CUDAHY, Circuit Judge.
The plaintiff Wayne Metz, age fifty-four, was discharged by his employer, defendant Transit Mix, Inc., after twenty-seven years of employment with the company. He alleges that he was fired in violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C.A. §§ 621-634 (West 1985 & Supp.1987). Following a bench trial, the district court entered judgment for Transit Mix, 646 F.Supp. 286 (N.D.Ind. 1986). For the reasons that follow, we reverse.
I.
Transit Mix is in the business of selling concrete to construction contractors. Metz worked for Transit Mix as manager of its plant in Knox, Indiana, a satellite of Transit Mix’s principal office and larger plant in Plymouth, Indiana. During the three years prior to Metz’s discharge, Transit Mix experienced financial problems which the district court attributed to the decline in the local construction business. In November 1983, Will Lawrence, the president of Transit Mix, notified Metz that due to Transit Mix’s poor sales, the Knox plant would be closed for the winter starting in December and Metz would be laid off. At that time, Lawrence had not decided whether he would close the Knox facility permanently or only for the winter.
In February 1984, Lawrence sent the assistant manager of the Plymouth plant, Donald Burzloff, to Knox to inspect the plant and make any necessary repairs. Burzloff obtained permission to take orders from the plant’s regular customers while he was there. Burzloff later requested that he be allowed to manage the Knox facility. Lawrence approved this request and in April 1984 discharged Metz.
At the time of his layoff in December 1983, Metz had an annual salary of $26,000, or about $15.75 an hour. He was among the highest paid of Transit Mix employees and, having worked for Transit Mix for twenty-seven years, was the second most senior employee there.1 Metz’s relatively high salary was a direct result of his many years of employment by Transit Mix; Lawrence testified at trial that Metz was given a raise each year, including years when Transit Mix was losing money.2 Burzloff [1204]*1204was forty-three and had worked for Transit Mix for seventeen years when he replaced the fifty-four-year-old Metz as manager. Burzloff’s salary as manager was about $8.05 an hour.
II.
The ADEA prohibits employers from discriminating against employees on the basis of age. 29 U.S.C. § 623(a).3 Its objective in part is to promote employment of older workers on the basis of their abilities rather than their age. 29 U.S.C. § 621. The statute does not, however, prevent an employer from terminating an older worker based on reasonable factors other than age. 29 U.S.C. § 623(f)(1). When, as in the present case, a plaintiff is proceeding on a disparate treatment analysis, the plaintiff may recover only if the defendant in discharging the plaintiff was motivated by a discriminatory animus; that is, the plaintiff may recover only if his or her age was a determining factor in the employer’s decision.4
Proving intentional discrimination is often difficult, so a plaintiff may do so by presenting either direct or indirect evidence of discrimination. Graefenhain v. Pabst Brewing Co., 827 F.2d 13, 17 (7th Cir.1987); Bechold v. IGW Sys., Inc., 817 F.2d 1282, 1284 (7th Cir.1987); LaMontagne v. American Convenience Prods., Inc., 750 F.2d 1405, 1409 (7th Cir.1984). In order to permit recovery for an ADEA claim through indirect means, this circuit has adopted a variation of the burden-shifting analysis set forth by the Supreme Court in the Title VII context for establishing a prima facie case of employment discrimination. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). As applied to an ADEA claim, this analysis requires that a plaintiff show that he or she: 1) belongs to the protected class (age forty or older); 2) was qualified for his or her position; 3) was terminated; and 4) was replaced by a younger person. After the plaintiff has established a prima facie case, the defendant employer then has the burden of presenting evidence that the plaintiff’s discharge was a result of “some legitimate, nondiscriminatory reason.” If the defendant meets this burden of production, the burden shifts to the plaintiff to prove that the reasons proffered by the employer for the discharge were merely a pretext for discrimination. Id. at 802-05, 93 S.Ct. at 1824-25; Graefenhain, 827 F.2d at 17-18; Bechold, 817 F.2d at 1284; LaMontagne, 750 F.2d at 1409. Throughout the trial, the burden remains with the plaintiff to prove there was discrimination, rather than with the employer to prove the absence of discrimination. LaMontagne, 750 F.2d at 1409.
