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Teacher Union Pension Flim-flam

The public employee pension problem isn’t new, but a teacher union leader’s defense of it has sunk to new depths.

According to the Federal Reserve, public employee pensions in aggregate nationally are in serious trouble. Currently totaling $5.8 trillion, they are underfunded by $1.7 trillion. While all these pensions are draining public resources, Don Boyd, director of fiscal studies at the Nelson A. Rockefeller Institute of Government, charges that the teachers’ plans are a disproportionate part of the problem. And in a recent US News & World Report piece, “America’s Bankrupt Schools,” Lauren Camera sounds alarm bells, explaining that “Pension plans could be the culprit behind broke big-city school districts,” and goes on to detail the bleak fiscal situation that now burdens Philadelphia, Baltimore and Chicago.

Teachers’ pensions are funded to some extent by teachers themselves but the bulk of the payment is supplied by the school district (the taxpayer) and the local and state government (the taxpayer). It’s a “defined benefit” set-up whereby the teacher, upon retiring, receives a fixed monthly amount for life…no matter how much he or she has actually contributed to the plan.

While it is true that local and state governments are responsible for the looming disaster, the influential teachers unions have much to say about these policies and are leading the charge to maintain the unsustainable status quo. Randi Weingarten, president of the American Federation of Teachers, which represents many educators in the most fiscally challenged cities, claims, “People become schoolteachers knowing full well they will not command riches like in the private sector, but when they retire they can take comfort in knowing they have a pension to support them…The real culprit of the school systems’ trouble has been state governments’ support for expanding charter schools, voucher plans and other school choice policies,” which she argues have eaten into the budget for traditional public schools. She adds, “There is a common thread in how the Philadelphia crisis started, what happened in Michigan, and what’s happening in Illinois, where there is abandonment by these Republican governors or legislatures of urban city school districts.”

Where to begin?! In one fell swoop, she plays the “poor teacher” card, blames legislators who try to help kids to escape their failing public schools (which her union rules over) and Republicans. Of course, she omits the fact that every city and some states that are underwater are run by Democrats. As for her first claim, the myth of the underpaid teacher has no basis. Perhaps the most respected study to date, conducted by researchers Jason Richwine and Andrew Biggs (in which they account for all variables – including the fact that teachers work on average for 180 days, while private industry workers toil for 240-250 days) found that workers “who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent, while teachers who change to non-teaching jobs see their wages decrease by approximately 3 percent.” And that doesn’t include the very generous “Cadillac” healthcare plans that most teachers have and don’t pay for. So it would seem that teachers do quite well compared to other workers, even before their pensions are accounted for.

Weingarten’s comments about school choice are especially egregious. As explained by the Friedman Foundation’s Martin Lueken, “First, the states Weingarten cites are experiencing the worst pension crises, Pennsylvania, Michigan, and Illinois, do not even have strongly funded private school choice programs. Michigan has none, and fewer than 3 percent of the state’s students in Pennsylvania and likely fewer in Illinois are currently using any private school choice program.” He rightfully points out that schools of choice do not siphon public funds. “The truth is that school choice programs can improve the fiscal health of public school districts. Between 1990 and 2011, there were 10 private school choice programs in operation. Those programs saved a total of $1.7 billion. Another fiscal analysis on the Milwaukee Parental Choice Program demonstrated net savings of $37 million in FY 2009 from the program.”

Unmentioned in Weingarten’s misguided explanation was a prior classic. She is on record saying that, “Every dollar paid out in pension benefits puts $2.37 back into the economy.” Here the union leader blithely ignores that the same economic activity would be generated by taxpayer money if it were not diverted to pensions in the first place.

Another outrage that has been rarely acknowledged in the pension discussion is what is euphemistically called release time or, in some circles, “ghost teachers.” It’s a practice that allows public employees to conduct union business during working hours without loss of pay. These activities include negotiating contracts, lobbying, processing grievances, and attending union meetings and even out-of-town conferences. It has cost the state and federal governments billions to date, not including the pension time the “ghosts” rack up doing work for their union. Thankfully, reports about abuses in Michigan, Connecticut, Philadelphia and elsewhere have been brought to light over the past year.

Via legislation or initiative – whatever it takes – public sector employers must be made to set up 401(k) or “defined contribution” retirement plans as exist in the private sector. In this arrangement, the employer, employee or both make contributions on a regular basis, but there is no additional taxpayer involvement. However, until 401(k) plans are implemented – and the unions will fight tooth and nail to keep that from happening – so much of the money that should be spent on education, especially in our most blighted cities, will go into the pockets of not only retired teachers but to various other public employees…ghost and otherwise. And all the while the teachers unions claim that everything they do is for the children. In this case (and in so many others), they are doing it to the children, not to mention the ever-more-beleaguered taxpayers.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

The Poor Teacher Canard Redux – Part I

“Mid-and Late-Career Teachers Struggle With Paltry Incomes” is the latest flawed study to claim that American teachers are underpaid.

