Age of retirement: American payouts target tenured staff

Cash-strapped states offer golden goodbyes to slash the wage bill. Jon Marcus reports

February 3, 2011

Struggling with relentless budget cuts, US universities have reached the last resort: getting rid of long-protected tenured faculty whose job security was once ironclad.

Even in these dire times, the staff are not being sacked. Instead, they are being offered incentives of up to two years' pay to retire early - and hundreds are accepting.

Some of the resulting vacancies are being left unfilled, leading to larger classes for students and heavier workloads for remaining faculty, while others are being taken up by younger, less experienced replacements at much lower salaries, accelerating a dramatic shift away from tenure.

In Texas, where legislators have proposed cutting $750 million (£473 million) from public higher education over the next two years, 130 scholars at Texas A&M University and the University of Texas have accepted buyouts worth up to 18 months' salary, saving the institutions a collective $18 million a year.

They are not alone. Some 420 employees at the University of Illinois, 117 at Wright State University, 58 at the University of South Florida, 43 at Northern Arizona University and 42 at Rutgers, the State University of New Jersey, have also agreed to take early retirement. The move will deliver a combined $17.7 million in savings a year.

In addition, faculty at the University of Nebraska have been offered buyouts.

All these institutions are public universities, financially dependent on cash-strapped state legislators. But private universities are dangling early retirement deals before their faculty, too, allowing deans to make long-desired academic changes.

For example, 24 faculty in two departments at George Washington University have accepted buyouts. In total, 38 per cent of US universities have offered early retirement to staff, according to the American Association of University Professors (AAUP).

Some of the retirees may see the writing on the wall. Average faculty salaries in the US rose by only 1.2 per cent last year, lower than the rate of inflation, and there is little expectation that things will improve.

In addition, many university employees are being required to take unpaid furloughs, which are effectively pay cuts.

"It is not a happy world in a lot of higher education," said Sherman Dorn, president of the faculty union at the University of South Florida.

Now's the time

Meanwhile, some academics who had put off their retirements because of depressed stock market portfolios have seen their nest eggs return to healthier levels.

"The great majority of the people who took the buyout were folks who had been thinking for years about retiring but did not retire, by and large because the economy went down and their savings for retirement took a big hit," said Antonio Cepeda-Benito, associate provost at Texas A&M. "These were people who would have retired anyway."

Other academics took the buyouts and immediately got better-paid jobs elsewhere.

For example, 25 academics who left jobs at Illinois with average salaries of $106,000 a year accepted new positions elsewhere paying an average of more than $168,000.

But for most, things are not so rosy: uncertainty is rampant and jobs are drying up. The American Historical Association reports a 24 per cent drop in the number of posts listed for historians; the American Economic Association notes a 19 per cent decline in jobs within its discipline; and the American Mathematical Society identifies a 13 per cent fall. The Modern Language Association records a 35 per cent drop in English language and literature positions and 39 per cent in other disciplines.

That makes for a buyer's market and universities are cashing in.

A full professor at a private, independent doctorate-granting institution makes an average of about $191,000 a year, according to the AAUP, but the magazine Bloomberg BusinessWeek reports that a non-tenured replacement can be hired for as little as $52,500.

"You can hire non-tenure-track faculty for less money, and therefore teach more courses for less," Dr Cepeda-Benito said. On the downside, you lose experience.

"These people (who are leaving) have been doing it for a long time, and they're very good at it. So, yes, that's a cost," he added.

Nevertheless, it is a cost that universities seem willing to bear in exchange for reducing the proportion of faculty who have tenure. Such status makes them harder to lay off or reassign, said Peter Hugill, president of the AAUP chapter at Texas A&M.

In 1970, 80 per cent of US academics were tenured or on the tenure track. Today, barely half are.

"It's clearly a mechanism to accelerate the move to non-tenure-track, part-time faculty," Dr Hugill said.

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