The district court found that Metz had established a prima facie case of age discrimination. The court further found that a determining factor in Transit Mix’s decision to replace Metz with Burzloff was a desire to save the higher cost of Metz’s salary and that this factor “bore a relationship to Mr. Metz’s age.” 646 F.Supp. at [1205]*1205293.5 The court held, however, that this was not age discrimination in violation of the ADEA because it was based on an assessment of the cost of employing an individual employee, namely, Metz, rather than an impermissible assessment of the costs of employing Transit Mix’s older employees as a group. The sole issue on appeal is whether the salary savings that can be realized by replacing a single employee in the ADEA age-protected range with a younger, lower-salaried employee constitutes a permissible, nondiscriminatory justification for the replacement.
III.
Congress enacted the ADEA in response to the problems that the older worker faces in the job market, including the obstacles that the long-term employee encounters when he or she is suddenly without work. See generally Report of Secretary of Labor to Congress, The Older American Worker: Age Discrimination in Employment 11-17 (1965), reprinted in EEOC, Legislative History of the Age Discrimination in Employment Act, 16, 28-34 (1981). These difficulties have been attributed in large part to the worker’s development of firm-specific skills not easily transferable to a different job setting. National Commission for Employment Policy, 9th Annual Report, Rep. No. 17, Older Workers: Prospects, Problems and Policies 4 (1985). Therefore, while the older employee’s higher salary reflects the value of improved skills and the increased productivity that results, it is also indicative of one of the very problems the ADEA was intended to address: the likelihood that the employee will be less employable in other settings.6
The ADEA has consistently been interpreted by the administrative agencies charged with its enforcement and the courts to prohibit an employer from replacing higher paid employees with lower paid employees in order to save money.
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CUDAHY, Circuit Judge.
The plaintiff Wayne Metz, age fifty-four, was discharged by his employer, defendant Transit Mix, Inc., after twenty-seven years of employment with the company. He alleges that he was fired in violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C.A. §§ 621-634 (West 1985 & Supp.1987). Following a bench trial, the district court entered judgment for Transit Mix, 646 F.Supp. 286 (N.D.Ind. 1986). For the reasons that follow, we reverse.
I.
Transit Mix is in the business of selling concrete to construction contractors. Metz worked for Transit Mix as manager of its plant in Knox, Indiana, a satellite of Transit Mix’s principal office and larger plant in Plymouth, Indiana. During the three years prior to Metz’s discharge, Transit Mix experienced financial problems which the district court attributed to the decline in the local construction business. In November 1983, Will Lawrence, the president of Transit Mix, notified Metz that due to Transit Mix’s poor sales, the Knox plant would be closed for the winter starting in December and Metz would be laid off. At that time, Lawrence had not decided whether he would close the Knox facility permanently or only for the winter.
In February 1984, Lawrence sent the assistant manager of the Plymouth plant, Donald Burzloff, to Knox to inspect the plant and make any necessary repairs. Burzloff obtained permission to take orders from the plant’s regular customers while he was there. Burzloff later requested that he be allowed to manage the Knox facility. Lawrence approved this request and in April 1984 discharged Metz.
At the time of his layoff in December 1983, Metz had an annual salary of $26,000, or about $15.75 an hour. He was among the highest paid of Transit Mix employees and, having worked for Transit Mix for twenty-seven years, was the second most senior employee there.1 Metz’s relatively high salary was a direct result of his many years of employment by Transit Mix; Lawrence testified at trial that Metz was given a raise each year, including years when Transit Mix was losing money.2 Burzloff [1204]*1204was forty-three and had worked for Transit Mix for seventeen years when he replaced the fifty-four-year-old Metz as manager. Burzloff’s salary as manager was about $8.05 an hour.
II.