Leave it to the left-leaning teacher-union-friendly Center for American Progress to come out with a flatulent report lamenting the allegedly lousy state of teacher pay in the U.S. Even worse, much of the acolyte media dutifully bought the study hook, jive and half-truth. A writer for Huffington Post, tightly clutching a moist hanky, whimpered,

While the report recognizes that low teacher pay is not news – especially when it comes to low entry-level salaries – researchers were interested in seeing if the salaries of mid- and late-career teachers ‘were high enough to attract and keep the nation’s most talented individuals.’ However, in a profession where teacher turnover costs up to $2 billion annually, the results they found are quite depressing. 

Where to begin?!

Let’s start with Andrew Biggs, American Enterprise Institute researcher and scholar, and Jason Richwine, a senior policy analyst at the Heritage Foundation, who released a study in 2011 in which they found that teachers are actually overpaid. What their study includes – and the Center for American Progress’ conveniently omits – are the perks that teachers typically receive as part of their compensation package, like excellent healthcare and pension packages that aren’t counted as “income.” Armed with data, the authors make a solid case. They find,

Workers who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent, while teachers who change to non-teaching jobs see their wages decrease by approximately 3 percent.

When retiree health coverage for teachers is included, it is worth roughly an additional 10 percent of wages, whereas private sector employees often do not receive this benefit at all.

Teachers benefit strongly from job security benefits, which are worth about an extra 1 percent of wages, rising to 8.6 percent when considering that extra job security protects a premium paid in terms of salaries and benefits.

Taking all of this into account, teachers actually receive salary and benefits that are 52 percent greater than fair market levels. (Emphasis added.)

Needless to say, this was beyond the pale for American Federation of Teachers president Randi Weingarten. She promptly bashed the report, insisting that it’s full of “ridiculous assertions” and countered with half-truths and threw in a little class warfare as red meat for her members:

The AEI report concludes that America’s public school teachers are overpaid — something that defies common sense — and uses misleading statistics and questionable research to make its case.

If teachers are so overpaid, then why aren’t more 1 percenters banging down the doors to enter the teaching profession? Why do 50 percent of teachers leave the profession within three to five years, an attrition rate that costs our school districts $7 billion annually?

Kim Anderson, advocacy director at the National Education Association, ignored the data and went for the lachrymose,

Talented individuals turn away from this rewarding profession because they are forced to choose between making a difference in the lives of students and providing for their families.

Actually, the AEI report wasn’t the first to explode the “poor teacher” myth. Back in 2007, researchers Jay Greene and Marcus Winters, then with the Manhattan Institute, found:

Education policy discussions often assume that public school teachers are poorly paid. Typically absent in these discussions about teacher pay, however, is any reference to systematic data on how much public school teachers are actually paid, especially relative to other occupations. Because discussions about teacher pay rarely reference these data, the policy debate on education reform has proceeded without a clear understanding of these issues.

This report compiles information on the hourly pay of public school teachers nationally and in 66 metropolitan areas, as collected by the U.S. Bureau of Labor Statistics (BLS) in its annual National Compensation Survey. We also compare the reported hourly income of public school teachers with that of workers in similar professions, as defined by the BLS….

Among the key findings of their report:

  • According to the BLS, the average public school teacher in the United States earned $34.06 per hour in 2005.
  • The average public school teacher was paid 36% more per hour than the average non-sales white-collar worker and 11% more than the average professional specialty and technical worker.
  • Full-time public school teachers work on average 36.5 hours per week during weeks that they are working. By comparison, white-collar workers (excluding sales) work 39.4 hours, and professional specialty and technical workers work 39.0 hours per week. Private school teachers work 38.3 hours per week
  • Compared with public school teachers, editors and reporters earn 24% less; architects, 11% less; psychologists, 9% less; chemists, 5% less; mechanical engineers, 6% less; and economists, 1% less.
  • Compared with public school teachers, airplane pilots earn 186% more; physicians, 80% more; lawyers, 49% more; nuclear engineers, 17% more; actuaries, 9% more; and physicists, 3% more.
  • Public school teachers are paid 61% more per hour than private school teachers, on average nationwide.
  • The Detroit metropolitan area has the highest average public school teacher pay among metropolitan areas for which data are available, at $47.28 per hour, followed by the San Francisco metropolitan area at $46.70 per hour, and the New York metropolitan area at $45.79 per hour. 

Of particular interest to Golden Staters, the California Policy Center (publishers of UnionWatch) has posted Transparent California, a valuable website which is “dedicated to providing accurate, comprehensive and easily searchable information on the compensation of public employees in California.” From it we learn that the average full-time teacher in California made $84,889 last year, and about 34,750 teachers were paid more than $100,000 in total compensation. It’s important to note that CPC includes all income in its reporting – base pay, overtime, health and pension benefits and other forms of compensation, while again, the CAP study misleadingly includes only base pay.

Despite unassailable research, the “poor teacher” myth is still widely believed, in large part due to those who benefit from spreading it. Most notably, the teachers unions exploit this falsehood as a tactic to con teachers into believing that the union is their only avenue for salary enhancement. The unfortunate truth for teachers is that unions actually prevent them from earning more money. Look for more on this in an upcoming post.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues.