Are Old People Ripping Off Young People? Age Discrimination and Fairness Between Generations
Do today's young people have valid reasons to believe that they are being treated unfairly in the great intergenerational handoff from the Baby Boomers (and soon Gen X) to those who will follow? The answer, frustratingly, is yes and no. I have been writing about generational justice for most of the past two decades, and trying to figure out whether anyone is being cheated or is receiving undeserved windfalls remains a fuzzy and highly contingent inquiry.
The fact, however, is that younger people in the US and some (many? most?) other countries do largely believe that they are on the wrong side of the tradeoff, and there are some strong arguments for the "yes, you're being cheated" side of the debate -- though, to be sure, there are some utterly fatuous arguments as well. There are, moreover, specific policies and practices that could be changed to help out younger people as they take their first steps into adult life.
As a counterpoint, my Dorf on Law column earlier this week offered one "no, young people aren't being cheated" argument, but with an odd twist. Responding to that most conventional of conventional wisdoms that owning one's own home is young people's best -- indeed only -- path to building wealth, I pointed out that young people's frustration at having to rent rather than own is misplaced. It is surprisingly a good thing that fewer of them are able to buy houses, although that was definitely not the result of intentional policy choices. Rising house values have never generated as much wealth as the alternatives, and owning houses unwisely concentrates risk in a single undiversified asset, which is especially worrisome because having to sell a house at the wrong time can be disastrous.
Another common argument purporting to show that older people are being favored over younger people relies on a misreading of how resources are spent across generations. As I explained in a Verdict column more than ten years ago, it is misleading but very easy to point to social insurance programs in the federal budget to claim that we are spending trillions on oldsters but a pittance on youngsters.
The reason that such a comparison is misleading is that the social resources that we put into younger people are generally not direct cash transfers like retirement benefits but instead spending on education and technological advances. Moreover, unpaid labor in the home (mostly provided by women) represents a massive economic investment in children. I summarized the point by saying that "our society has developed a way to 'monetize aging'—spending money directly or indirectly on senior citizens—whereas much of our caring for children remains non-monetized, because it takes place largely inside the home."
Even so, there are undeniably ways in which social resources are redirected to benefit older people at the direct expense of the young. Here, I want to discuss the unintended consequences of age discrimination law, a discussion that provides a very unexpected lens through which to view transfers between generations.
I should say up front that much of my argument here was inspired by insights that a friend of mine offered in some recent conversations. I suggested that they publish those thoughts, but they declined and said that I could write this up without attribution. As I explained in a column two years ago, however, I am fanatically committed to giving credit where it is due, so I need to state clearly that the inspiration for what I write here came from someone else. I hope that I am developing and expanding those insights in a productive way, and in any event, all errors or controversial assertions are my own.
What is at stake when it comes to age discrimination and justice between generations? I learned about the Age Discrimination in Employment Act (ADEA) during my 1L year. It happened to resonate with me strongly at the time, because I was an older student who had only months before reached the age of that law's coverage. Even without such personal salience, however, I would have viewed the ADEA as a good thing. Passed in 1967, the law was part of the civil rights revolution of the mid-1960's, along with the Civil Rights Act of 1964, the Voting Rights Act of 1965, and other important new laws. In terms of gut level instincts, then, the ADEA seemed unquestionably to be a mark of social progress.
This short article nicely summarizes the law as it stands today, one important part of which was the prohibition (with very limited exceptions, mostly for safety reasons) of forced retirement. In our conversations, my anonymous colleague started by describing the effect that ADEA rules have had on academia. And that effect has been enormous. During my time on the faculty at one US law school, for example, there were years in which we had one not-yet-tenured professor and seventy tenured professors. Not every tenured professor was "superannuated" (I love that euphemism), but a very large percentage were in their seventies and beyond.
This is replicated in only slightly lesser degrees in other law schools and university faculties as a whole across the US. When I took emeritus status (another euphemism) from the University of Florida last year, I felt like I could have continued not only through the rest of my sixties but well into my seventies. It would be up to me. Many professors are so deeply invested in their status (and denial about aging) that they hang on well into their eighties.
Not only do students lose out when their classes are taught by faculty in cognitive decline, but younger would-be faculty are prevented from entering the academy. Moreover, because of salary progression (and other parts of age discrimination law), older faculty generally are paid much more than younger ones, sometimes to the point where paying one older professor uses up the resources that could be used to hire two younger ones (or even more).
I am well aware that different people lose their edge at different rates as they age, and it is true that students benefit from the wisdom and experience of their still-sharp older professors. Nonetheless, there is a rather obvious problem with abandoning a one-size-fits-all, objective retirement rule in favor of self-enforcement. I have been told that the UK still has a 65-year mandatory retirement age for professors (and probably everyone else, although I have not looked into it), which means that there are probably many people there who could have been very good at their jobs for a number of additional years but were forced out against their will. The problem is that allowing everyone to make individualized calls has led to an unmistakable upward skew in the ages of university faculty in the US.
If we extend this beyond academia, the effect of the ADEA becomes obvious. As much as I am intuitively drawn to the idea that employers should not be able to discriminate on the basis of age, the law does in fact represent a rather massive shift of economic resources upward in the age distribution. Or, to put in in non-wonk-speak: young people lose and old people win.
I should note (and the colleague who sparked these thoughts would certainly agree) that this argument is hardly new. Because the ADEA by its terms is only applies to one generation, however, it is very rare that people think about the ADEA from an intergenerational perspective. It is thus important to remind ourselves that this is indeed part of a multi-generational analysis.
To be clear, the implication of what I have written here cannot reasonably be the simplistic idea that the ADEA should be repealed, full-stop. One of the major reasons that we need to worry about age discrimination at all is that some people are simply too poor or near-poor to be able to stop working. If we were to conclude that we need to clear out older workers to allow the age pipeline in employment to move more smoothly, we would be obligated to make sure that forced retirement does not sentence forced retirees to poverty in their later years.
This is to say that shifting resources, in the form of reallocating jobs from older workers to younger workers, must be partially offset by spending more money to support dignified retirements for all. That means that the long-held dream of Republicans in the US to eliminate Social Security and Medicare is exactly the wrong move. There are, moreover, other parts of the ADEA and other anti-discrimination laws that are important and should be kept.
I have long argued that intergenerational justice is best understood as distributive justice, because it nearly always turns out that the injustices that seem at first glance to be rooted in age are in fact a result of economic inequality. Even so, an economy that holds back younger people and tells them to wait until their grandparents decide when is the best time to retire has undeniable consequences that skew wealth toward the elderly. Addressing that imbalance is surely a better pro-youth policy than giving young people artificial incentives to buy overpriced houses.