The ADEA prohibits employers from discriminating against employees on the basis of age. 29 U.S.C. § 623(a).3 Its objective in part is to promote employment of older workers on the basis of their abilities rather than their age. 29 U.S.C. § 621. The statute does not, however, prevent an employer from terminating an older worker based on reasonable factors other than age. 29 U.S.C. § 623(f)(1). When, as in the present case, a plaintiff is proceeding on a disparate treatment analysis, the plaintiff may recover only if the defendant in discharging the plaintiff was motivated by a discriminatory animus; that is, the plaintiff may recover only if his or her age was a determining factor in the employer’s decision.4
Proving intentional discrimination is often difficult, so a plaintiff may do so by presenting either direct or indirect evidence of discrimination. Graefenhain v. Pabst Brewing Co., 827 F.2d 13, 17 (7th Cir.1987); Bechold v. IGW Sys., Inc., 817 F.2d 1282, 1284 (7th Cir.1987); LaMontagne v. American Convenience Prods., Inc., 750 F.2d 1405, 1409 (7th Cir.1984). In order to permit recovery for an ADEA claim through indirect means, this circuit has adopted a variation of the burden-shifting analysis set forth by the Supreme Court in the Title VII context for establishing a prima facie case of employment discrimination. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). As applied to an ADEA claim, this analysis requires that a plaintiff show that he or she: 1) belongs to the protected class (age forty or older); 2) was qualified for his or her position; 3) was terminated; and 4) was replaced by a younger person. After the plaintiff has established a prima facie case, the defendant employer then has the burden of presenting evidence that the plaintiff’s discharge was a result of “some legitimate, nondiscriminatory reason.” If the defendant meets this burden of production, the burden shifts to the plaintiff to prove that the reasons proffered by the employer for the discharge were merely a pretext for discrimination. Id. at 802-05, 93 S.Ct. at 1824-25; Graefenhain, 827 F.2d at 17-18; Bechold, 817 F.2d at 1284; LaMontagne, 750 F.2d at 1409. Throughout the trial, the burden remains with the plaintiff to prove there was discrimination, rather than with the employer to prove the absence of discrimination. LaMontagne, 750 F.2d at 1409.
The district court found that Metz had established a prima facie case of age discrimination. The court further found that a determining factor in Transit Mix’s decision to replace Metz with Burzloff was a desire to save the higher cost of Metz’s salary and that this factor “bore a relationship to Mr. Metz’s age.” 646 F.Supp. at [1205]*1205293.5 The court held, however, that this was not age discrimination in violation of the ADEA because it was based on an assessment of the cost of employing an individual employee, namely, Metz, rather than an impermissible assessment of the costs of employing Transit Mix’s older employees as a group. The sole issue on appeal is whether the salary savings that can be realized by replacing a single employee in the ADEA age-protected range with a younger, lower-salaried employee constitutes a permissible, nondiscriminatory justification for the replacement.
III.
Congress enacted the ADEA in response to the problems that the older worker faces in the job market, including the obstacles that the long-term employee encounters when he or she is suddenly without work. See generally Report of Secretary of Labor to Congress, The Older American Worker: Age Discrimination in Employment 11-17 (1965), reprinted in EEOC, Legislative History of the Age Discrimination in Employment Act, 16, 28-34 (1981). These difficulties have been attributed in large part to the worker’s development of firm-specific skills not easily transferable to a different job setting. National Commission for Employment Policy, 9th Annual Report, Rep. No. 17, Older Workers: Prospects, Problems and Policies 4 (1985). Therefore, while the older employee’s higher salary reflects the value of improved skills and the increased productivity that results, it is also indicative of one of the very problems the ADEA was intended to address: the likelihood that the employee will be less employable in other settings.6
The ADEA has consistently been interpreted by the administrative agencies charged with its enforcement and the courts to prohibit an employer from replacing higher paid employees with lower paid employees in order to save money. The Equal Employment Opportunity Commission guidelines expressly provide that “A differentiation based on the average cost of employing older employees as a group is unlawful except with respect to employee benefit plans which qualify for the section 4(f)(2) exception to the Act.” 29 C.F.R. § 1625.7(f) (1986). This position is consistent with that adopted by the Department of Labor when it administered the ADEA:
It should also be made clear that a general assertion that the average cost of employing older workers as a group is higher than the average cost of employing younger workers as a group will not be recognized as a differentiation under the terms and provisions of the Act, unless one of the other statutory exceptions applies. To classify or group employees on the basis of age for the purpose of comparing costs, or for any other purpose, necessarily rests on the assumption that the age factor alone may be used to justify a differentiation — an assumption plainly contrary to the terms of the Act and the purpose of Congress in enacting it. Differentials so based would serve only to perpetuate and promote the [1206]*1206very discrimination at which the Act is directed.
