The debate about mandatory retirement is fundamentally a moral issue, about human rights, but one strongly related to several major economic issues. Mandatory retirement is a form of age discrimination that seems to be strictly prohibited by section 15(1) of the Canadian Charter of Rights. But the Charter provides an important qualification: in that ‘it guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society’. That provision was cited in the majority decision of the Supreme Court of December 1990, known as McKinney v University of Guelph, which upheld the right of Ontario (and other Canadian) universities to impose mandatory retirement at 65, if not otherwise constrained by provincial legislation. The reasons that the majority cited to explain this decision bear directly upon important economic issues; and this paper seeks to refute all those arguments, chiefly if not exclusively on economic grounds. The first set of arguments were those contending that mandatory retirement, in a supposedly ‘closed’ system of Canadian universities, is necessary to open employment and promotion opportunities for younger workers, with fresher, more innovative ‘new blood’, i.e., by forcing academics to leave at 65 (an argument akin to one used in the past against employing females: on the grounds that they took jobs from ‘male family-breadwinners’). This basically involves the still widely held ‘lump of labour fallacy’; and it is refuted by not only economic logic but by the historical evidence from jurisdictions that have abolished mandatory retirement in full: Quebec, from 1983 (the only Canadian province so far to do so); and the United States, from 1994. Various studies now demonstrate that an end to mandatory retirement has encouraged very few to continue past the normal age of retirement, has not appreciably altered the average age of retirement, and has had no discernible consequences for the employment and advancement of much younger faculty. The second related Supreme Court argument was that mandatory retirement is necessary to obviate the need to monitor productivity in order to dismiss unproductive elderly faculty, and thus also to protect tenure (to guarantee academic freedom). This paper argues that performance monitoring is a normal feature of academic life in major North American universities; that there is no evidence that academic productivity declines with, and only with, the onset of the 60s; that in jurisdictions without mandatory retirement none of the predicted adverse consequences has taken place; and that tenure remains intact. The third argument concerns the validity of freely-negotiated labour contracts, containing provisions for mandatory retirement. In the case of the University of Toronto and many other Ontario universities, this paper demonstrates that mandatory retirement was imposed unilaterally, without negotiated contracts; but the paper also discusses the nature, and economic rationale, of such contracts that involve the suppression of individual rights in the presumed favour of the majority (if and when freely negotiated). The paper also addresses labour union concerns to protect normal retirement benefits at 65 (when most do wish to retire). The paper also considers two other economic issues not considered by the Supreme Court: (1) mandatory retirement as an employment tool to ensure greater diversity of Canadian faculty – and thus whether one may engage in one form of discrimination to combat the presumed consequences of another; and (2) mandatory retirement as a fiscal necessity, when government grants have been shrinking. Quite clearly universities do gain by rehiring forcibly retired academics to do stipendiary teaching (making a mockery of their reasons for mandatory retirement). Against this is set the costs of mandatory retirement: in promoting the flow of some productive and renowned faculty to the US; or in encouraging productive senior faculty to seek alternative employment in Canada; and in hindering (or even preventing) the recruitment of renowned senior faculty from jurisdictions that prohibit mandatory retirement.
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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number
munro-04-02.