Unsustainable: $15,000/month Average Teacher Compensation

By Bill Zettler

Public Sector Pay & Benefits Soar While Private Sector Languishes.

It is becoming more obvious every day that government spending for public employee compensation is well beyond what is available in the private sector. What is more, because the tax dollars being allocated to pay public compensation comes from the private sector, taxes are being increased at the very time when taxpayers can least afford it.

How Big Is The Difference between Public and Private Sector Compensation?

When we talk about compensation we mean the total cost of an employee to an employer. This would include not only wages and salaries but fringe benefits such as retirement pay (or pensions), retirement health care, vacations and other time off with pay, and insurance (health, life, disability).

There are several ways to look at the disparity between public employee compensation and private sector compensation. Previously we have written about the huge difference between federal workers compensation and the average private sector employee, $120,000/yr vs. $60,000/yr per the BEA (Bureau of Economic Analysis) (see article here).

We can also look at the BLS (Bureau of Labor Statistics) and see the comparison according to their statistics:

Total Hourly Compensation Wage Portion Benefits Portion
State and local government workers

$39.66

$26.01

$13.65

Private Sector all workers

$27.41

$19.39

$8.02

Difference in dollars/hr

$12.25

$6.62

$5.63

Difference in percentage

45%

34%

70%

Those numbers are stunning: 45% more in total compensation for state and local workers and an amazing 70% in fringe benefits. And public employee unemployment is of private sector unemployment. So government workers are compensated more and have more secure jobs. Not a bad deal if you can get it.

Many Illinois School Districts Are At The $15,000/mo Level of Compensation.

On October 30, 2009 the Daily Herald printed a report showing the highest average teacher salaries by school district:

2009 TEACHER SALARIES

                                                                                                            

                                         Average      Average

                                         salary          salary                         Percent highest average salaries  2008             2009           change    change

Adequate yearly
progress*
in ’08   in ’09
Maine Twp. H.S. D207 $88,539.00 $94,205.00 $5,666.00 6.40%

no

No

Palatine-Sch. H.S. D211 $88,022.00 $92,811.00 $4,789.00 5.44%

no

No

Fenton H.S. D100 $84,696.00 $92,373.00 $7,677.00 9.06%

no

No

Stevenson H.S. D125 $86,932.00 $90,555.00 $3,623.00 4.17%

yes

No

Libertyville-Vrn Hills D128 $83,690.00 $90,273.00 $6,583.00 7.87%

no

Yes

NW Suburban H.S. D214 $87,457.00 $90,112.00 $2,655.00 3.04%

no

No

Keeping in mind that teachers in Illinois only work 9 months (182 day contracts) these 6 schools average more than $10,000 per month in salary for each of their teachers. But they also receive superior benefits including pension, insurance and days off.

If we look at just one of these schools, Stevenson High School District 125, we can come up with a total compensation package in excess of $143,000/yr or more than $15,000/mo.

Here’s the calculation:

Illinois School District 125 Teacher Compensation
Salary

90,555

Pension Contribution – State 30.5%

27,619

POB – Pension Obligation Bonds 3%

2,717

OPEB – Retiree Health Care 3.25%

2,943

Pension Contribution – Local and Federal 1%

906

Insurance Family Coverage

19,125

TOTAL COMPENSATION

143,865

Average Monthly Compensation

15,985

The same calculation could be made for the other five $90,000/yr-plus districts with similar results.

It Would Be Cheaper To Hire Full-time Consultants Than Teachers.

According to the teacher contract teachers receive 2 personal days off per year and 16 sick days. Of those 16 sick days 10 may be accrued each year towards 340 days which can then be used at retirement as two worked years. That puts the actual work days per year at 170 (182 minus 12). In addition there are sabbatical leaves, professional leaves, family and medical leave and by contract the school day is 8 hours or less. Then there are the additional costs of tenure, up to $3,000/yr tuition reimbursement and disability insurance. So the true cost of a teacher at District 125 is far more than the $143,000/yr we have documented here.

If we take $143,000 annual compensation and divide it by 170 days and 8 hours/day we get $105/hr. So in effect taxpayers are paying consulting rates for teachers but, because of tenure, without the right to fire them as they would have with consultants. And of course you don’t pay consultants when they are sick, you don’t reimburse them for tuition and you don’t provide disability insurance.

Private Sector Workers Get 1.5% Raises, While Teachers Get 9.06% Raises.

The Labor Department reported this week that for the 12 months ending Sept. 30, 20

09 wage increases averaged 1.5%. If you look at the teacher salaries in the table above you will see annual increases up to 9.06%.

Below is a chart showing the monthly compensation of state and local workers, federal workers and Illinois teachers compared to the average for private sector workers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Please notice how those of us in the squashed left column are being taxed to pay for the vastly higher compensation of our public sector peers in the 3 right-hand columns. The distorted 1.5% to 9.06% wage increase explains how this can happen.

The Huge Disparity between Public and Private Compensation is a Form of Political Corruption.

The publically available data outlined above shows the unsustainable nature of current public policy. More and more income is being redistributed from private sector wages to public sector wages via taxes and this can only happen with political approval.

Not only is this policy financially unsustainable, it is patently unfair.

Sources:

Bureau of Economic Analysis

Bureau of Labor Statistics

Illinois Commission on Government Forecasting and Accounting

Chicago teachers Pension Fund

Teachers Retirement System Actuarial Report June 30, 2008

 

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.