29 C.F.R. § 860.103(h) (1979) (emphasis added). Courts have also emphatically rejected business practices in which “the plain intent and effect ... was to eliminate older workers who had built up, through years of satisfactory service, higher salaries than their younger counterparts.” Leftwich v. Harris-Stowe State College, 702 F.2d 686, 691 (8th Cir.1983); see also EEOC v. Chrysler Corp., 733 F.2d 1183 (6th Cir.1984); Dace v. ACF Indus., Inc., 722 F.2d 374 (8th Cir.1983), aff'd on rehearing, 728 F.2d 976 (1984); Geller v. Markham, 635 F.2d 1027 (2d Cir.1980), cert. denied, 451 U.S. 945, 101 S.Ct. 2028, 68 L.Ed.2d 332 (1981). See generally 1 H. Eglit, Age Discrimination § 16.32 (1985).
Neither the district court nor Transit Mix on appeal takes issue with this interpretation of the ADEA in the context of policies that eliminate older employees as a group based on their higher salaries. Rather, they argue for a distinction based on whether the employer’s employment action, motivated by a desire to save costs, affects a group of employees or an individual employee. The district court held that while the former would be impermissible age discrimination, the latter is a legitimate, nondiscriminatory reason for replacing an employee. The court cited a treatise for support as follows:7
“The relatively higher cost of employing older workers as a group is generally rejected as an RFOA [reasonable factor other than age]. The cost of employing an older worker when considered on an individual basis, however, may constitute an RFOA.” B. Schlei & P. Grossman, Employment Discrimination Law 506 (2d ed. 1983).
646 F.Supp. at 294. We find that this statement of the law, as interpreted by the district court, is inaccurate. Neither the policies behind the ADEA nor the relevant case law supports making this distinction and we find it to be an inappropriate distinction as applied to Metz’s claim.
The ADEA is aimed at protecting the individual employee. Section 623(a)(1) prohibits practices that “discriminate against any individual ... because of such individuals’s age.” (Emphasis added). The statute’s language indicates that it shares the same focus as Title VII legislation: “fairness to individuals rather than fairness to classes.” City of Los Angeles Dep’t of Water & Power v. Manhart, 435 U.S. 702, 709, 98 S.Ct. 1370, 1376, 55 L.Ed.2d 657, 666 (1978); see also Connecticut v. Teal, 457 U.S. 440, 453-54, 102 S.Ct. 2525, 2534, 73 L.Ed.2d 130, 141 (1982) (“The principal focus of [Title VII] is the protection of the individual employee, rather than the protection of the minority group as a whole. Indeed, the entire statute and its legislative history are replete with references to pro[1207]*1207tection for the individual employee.”). The same ADEA policy concern that forms the basis for rejecting cost-based employer practices that have an adverse impact upon older workers as a group is present in the case of Metz’s discharge: Given the correlation between Metz’s higher salary and his years of satisfactory service, allowing Transit Mix to replace Metz based on the higher cost of employing him would defeat the intent of the statute.8
This position is consistent with past decisions that have found in favor of employees’ ADEA claims as well as those that have found for the employer. In Leftwich, 702 F.2d 686, an employer defending an ADEA claim argued that although its employment selection plan had a detrimental disparate impact on older employees, the plan was justified because it was adopted as a cost-saving measure. The Eighth Circuit found that this cost justification did not establish a business necessity defense:
Here, the defendants’ selection plan was based on tenure status rather than explicitly on age. Nonetheless, because of the close relationship between tenure status and age, the plain intent and effect of the defendants’ practice was to eliminate older workers who had built up, through years of satisfactory service, higher salaries than their younger counterparts. If the existence of such higher salaries can be used to justify 'discharging older employees, then the purpose of the ADEA will be defeated.
