The popular documentary movie, “Waiting for Superman” has caused a lot of consternation and outrage among people in America. On her television show, Oprah Winfrey had education reform as a topic twice in one week. Numbers always bring clarity to emotional situations. Let’s look at some facts.
Teachers are extremely important to our society. They are educating the next generation of human capital that will hopefully help us make the next great leap forward. Like there are good employees and bad employees, there are good and bad teachers. One thing is for sure, exposure to a great teacher that understands their craft can change a life.
Every single state has a different set of pay standards for teachers. The only thing in common is that the entire teaching community is unionized. No matter if you are a good teacher, or a bad teacher, you get paid the same. There is no risk in being a teacher. Once you attain tenure, you have a job for life. It is virtually impossible for you to lose your job.
Let’s look at Illinois, and drill down into one state’s numbers to see what they look like.
Illinois is broke. There is a great debate beginning in the state about public pensions. Teachers pensions are a part of that debate. An aside, another travesty in Illinois is public school administrators.
They make an average of $106,217 in salary, not including pensions and health benefits. In the final three years of their contracts, school districts jack up the administrator salaries to increase their pension benefits for life. Of course, there is hardly a check or balance on the behaviour. The taxpayer gets stung.
Teachers also have a pretty good deal in Illinois. They are 100% unionized. The rent seeking teachers’ union curries favour with the Democrats. Democrats at every level of government do whatever the union wants.
The average teacher in the state of Illinois makes $61,402. Illinois teachers work around 176 days, 300 minutes, or 5 hours, per day. That’s just over 35 weeks per year. On average, they make $348.88 per day, $1.16 per minute, or $69.60 per hour guaranteed. Teachers in Illinois work an average of 12 years. They can retire at age 55.
In order to find out what they really make though, you should take their pension benefits, net present value them and amortize them over their career. As of 2010, the average pension for an Illinois teacher is $43,164. It compounds annually for life at 3% per year.
Now it’s time to do some maths and make some assumptions. Assume that the lifespan of the teacher is no different than the average American, 78 years. If they start teaching at age 22, on average they will quit at 34. This means they will wait 21 years to collect their pension. The discount rate for the cash flows is a conservative 5%.
When you crunch all the numbers, the net present value of that pension is $290,756. Amortizing that over a twelve year career adds $24,229.64 to their average salary, making their actual salary before health benefits are added in a tidy $85,631.67, or $97.31 per hour.
If you compare and extrapolate that number to the private sector, it is interesting. Assume that you work an 8 hour day, 50 weeks a year. $194,620 bucks a year is what you would make! Most private sector jobs at that level work a lot more than an 8 hour day. Recently, private sector employment has not been as lucrative as public sector employment. For the first time in American history, it pays to be in the public sector.
Being an professional educator is going to give you a comfortable lifestyle. Odds are, you won’t own an island. But, you get summers off, a short work day, and no worries about ever losing your job. There will always be something under the Christmas tree.
However, our society really needs to rethink how we pay our teachers. In aggregate, our schools are not turning out a quality product. The country is falling behind. Our future is in danger. Unionization of education hasn’t been good for great teachers, and it hasn’t been good for America. It only helped the bad teachers.
This contract needs to be renegotiated. America needs to redefine how the teaching job is structured. Then, fair metrics can be applied for evaluation. Good teachers can make more, and poor ones can be weeded out. We ought to be paying our teachers more in upfront money for that change. On the back end, pensions need to go from defined benefit, to defined contribution.
Changes like this will make for better schools, attract better quality teachers, and turn America into a better educated populace. That is the great leap forward we need to stay competitive.
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