ease out senior faculty who are often among the highest paid.

Budgetary measures can play a critical role in whether universities meet long-standing demands for increasing racial diversity.

Many have commented on these dire circumstances. What has gone less appreciated is that decisions taken to address this financial crisis—those made in the coming weeks and months—will have profound long-term consequences on another urgent crisis: a profound reexamination of racism in higher education, accelerated by the Black Lives Matter movement. The two crises are intertwined: financial decisions help to shape the constitution of academic communities. Budgetary measures, particularly relating to retirement policy, can play a critical role in whether universities meet long-standing demands for increasing racial diversity.

These decisions must be informed by history. One striking development on this front was Congress’s decision to eliminate mandatory retirement in higher education in 1994. (The decision amended the Age Discrimination in Employment Act, and hence applied to most private and public sector employers of sufficient size.) The move has had long-term consequences for faculty diversity.

Prior to Congress’s action, universities had long required that faculty retire at age 70 due to the unique institution of tenure. (Mandatory retirement continues to be lawful to this day for executives, policymakers, and other instances where age is deemed a “bona fide occupational requirement”, such as for firefighters, police officers, and airline pilots.) After this act, tenure effectively became a grant of lifetime employment. Congress based its decision on the received wisdom that the elimination of mandatory retirement (so-called “uncapping”) would have no material effects. The National Academy of Sciences concluded that uncapping was “unlikely to affect the vast majority of colleges and universities because most faculty members now retire well before age 70.” A committee assembled by the Association of American Law Schools similarly reported no “dramatic alteration in the overall retirement pattern of law faculty following 1993.”

But contrary to these contemporaneous reports, the effects have been substantial. An important study published in 2002 concluded that fewer faculty have retired upon reaching age 70 and 71. While that study examined effects immediately after uncapping, we assembled fifty years of data from U.S. law schools and found that the long-term impacts were profound.

After Congress’s decision to eliminate mandatory retirement in 1994, tenure effectively became a grant of lifetime employment.

First, the effect on faculty retirements has been dramatic. Among faculty who turned 70 after mandatory retirement was eliminated, nearly 40 percent elected to work past age 70, as seen in Figure 1. As a result, the percent of faculty over 70 has increased from a stable 1 to 2 percent during the period 1971–1993 to 14 percent in 2017. At some schools, the shift was jaw dropping. A fifth of Harvard Law School’s faculty (purple line), for instance, was over 70 as of 2017. From 1993 to 2017, the proportion of the faculty under 40 dropped from 24 to 6 percent, and the average age increased from 50 to 58.

Figure 1: Proportion of faculty above age 70 (vertical axis) that would have been subject to mandatory retirement in the pre-1994 period over time (horizontal axis). Uncapping takes effect in 1994. The red line indicates the average across 166 law schools and the purple line indicates the proportion for Harvard Law School. After uncapping takes effect in 1994, the proportion of retirement-eligible faculty rises dramatically.

Second, delayed retirement has, in turn, adversely affected diversification. The reason is simple. Senior faculty nearing retirement age are (and have been) overwhelmingly white men. Uncapping went into effect when those close to retirement were 92 percent men and 98 percent white. In contrast, the entry-level pool is considerably more diverse along gender and race. Delayed retirements reduce open positions and thereby slow the diversification of faculties. Consistent with this effect, gains in minority hiring beginning in the 1980s slowed after 1994 (Figure 2).

This pattern holds at the school level: schools with the highest proportion of faculty over 70 exhibit the slowest pace of racial and gender diversification. Based on model estimates of the impact of faculty that would otherwise have retired, some 140 more female professors and 80 more minority professors could be teaching law students across the country had mandatory retirement stayed in place. (For the modeling details, see Section 4.4 of our longer research paper.) These numbers are meaningful, given evidence of the salutary impacts of diverse faculty on an increasingly diverse student body. Across 166 law schools, such diversity would represent an additional 10 percent and 13 percent of female and minority faculty relative to 1994.

Figure 2: Proportion of faculty identifying as minority (vertical axis) over time (horizontal axis). Uncapping takes effect in 1994. The red line indicates the average across 166 law schools and the purple line indicates the proportion for Harvard Law School. After uncapping and particularly the Great Recession, racial diversification appears to have slowed substantially.

Third, retirement incentives have a big role to play. Defined benefit plans, under which employers pay employees a predetermined annuity for life (e.g., a pension plan), tend to have weaker incentives to delay retirement than defined contribution plans, under which annual contributions are made into an investment fund (e.g., a 401(k)). Public law schools have been more likely to retain defined benefit plans compared to private universities, and such plans appear to have muted the impact of uncapping. Defined contribution plans are also more vulnerable to market downturns, a fact that may explain the sharp increase in faculty deferring retirement after the Great Recession at private schools.