Id. at 691.
Although Leftwich involved a disparate impact claim, the reasoning behind its holding can apply equally to a discriminatory treatment claim brought by an individual employee where, because of the high correlation between age and salary, it would undermine the goals of the ADEA to recognize cost-cutting as a nondiscriminatory justification for an employment decision. The Eighth Circuit itself applied the reasoning in Leftwich to an ADEA claim of discriminatory treatment brought by a single employee. Dace v. ACF Indus., Inc., 722 F.2d 374 (8th Cir.1983), aff'd on rehearing, 728 F.2d 976 (1984). In upholding a jury verdict in favor of the plaintiff, the court quoted the portion of Leftwich that we have reprinted above and characterized Leftwich as holding “that discrimination on the basis of factors, like seniority, that invariably would have a disparate impact on older employees is improper under the ADEA.” Id. at 378. In a third case, the Eighth Circuit found that although an employer has the right to abolish a position held by an older worker and combine that position’s responsibilities with the duties of a younger person, it distinguished such a situation from one in which “the position remained the same" and the employer knew the replacement would save money. Holley v. Sanyo Mfg., Inc., 771 F.2d 1161, 1168 (8th Cir.1985) (emphasis added). The court stated that there would be a much stronger claim for recovery in the latter case. Id.
A district court for the Eastern District of New York similarly held that cost-cutting is not a legitimate, nondiscriminatory reason for discharging an older employee while retaining younger, lower-paid employees. Marshall v. Arlene Knitwear, Inc., 454 F.Supp. 715 (E.D.N.Y.1978), aff'd in part, rev’d and remanded in part without opinion, 608 F.2d 1369 (2d Cir.1979). The court stated that, although in the absence of the ADEA this might have been a valid business justification, “Congress has decreed in the ADEA that an employee [1208]*1208may not be discharged because of her age. Where economic savings and expectation of longer future service are directly related to an employee’s age, it is a violation of the ADEA to discharge the employee for those reasons.” Id. at 728. The court found that the plaintiff had proven her ADEA discriminatory treatment claim:
The evidence compels the conclusion that the savings in salary and the unpaid pension benefits accruing to defendants as a result of [the plaintiff’s] discharge were the controlling economic factors behind her termination. Since such economic factors are directly related to age, [the defendant’s] reliance on them to discharge [the plaintiff] constitutes age discrimination.
Id. at 730.
In Geller v. Markham, 635 F.2d 1027 (2d Cir.1980), cert. denied, 451 U.S. 945, 101 S.Ct. 2028, 68 L.Ed.2d 332 (1981), the Second Circuit held that a school board policy that limited teacher hiring to persons with less than five years’ experience violated the ADEA. The court further found that the plaintiff, an older teacher replaced under the school board’s policy, could recover on theories of both disparate impact, based on the plaintiff’s membership in a group unfairly affected by the policy, and disparate treatment, based on her individual replacement by a younger teacher. The court, citing Marshall approvingly, rejected the defendants’ defense that the policy “was supportable as a necessary cost-cutting gesture in the face of tight budgetary constraints.” Id. at 1034.
The Sixth Circuit has held that “the prospect of imminent bankruptcy” may qualify as a “reasonable factor other than age” and thus justify, for example, a forced retirement policy. EEOC v. Chrysler Corp., 733 F.2d 1183, 1186 (6th Cir.1984). The court described two tests that the employer must meet to establish a reasonable-factor-other-than-age defense based on the economic needs of a failing company. “First, the necessity for drastic cost reduction obviously must be real____ Second, the forced early retirements must be the least-detrimental-alternative means available to reduce costs.” Id. Even if we were to adopt a similar economic necessity exception in the present case, Transit Mix would not satisfy this two-part test. We are not convinced that Transit Mix’s financial solvency was sufficiently in jeopardy to meet Chrysler’s first requirement. More important, Transit Mix clearly has not satisfied the second requirement. Transit Mix did not pursue obvious less-detrimental alternatives to replacing Metz, such as offering Metz continued employment at a lower salary or in a different position. The district court expressly found that Transit Mix “did not ask Mr. Metz to take a pay cut or to take a different job within the company.” 646 F.Supp. at 290.
