Wagener: Improving teacher compensation

Praxis Makes Perfect

If you walk into a typical American public school, you’re bound to see a teacher with an impressive back-load. Stop wagging your finger; this is a column about compensation, not prurient chiding. A back-loaded compensation scheme rewards employees with significant tenure in their posts by offering a low starting wage that rises with tenure in a firm or agency, usually culminating in a generous pension system with retirees likely to make more than many of the active employees who are paying for the pension system. Virtually all government employees face a back-loaded compensation scheme, which makes it a topic worthy of considerable attention: several states and dozens of major municipalities face impending fiscal crises as a direct consequence of rising pension costs.

The first thing worth noting about the back-loading of public employee compensation is how it discourages talented workers from entering public service and encourages mediocre workers to stay put. In a modern, vibrant economy, talented individuals dynamically move from firm to firm, and even from industry to industry, in response to offers of better pay, changes in personal interests, etc. It is highly desirable to have a dynamic labor force, since transition and friction costs are lower within an economy when workers are willing and able to move from role to role seamlessly. However, dynamism is inhibited by public sector pay schemes that offer low starting salaries even for talented employees and deliver minimal benefits for those who don’t make a lifelong career out of government service.

New York City public school teachers, for instance, tend to start out with a salary between $45,000 and $55,000 plus benefits. The pay is low enough that few talented individuals would be lured away from the private sector to the classroom by the initial pay package. However, a punch-clock employee with no particular enthusiasm and unexceptional performance can take a low initial pay, rationalize it by realizing they only have to work 40 hours per week nine months out of the year and get generous vacation time during those nine months, plod along for 30 years, and find themselves making $100,000 per year. They can then retire at age 55, an age at which private sector workers can’t dream of retirement, and receive $60,000 per year in pension pay plus health benefits for the rest of their life. There is no adjustment for teacher quality or enthusiasm; all that matters is the number of years spent in the classroom. A similar pay system is used for most government jobs nationwide.

This is troubling for a number of reasons, the most obvious being the impact on public finances of public employees retiring at 55 rather than 65 or older (the private sector standard). On that front, there has been some progress: several states have started raising the minimum public employee retirement age above 55. However, an oft-ignored consequence of public employee pay schemes is the penalty they place on short-term government service, and here progress has been lacking.

Although public pensions are very generous for employees with two to four decades of service, they often pay little or even nothing to employees with fewer than ten years under their belts. Government pay is not only untied to performance, it encourages larger numbers of less enthusiastic public servants to stay on in a position they might not care about just to capture the back-loaded compensation.

As a society, we should encourage medium-term public service by enthusiastic individuals and discourage tenure-based rent-seeking. New teachers in a major city probably shouldn’t be making less than $50,000 per year, and tenured teachers definitely shouldn’t be making more than $100,000. Public employee pensions should pay a small, even annual increase based on tenure rather than disproportionately rewarding five and 10 year “landmarks.” Above all, public employee pensions should not allow government workers to retire during early middle age: 55 isn’t even considered retirement age in the French welfare state. Public employees should not be a favored special interest isolated from the competitive pressures faced by every American in the private sector.

Trevor Wagener is a senior in Pierson College.

Comments

  • The Anti-Yale

    There is no tenure in the Green Mountain state.

    Many districts have $60, 000 as their TOP pay (if that high), and that after 25 years plus as master’s degree. Many retire well below TOP pay.

    Retirement is 50% of the final three years’ pay AFTER achieving 30 years.

    Summers are used for course-work toward advanced degrees for which $1200 maximum might be reimbursed if the grade is B or better.

    Who in his/her right mind would spend 30-years at a job “plodding along,” especially a job as emotionally demanding as teaching?

    A teacher makes 1000 decisions every day.

    I have seen teachers quit (one fled) the first week in the classroom.

    Mile? Shoes?

  • The Anti-Yale

    PS To clarify: retirement pay is based on 50% of the AVERAGE pay of your final three years once you have achieved 30 years service. If the average was $55,000 your retirement is $22,500.

  • The Anti-Yale

    OOOPS: $27.500.

  • slatest

    Putting your main argument aside, the joke you open with is so much less cute or clever than you think it is.

    If you want to be taken seriously with your argument against teachers’ current retirement benefits, sexist insults are not a good way to start out.

  • ignatz

    Public employees shouldn’t be unionized — period. The “innovation” of public-sector unions, launched by the estimable State of Wisconsin, was another “progressive” disaster. Today, public-sector unions (AFSCME, SEIU, NEA, etc.) actually represent a majority of America’s unionized workers. They rank among the very largest contributors to political campaigns (“I’m shocked!”). And they are largely responsible for the crisis faced today by most of our states and major cities, whose aggregate pension liability underfunding runs into the trillions — yes, trillions — of dollars.

  • River Tam

    > If you want to be taken seriously with your argument against teachers’ current retirement benefits, sexist insults are not a good way to start out.

    Reread it. The joke was gender-neutral – it is your own preconceptions that imposed gender on Wagener’s otherwise neutral (and lame) introduction.

    (The doctor is the boy’s mother.)

  • JE09

    I’m not going to address every issue I have with this piece. After all, I still have more lesson planning to complete for tomorrow (strange how the workday extends beyond my compensated hours). Here’s a few criticisms/questions I have:

    1) Your argument about dynamism shows how little you actually know about teaching. Dynamism is actually a terrible thing in the teaching profession. Teacher retention is one of the strongest indicators of academic success. Long-term, not short or medium, teachers tend to be the most successful. We all hear about washed up teachers with tenure, but many veteran teachers are true masters in their craft. Also, successful education systems globally thrive on teacher retention (e.g. Finland has a strong tenure system and a high-performing education system).
    2) You claim that this article is about compensation, but when you begin to discuss 40 hour work weeks and paid vacations, you display your disdain for the profession. Teaching is more emotionally and physically draining than you can possibly imagine. An official 40 hour work week is daunting enough, not to mention that most teachers (novice or veteran) work well beyond the 40 hours for which they are compensated.
    3) If the backloaded compensation of public service is such a great deal compared to the rat-race of the private sector, why do you assume that only the middling choose it? It would seem to me that if the deal were so sweet, the best and the brightest would figure that out. Perhaps it is not compensation alone that determines who goes into the teaching profession. Very few teachers I know act purely for financial gain.
    4) “Tenured teachers definitely should not be making more than $100,000.” Would you make this argument about recent alumni making more than that annually as investment bankers? That’s not to say that bankers should not be compensated well, but you should consider the relative impact of these professions on the lives of people when you make assertions about salary ceilings.
    5) I am not sure why the tradeoff of public sector work is so baffling to those who choose to work in the private sector. Public servants choose a more modest lifestyle in return for a degree of long-term security. I agree that in the future states should commit to less burdensome pension obligations (and they are already doing so through tiered systems), but they also should not renege on their pension obligations purely because of popular backlash (it is a matter of informed consent).

    Back to lesson planning…