So What?

The 1994 retirement reform has enduring relevance for universities today. In many fields, senior faculty continue to be less demographically diverse than entry-level hires. Recognizing this connection should inform both law and policy today.

These findings paint a picture of antidiscrimination law at war with itself.

In terms of law, these findings paint a picture of antidiscrimination law at war with itself. On the one hand, uncapping was tremendously successful in expanding generational diversity of faculty. On the other hand, as legal scholars Sam Issacharoff and Erica Harris argue, legal protections against age discrimination may simply have effected a “dramatic and unjustified shift in wealth toward older Americans”—and specifically, older white male Americans, who have comprised the majority of plaintiffs bringing suit under the Age Discrimination in Employment Act (1967). The comparison of age discrimination with sex discrimination is revealing. A popular, if incomplete, account of how sex ended up in Title VII of the Civil Rights Act is that it was a “deliberate ploy by foes of the bill to scuttle it” (as Barbara Whalen and Charles Whalen, Jr., described it in their 1985 book The Longest Debate: A Legislative History of the 1964 Civil Rights Act). What is less known is that the Smathers Amendment had also proposed age as an additional protected class. As one historian puts it, “the loudest backers of an age discrimination clause, somewhat suspiciously, were conservative Republicans and Southern Democrats.” Regardless of the historical origins, present-day law will continue to wrestle between the tension of age diversity and racial and gender diversity.

The stakes are not just legal. As a policy matter, these findings should inform university measures being taken now. Cost-cutting measures like freezing retirement contributions may actually delay retirements even further. In contrast, increasing retirement incentives could have long-term secondary benefits in promoting diversification.

Even more, current retirement policies make the retirement choice a weighty one, involving the sense of loss of salary, benefits, professional identity, and community. Universities could do much to disaggregate these social, psychological, and financial components of the decision. Some universities, for instance, have started offering “emeritus colleges” to provide continuity of intellectual community through lectures, reading groups, courses, and, in some cases, modest research stipends. UCLA’s Pathways to Retirement empowers faculty members to map out phased retirement, including reduced teaching loads and continued support for their research. Widener University offers a one-year terminal sabbatical, enabling faculty to be immersed in research or service before retirement. Continuity of health care as well as access to libraries, campus facilities, office space and opportunities to mentor junior scholars are particularly salient. The United Kingdom’s Job Release Scheme, for instance, encouraged older workers to retire a year early by extending income support. Providing a wider range of supportive, holistic options may be particularly important now in light of the unique risks that COVID-19 poses to older faculty.

Increasing retirement incentives could have long-term secondary benefits in promoting diversification.

To be sure, the impact of retirement policy will be small in the near term given widespread hiring freezes. For institutions facing permanent budget cuts, faculty demographics may not improve for some indefinite time. Some may also question the equity implications of providing more resources to senior faculty at a time when young scholars, contingent faculty, and university staff are left bearing the brunt of layoffs, pay cuts, and other significant career disruptions. When the National Institutes of Health proposed incentives to retire labs in 2015, for example, some charged that it was “merely a mechanism for channeling more money to older researchers.” But short of Congress reversing its decision to eliminate mandatory retirement in universities, retirement incentives are an important policy lever with unrecognized long-term consequences.

While we now know about the diversity implications of retirement policies due to this research, other seemingly neutral budgetary decisions may have substantial disparate impact as well. Non-tenure-track faculty positions are most amenable to layoffs, and minorities and women are disproportionately represented in these kinds of positions. One university even proposed pay reductions for postdoc positions, which serve as important stepping stones for the next generation of academics. (Though that school has since retreated from the proposal, it suggests the kinds of retrenchments administrators are contemplating.) And the design of pay reductions may have substantial effects on future generations. While the University of Colorado, for instance, announced 5 percent cuts across the board for faculty and staff with salaries above $60,000, the Universities of Arizona, Kansas, and Wisconsin are calibrating pay cuts based on faculty salary. Uniform cuts will almost surely have disproportionate effects, as minority scholars are more likely to enter academia with high student loan debt and less generational wealth.

Developing budgetary measures with these consequences in mind can ensure that in the long-term, hiring opportunities exist to diversify our communities of higher education. Institutions must ultimately also follow through on diverse hiring practices, but policy choices with long-term structural consequences can be made now.

Editors’ Note: This essay is adapted from the authors research paper, “Mandatory Retirement and Age, Race, and Gender Diversity of University Faculties.” The authors thank Dan Hulsebosch for numerous conversations that sparked this work.