Ontario eliminated mandatory retirement in 2006. Six years later, professors started to enter the quarter million dollar dollar club. This exclusive group is comprised of university professors aged 71 or older who, due to the curious interaction of federal pension legislation and academic collective agreements, are able to collect a full pension and a full salary.
The average salary of a full professor in Canada is around $166,000 per year (calculations available here: Download Average salary of full profs in Canada). Suppose we assume (a) that the typical university pension replaces 2/3 of a professor's salary and (b) that the typical professor working at age 71 or more is earning at least an average full professor's salary. That puts the total salary plus pension income of most professors over the age of 71 well above $250,000, granting them membership in the quarter million dollar club.
Are aged professors worth what they're paid? Some are; most aren't. The picture below shows a stylized representation of a typical university professor's salary, and a typical university professor's productivity.
The value of academic services produced goes down over time because, on average, most academics publish less as they grow older, the quality of their teaching is stable or declining, and they typically have less energy for academic administration.
Declining productivity is not, in and of itself, a problem. Academic salary contracts are designed so that pay is lower than productivity in the initial years, and higher than productivity in the later years, for good reason. The structure of the academic salary contract encourages workers to work hard when they are young, in the hopes of getting a big pay off when they are old. Such contracts encourage loyalty to a particular employer.
However the current age-salary profiles in most Canadian universities were designed for a world when professors were required to retire at 65. As professors continue to work and collect salaries until they are 70, 80, or 90, the period during which professors earn more than they produce is getting longer and longer, impeding the financial viability of the Canadian university system.
An employment contract designed for a world where professors had to retire at 65 will no longer be optimal in a world where professors can continue to work as long as they choose. So what is to be done?
The Ontario government has some ideas, described in the recently released discussion paper "Postsecondary Education: Sustainability and Renewal" [Download Postsecondary Education Discussion Paper]. The report begins by noting that workers in the postsecondary sector are more likely than others to linger on:
[T]he postsecondary sector is different from the broader public sector in Ontario. With regards to extended careers, the College of Nurses of Ontario’s 2017 Membership Statistics Report noted that only 4% of all nurses in Ontario were over the age of 65. Employees of the Ontario Public Service retired on average at age 59 in 2017. According to the Ontario Teacher’s Pension Plan, and similarly to these other sectors, the average retirement age for Ontario teachers in 2017 was 59. By contrast, in 2017-18, 9.5% of Ontario faculty were over the age of 65, with 3% over the age of 71. In 2016-17, 8.3% of college faculty were over 65.
The document then goes on suggest some possible alternatives to the status quo:
The ministry believes that there are likely best practices regarding the collection of pensions and full-time salaries currently at postsecondary institutions, or in other areas of the broader public sector, for example:
• Limiting the number of classes retired faculty can teach, or the number of days retired employees can work, without seeing their pensions suspended;
• Requiring that any employees who retire and return to work full-time have their salaries reduced so that take-home pay levels do not exceed pre-retirement levels; and
• Encouraging employees to retire through phased retirement plans with defined end points.
The document then asks for feedback on a variety of questions, including the following:
The ministry is giving consideration to a policy that would limit the ability of postsecondary education employees to simultaneously collect full-time salaries and pension benefits. Such a policy could, for instance, require institutions to reduce salary payments so that salary and pension payments combined are not greater than the employee’s salary prior to pension payments commencing. If this were to be pursued as a policy,
o Does your organization/ do your members have any concerns if the ministry was to proceed with this initiative?
o Would such a policy conflict with current terms of employment for all/some/none of your members?
o What is your best advice to the ministry?
I suspect that the ministry's proposals will be strongly opposed by Ontario university's faculty associations. This is, in my view, a serious mistake.
If universities can't get rid of professors when they're old, they will start trying to get rid of university professors when they're incompetent, or simply surplus to the university's requirements. That will mean the end - or at least the serious erosion - of tenure as we know it.
In the QC Cégep system, incentives to stay longer were introduced (you can accumulate pension credit, with pension computed on your last 5,better years, up to 40 years... I delayed my own retirement for 5 years till this spring. Many colleges, including mine, are hiring back the retirees, due to manpower shortage.
Hiring for economists is so strong that graduates from Québec City and Montréal don’t want to go to Trois-Rivières, 130 kms away, because it is too far...
New profs begin on the 10th step of the pay scale (on a 17 steps ladder). The scale itself will be raised up to 7.81% on April 2nd.
Old guys (me) clogging the system are not a problem everywhere...
Posted by: Jacques René Giguère | March 13, 2019 at 05:34 PM
Jacques Rene,
The Ontario document talks about both colleges and universities, but I think this is mostly an issue for research universities, especially research universities outside Quebec.
I would argue that, in teaching-intensive institutions, productivity doesn't fall as much with age, because cutting edge research is a smaller component of the workload. Moreover, the salaries aren't as high. This is especially true in Quebec. At Universite de Quebec en Outouais, for example, the average salary for a full professor is $130,350, which is well below the Canadian average - and Ottawa/Gatineau is not a particularly cheap place to live.
