How much should a teacher make? A private sector equivalency calculation

By Bill Zettler

We believe that teaching is an honorable and well-respected profession and teachers should be compensated in a manner equivalent to what private sector peers earn taking into account all fringe benefits. Our argument is that most teachers, especially those in suburban Chicago, are more than adequately compensated compared to their equals in the private sector.
Over the last 10 years, due to teachers unions influence on politicians of both parties, teachers salaries and benefits have increased to the point where in many cases they far exceed what the private sector earns. The people paying the taxes should not make less than those being paid with the taxes.
So we will work through a scenario where a private sector salaried employee, making a salary of $100,000 per year, goes to his/her boss and asks for changes in compensation to match what local teachers receive. What you end up with is $50,000 per year for a teacher is the private sector equivalent of a $100,000 per year salary.
Here we go:
EMPLOYEE: Well boss, I have decided I need to change my lifestyle and I am talking to you today to see if we can come to an agreement on what I should be paid based upon my new employment needs.
BOSS: Well, OK you are a valuable and hard working employee and we will do what we can to accommodate your needs.
EMPLOYEE: Thanks boss. First of all, I would like to work less. Basically, I would like to have 2 weeks off for Christmas each year and the summers off to be with my kids while they are home from school. In all I would like to work 180 days per year or 36 weeks.
BOSS: Wow, that is going to be hard to accommodate. As you know, everyone wants off for Christmas and summer is our busiest time but you are a valuable employee so we will do it. Right now you work about 48 weeks a year after taking time off for holidays and vacations so that is an easy calculation, you will have to take a 25% cut in pay to $75,000 per year.
EMPLOYEE: Right boss, I agree a straight 25% off of my 12 month salary because I am only working 9. That’s fair. Now we are at $75,000.
EMPLOYEE: Now boss I also want to retire at age 55 or 56 on 75% of my pay with automatic 3% increases each year even if inflation is less than that. I am willing to pay 9% towards that on my own.
BOSS: That is a very expensive proposition. With Social Security you contribute about 7% but you only get $18,000 maximum at age 62. If you want to retire 7 years before that and get about 300% more we are really going to have to pump some major dollars into your pension plan. Our actuaries tell us that we would have to contribute at least 25% of your salary in addition to the 7% we have been contributing on your behalf for Social Security or another $ 15,000 per year. So we would have to take your salary down to $60,000.
EMPLOYEE: You are right boss, my salary should go down to $60,000 but I still have a few more things I need.
EMPLOYEE: I want you to guarantee me a job no matter what. You can’t fire me unless I commit a felony and I don’t have to move around or change jobs if I don’t want to. And I want a raise every year whether I do a good job or not. In fact you cannot even review or judge me to see if I deserve the raise or not. I get my raise no matter what.
BOSS: You mean even if business is bad and we are in a recession, you want me to borrow money to pay you? Do you have any idea how risky and expensive that concept is? Somebody has to pay for the loan and the interest on it. And if you are doing a lousy job I cannot fire you, I have to give you a raise? Thats insane.
EMPLOYEE: Boss, do you want to keep me or not. If you don’t give me what I want I will go to Palatine or Lincolnshire and get a job with someone who will.
BOSS: OK, OK lets see what that cost is. I have to borrow money, perhaps hire someone else to do your job because I can’t fire you. Then when you consider how many millions of people have been laid off recently, I would have to say that is worth at least 10% maybe more. So at 10% that gets you down to $54,000 per year.
EMPLOYEE: That sounds fair but I still need a few other things before I can agree. First of all, I want a 20% increase in pay my last year before retirement to jack up my pension payments, I want 2 personal days and 2 religious days off per year, I want health, life and disability insurance, 15 sick days per year which if I don’t use I can apply to early retirement and I only want to work 7 and 12 hours per day.
BOSS: This is impossible; no one can give you all of this and possibly run any kind of functioning organization. But if I could that would be another 10% so you are down to $50,000 per year instead of the $100,000 you are making now.
EMPLOYEE: Right boss, that sounds like a good deal. I’ll take it.
Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this email address. Click here to read more by Mr. Zettler.