Government

Are teachers underpaid or overpaid? Yes and no.

Teachers are the victim of their unions and politicians. For many years unions and their political allies negotiated agreements that favored non-cash compensation such as generous pensions, health benefits, PTO and retiree health care benefits. The true cost of these benefits were ignored and generally invisible to the public. In many cases adequate funding was largely ignored by the politicians. The total compensation for teachers and other state workers is generally far greater than the average citizen in their jurisdiction.

Compare the above to salaries, which are totally visible, and must be paid concurrently.

Now it is all coming home to roost. Many states face massive unfunded liabilities and any funding being done is drawing from vital government services. The promises are simply unaffordable. Some states have started to trim benefits, if not for current workers, for new hires.

Teachers are caught in the middle, they expect and have a right to expect fulfillment of the commitments made, they also deserve good salaries, but taxpayers can not afford to do both.

If teachers keep all their current benefits and receive salary increases, the problem becomes worse. Taxes must be raised and/or state services must be cut, neither outcome being desirable.

There is no easy or quick solution. However, if teachers want higher salaries, to be fair to all taxpayers it should come in large part from a realignment of cash and non-cash compensation. The measure of fairness and affordability for any public employee should start with a comparison of total compensation for the private sector tempered by the tax burden required.

Teachers are the victims of too much of a good thing and of those responsible, meaning unions and politicians, ignoring the consequences of lucrative agreements. If you want a private sector analogy, look to the auto industry and it’s unions and what they had to do once their inability to sustain the situation was clear.

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1 reply »

  1. There is a solution to all of this but it would also badly hurt the private sector workers too. Start taxing all the benefits as income. Tax pension contributions as income now and make pensions tax free later like a Roth IRA. Then tax medical in retirement as income if it is being paid by the employer.

    Once the teachers and state workers realize that they will have to pay additional income tax on $20-30K without seeing any extra money in their paycheck, then maybe they will realize how good they have it. People being people, I’ll bet they demand less benefits to get more money in their pocket today and that they will do like most other people don’t do and that is not plan for retirement.

    I really don’t blame the teachers. It wasn’t until our old company gave out individual annual benefit summary booklets (and later on internet benefits sites) did I understand the true cost of my benefits. At first you want to call BS when you see the numbers. Over time as you follow the costs, you wonder how the company is paying so little when you talk to some self-employed business owners who try to buy their own medical by themselves.

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