IV.
The dissent presents a number of interesting insights into the nature of age discrimination and the role of productivity as a legitimate factor in employment decisions. But, while sweeping in its approach, the dissent fails to come to grips with the specific facts of this case.
Metz’s relatively high salary was the result of annual raises that were given to him by Transit Mix regardless of how the company was doing financially. See supra note 2. Metz’s salary therefore reflected his twenty-seven years of service to Transit Mix. When Lawrence, the president of Transit Mix, decided that the company's poor performance no longer justified the salary that the company had given Metz, Lawrence replaced Metz because of that salary without first asking Metz to take a pay cut. Given these facts, Lawrence’s desire to save costs was not a permissible, nondiscriminatory reason for replacing Metz with the younger, less-costly Burzloff; by thus replacing Metz, Transit Mix violated Metz’s rights under the ADEA.
We, of course, recognize that our use of pay as a “proxy” for age, although inescapable in this particular case, is of limited application and may be employed only on a case-by-case basis where the facts support its use. We do not agree with the dissent that cross-sectional studies of pay in relation to age have much value here. There [1209]*1209are any number of reasons why the average fifty-five-year-old might be earning less than the average forty-year-old. For example, as the dissent suggests, see infra p. 1218, younger employees as a group may be better educated and therefore better qualified when entering the workforce than are older employees. Employees may also invest more time and resources in improving their skills through training and education during their early years of employment. Employees may choose less demanding, and therefore lower paying, work as they grow older. In addition, many high-paying jobs require strength, speed, dexterity, endurance and other physical attributes and may even be compensated on a piece-work basis. At fifty-five many employees may be physically disqualified from or limited in high-speed, physically demanding tasks in such places as automobile plants or packinghouses. They may by that age have been down-graded to janitors. And there are not many fifty-five-year-olds playing major league baseball. By age fifty-five many people may have been laid-off or discharged from formerly high-paying factory or transportation jobs and may find work as security guards. Finally, age discrimination on the part of employers may account for some of the decline in the average salary of older workers. In any event, no matter what the facts, only federal judges under the Constitution have guaranteed earnings regardless of productivity until they die.
In the case of Metz, however, the facts are much narrower. He and Burzloff were both plant managers — apparently of equivalent competence. Their work is of the sort where declining physical effectiveness through aging is not apparently of consequence and may be more than offset by growth in experience. The facts suggest, as is usual with this type of work, that seniority is a factor in compensation and age and seniority are, of course, strongly correlated. Metz is paid more — as are most middle managers — because he has been there longer. There may be other reasons for the pay disparity but certainly seniority is an important one.
The dissent postulates output or productivity per wage dollar as a legitimate factor in discharge decisions. The dissent is then able to equate high pay with low productivity per wage dollar and thereby legitimate high pay as a reason for lay-off. The dissent maintains that since Metz, who is senior, is paid more because of his seniority (age), he may be fired for that reason alone. Because of his higher pay, awarded for seniority, he is automatically less productive per wage dollar and therefore becomes subject to termination. By this way of thinking, seniority (and hence age) is translated into a perfectly acceptable excuse for firing everyone who receives seniority pay raises.
Thus, if a company has twenty foremen, all of exactly equal ability, and the oldest ten make more money than the others because their average seniority is much higher, according to the dissent the employer would have a complete defense to an age discrimination charge when it fires the ten graybeards. In middle management jobs we would expect pay to reflect seniority and hence to be something of a proxy for age. This is how the civil service works and private industry usually is not much different.9 To accept the approach of the dissent is to make totally vulnerable the employees who are paid a little more because they have been with the company a little longer. All this has nothing to do with whether older employees across the economy make more or less on average than younger ones (which would presumably be revealed by cross-sectional analysis).