Moreover, the debate here is really about p, rather than q. I ran into a colleague of mine today who has to be well into his 70s. He's still teaching. But he gets outstanding teaching evaluations and, because he's retired, he's paid at just above the contract instructor rate. I'm totally fine with that.
It's also about who gets to decide upon q. It sounds as if, in your case, your employer definitely wants to see q>0!
Posted by: Frances Woolley | March 13, 2019 at 07:17 PM
Frances - this is an excellent analysis.
It should be noted that a similar policy was adopted in the federal Accountability Act for public servants employed in the Govt of Canada.
Inter alia, the act ended "double dipping" by federal public servants ie of collecting both pension and salary. It achieved this by requiring that any federal public pensions received be suspended for any retired public servant who returned to the public service as an employee. The pension payments were reinstated once the public servant left the public service.
This did not apply to federal public servants who returned on a contract (after a 1 year cooling off period), which seems similar to retired profs teaching one or 2 courses on short term contracts.
If I understand the ministry discussion proposal, any salary compensation from the university to a prof, who was also receiving a university pension, would be reduced dollar for dollar.
If we want to retain any support in the wider public, that sees professors in the universities as a very privileged elite, we should support this proposal to end what is widely perceived to be unfair and unjustified "double dipping" in universities.
Posted by: ianlee | March 13, 2019 at 08:10 PM
Problem with prohibiting double dipping is that you simply force a revolving door. We already hire retirees, whether from outside or inside. I can be barred from doing what I do best, or I could answer to the 9 hits I had last week on my LinkedIn profile...
The teal question is: What’s the most productive use for society? We don’t prevent plumbers from working past 65 even if they receive OAP,CPP and private pensions. There are even ,in QC at least, income tax credit for workers 65 and over....
A good part of the rest is sheer demagoguery. And yes it is easier to work past 65 at a higher income if you are an economist rather than a coal miner. Don’t blame me if the revolution failed.
Posted by: Jacques René Giguère | March 16, 2019 at 04:43 PM
Jacques René
"We don’t prevent plumbers from working past 65 even if they receive OAP,CPP and private pensions"
The appropriate parallel with plumbing would be teaching ECON 1000 at 8:30 a.m. on a contract instructor basis. Can we agree that neither one of us objects to academics who are currently receiving pensions doing onerous jobs on a fee-for-service basis?
The issue I'm concerned about is who gets paid, and how much, for research and elite teaching, that is, teaching the highly desirable seminars offered to a handful of selected students.
There are far more people wishing to be paid for doing research than there are tenured and tenure-track spaces in universities (except perhaps in a handful of applied fields, such as computer science). Research is, for those who remain research active, typically an enjoyable pursuit - it's not something like cleaning out a clogged toilet that you'd be unlikely to do unless someone paid you to do it. So I'm struggling to see the case for paying some academics salary+pension to do research when there are dozens of typically more productive younger academics knocking on the door.
There is no law saying that a person has to stop doing research when they no longer have a full-time salaried university position. I hope I'll still be blogging and writing when I'm 71 plus! The issue is only how much universities should be obligated to pay for that research.
Posted by: Frances Woolley | March 17, 2019 at 03:11 PM
Short as I hope to complete later.
Research should be hived off to research institutes à la CNRS. The main reason is that the Ph.D training system is a Ponzi scheme that is nearing its crisis point. A stable university system would let each prof train its own replacement. One doctoral student in a whole career...or we should admit that the current type of academic career makes no sense.
Posted by: Jacques René Giguère | March 19, 2019 at 06:01 PM
The best researcher I can read is not a Professor. She does work with an older Professor and is intending to invent an indoor workplace system of neuroimaging. She is Young but her teacher is older. Alot of output is determined by supports, such as a seven or eight figure research building. The Boeing story and chatter about breaking up social media giants suggest the ethics of technology is perhaps a combination of a Cold War era mindset and new applications to use the mindset.
Posted by: lateral Mimas | March 20, 2019 at 02:00 PM
So, it would be a serious mistake if universities start getting rid of incompetent professors?
Posted by: Gene Callahan | March 21, 2019 at 06:57 AM
Gene,
Two responses: the real problem here is mediocrity, rather than gross incompetence. The 80 year old professor who publishes a minor publication in a minor journal, and teaches his course the same way that he's being teaching it for the past 50 years, and does the bare minimum in terms of departmental administration is not going to be fired for incompetence. A younger faculty member would produce more and cost less - but it's hard to get rid of the older faculty member simply because he's mediocre. Many faculty members go through periods when their output is mediocre for one reason or another - a string of bad luck with journals, aging parents, small children, health problems, etc. Identifying and replacing all mediocre faculty members would be untenable for the university - it would erode job security to an extent that it would become hard to recruit, and all of that firing and hiring would be very epxensive.
Alternative response: whatever the merits of getting rid of incompetent professors, it's a strategic mistake for university faculty associations to embrace any plan that would encourage universities to find more ways of getting rid of incompetent professors - see, e.g., Siow's work on the economics of faculty unions.
Posted by: Frances Woolley | March 21, 2019 at 08:53 AM