Nor do we accept the view of the dissent that discharge and reduction in pay must be regarded as equivalents under the ADEA.for the purposes of this case. After all, discharge is “the industrial equivalent of capital punishment.” Complete Auto Transit, Inc. v. Reis, 451 U.S. 401, 421, 101 S.Ct. 1836, 1847, 68 L.Ed.2d 248, 268 (1981) (Powell, J., concurring in part and concur[1210]*1210ring in judgment) (quoting Whitman, Wild Cat Strikes: The Union’s Narrowing Path to Rectitude?, 50 Ind.L.J. 472, 481 (1975)). And, as the dissent makes clear, economic imperatives must be continually balanced against the requirements of the age discrimination law. At least two things are clear: most older employees (who have difficulty getting new jobs) would prefer a wage reduction to being fired, and many employers, knowing of the morale problems created by wage cuts, would prefer to terminate older employees rather than have them remain at work with their morale in serious disarray because their pay was reduced. For this reason, we think general pay reductions are less a threat to senior employees than terminations would be (in part because employers are less likely to cut pay unless economic circumstances absolutely require it). Certainly, however, in the case before us, we lay down no general rules about what circumstances might justify pay cuts for older employees. We only suggest that the language of the statute does not require that in this case we regard discharge or reduction in pay as the same thing (although they may have economic similarities and, under proper circumstances, they can both result in a successful ADEA claim). It is common knowledge that older employees tend to protect their jobs at all costs— even at the cost of a reduction in pay.10
The essential problem with the dissent’s approach is that pay for middle management jobs is, at least in the short run and within the broad limits of competition, under the control of the employer. The logic of the dissent’s position is that an employer may reward years of service for middle management employees with raises in the paycheck. If this is the practice, as it frequently is, when the middle managers reach age fifty or sixty, they may all be terminated since all will be making more money than younger managers with equivalent jobs. If we assume that all managers at a given level are of equivalent proficiency, as we must for purposes of analysis in the instant case, under the dissent’s analysis the managers who are paid the most are by definition the least productive per wage dollar. Through its control over productivity per wage dollar, the management would effectively decide who could be terminated as its employees reach a relatively advanced age.
The dissent’s approach to “productivity” as a rationale for discharge is inconsistent with the policies chosen by Congress in enacting the ADEA. As this circuit has previously recognized, the ADEA imposes some costs on employers and deprives employers of some decisionmaking autonomy in order to treat our nation’s older employees fairly:
[Although the ADEA does not hand federal courts a roving commission to review business judgments, the ADEA does create a cause of action against business decisions that merge with age discrimination. Congress enacted the ADEA precisely because many employers or younger business executives act as if they believe that there are good business reasons for discriminating against older employees. Retention of senior employees who can be replaced by younger, lower-paid persons frequently competes with other values, such as profits or conceptions of economic efficiency. The ADEA represents a choice among these values. It stands for the proposition that this is a better country for its willingness to pay the costs for treating older employees fairly.
Graefenhain, 827 F.2d at 21 n. 8 (emphasis in original).
The dissent mentions the higher cost of some fringe benefits for older employees, which is noted in the legislative history of the ADEA. The cost of some fringe benefits does increase with age and it might be said that the cost of these benefits reduces the productivity per fringe dollar of older employees. For example, after fifty, employees may incur higher costs for the provision of health insurance and health care [1211]*1211and, under most benefit plans, more senior employees are entitled to longer vacations. But it has not been argued that these higher costs, and by hypothesis lower productivity per dollar, should be reason for exposing older employees to discharge in the face of the age discrimination law. There is even less reason for firing because of higher salaries than because of higher fringes. Salaries are, within a substantial range, in the control of the employer, while fringes — medical costs, for example — may not be. Hence, as a basis for discharge we believe these cost factors must be evaluated critically.
We are, of course, aware that employers must control costs if they are to remain competitive and that this imperative of survival will inevitably create tensions with the legal prohibitions against age discrimination. We think it would be unwise, however, to translate this imperative into a rule that an older employee can be fired and replaced by an equally proficient younger employee merely because the older employee happens to be earning more money at the moment. There are a number of less burdensome measures that can be introduced if necessary before “industrial capital punishment” is brought into play. We therefore reverse the judgment of the district court and remand for a determination of the appropriate relief.
Reversed and Remanded.