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Since the Chicago school teachers went out on strike Monday, many political figures have tried to convince the public that their $70,000 average annual pay is excessive. This is peculiar, since many of the same people had been arguing that the families earning over $250,000, who would be subject to higher tax rates under President Obama’s tax proposal, are actually part of the struggling middle class. They now want to convince us that a household with two Chicago public school teachers, who together earn less than 60 percent of President Obama’s cutoff, have more money than they should.
Anyhow, if we want to assess whether someone is getting too much money, we always have to ask the follow-up question, compared to what? Here are a few comparisons that I have found useful.
Source: Author’s calculations, see text.
The first comparison number is the annualized pay that Chicago Mayor Rahm Emanuel got for a 14-month stint as a director at Freddie Mac. President Clinton appointed him as a director shortly after he left the administration. It’s not clear exactly what Mr. Emanuel did as a director, he was not appointed to any board committees. While Emanuel’s stint ended just as the housing bubble was building up steam, Freddie Mac was involved in an accounting scandal during this period for which it was forced to pay several million dollars in fines.
The second comparison is the compensation that Emanuel received for his day job after leaving the White House, working for Wasserstein Perella, an investment bank. According to Wikopedia, he earned $16.5 million for two and a half years of work.
The third comparison is the compensation that Erskine Bowles received as a director of Morgan Stanley, the huge Wall Street investment bank in 2008.Erskine Bowles has been mentioned in the news frequently as the co-chair of President Obama’s deficit commission. The plan that he co-authored with former Senator Alan Simpson, the other co-chair, is often held up as providing a basis for a “grand bargain” on the budget.
The year 2008 is noteworthy because this was the year that the bank was driven to the edge of bankruptcy. It was saved from imminent bankruptcy by a bailout from the Federal Reserve Board, which allowed it to change its status to become a bank holding company on an emergency basis. This gave it the protection of the Federal Reserve Board and the FDIC. Morgan Stanley also received tens of billions of dollars in below market loans and guarantees from the government. (Bowles continues to serve as a director of Morgan Stanley as well as several other companies. Here is a fuller discussion of his record as a director.)
These pay packages might be useful information for those trying to decide whether $70,000 a year is too much to pay a teacher working in inner city schools in Chicago. On the same topic, Catherine Rampell provides a useful comparison of the pay of teachers in the United States relative to the pay of teachers in other countries, most of which have better student performance on standardized exams.
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Based upon what has been said by union members who have appeared on Ed Shultz’s show, this is not about money, but about things like class size, curriculum options and resources available to students. However, by law, salary is the only thing that Chicago teachers may legally strike over.
Whether that is true I cannot say. I can say only that that is an accurate very short version of what they said.
Yes, that’s my understanding as well, based on this press release from the CTU.
http://www.ctunet.com/blog/cps-fails-to-negotiate-fair-contract-to-prevent-first-labor-strike-in-25-years
Rahm Emanuel is a corporatist union buster. He is not a “real” democrat. He represents the rich and powerful. Ordinary Democratic citizens who believe he is on “their side” are fooling themselves every bit as much as ordinary Republican citizens who believe Mitt Romney cares about them. Rahm Emanuel is an elitist corporate shill. He all about the money!
It would be irresponsible not to point out that Rahm is well-off enough
that he is able to send his three children to the University of Chicago Lab School.
Where the tuition is in the $23,00-26,000 range. Per child.
How many CPS teachers can do that?
The worst thing about these figures is that teachers actually make a contribution to society. People like Emanuel and Bowles get richly compensated for repackaging debt and selling it.
Speaking of teachers’ unions:
Obama angers union officials with remarks in support of R.I. teacher firings
Relatively new contributor to Ezra Klein’s Wonkblog, Dylan Matthews, had this pretzel-twisting exercise yesterday, trying to show that Chicago teachers’ pay is higher than union supporters claim. But he was forced by his own previous statistics errors to concede this as his conclusion:
The extra grand per year above the level Dean Baker uses here is immaterial, what is more significant is the choice of comparative populations. WaPo’s Matthews dismisses union supporters who point to the median income of $56,720 reported by the federal Bureau of Labor Statistics for the area including Cook County (city of Chicago), on the ground that the counties covered by the BLS figure include too large a population. WTF? Where does he think the teachers live? Lots of them live outside the city and outside Cook County.
What is the comparison with the for-profit schools pay scale? We will have teachers as part time no benefits automatons like at the retail stores and super markets. Killing off public education is already baked in our austerity cake which we will be eating for more years. Vote third party and avoid the pain of having to say “I voted for that Bullshit Artist” (either one qualifies.)
Teachers are by far the biggest contributors in society to “job creation”. The market cannot function — hell, democracy cannot function — without teachers.
Comparing stats is fun, especially apples and oranges.
The highest average teacher salary by country is Luxembourg at about $69,000. http://economix.blogs.nytimes.com/2009/09/09/teacher-pay-around-the-world/
So the average Chicago teacher salary is the highest average teacher salary worldwide.
The average Chicago teacher salary is about 1% of what Rahm made as a banker, which seems unfair.
Rahm on the other hand is a piker when it comes to the richest bankers. http://www.businessinsider.com/the-richest-bankers-in-the-world-2012-3?op=1
Rahm’s wealth is only about 0.1% of the top banker, worldwide.
In my home state of Michigan, the right wing has been remarkably successful in demonizing teachers by attacking the Michigan Education Association. Many of my neighbors believe that schools are filled with overpaid, incompetent teachers who can’t be fired or reassigned because the MEA will protect them. The right wing has also tapped into public bitterness over workforce reductions and benefit cuts by attacking teachers’ lavish salaries and benefits.
Funny thing. I’ve never, ever heard a right-winger talked about administrative bloat or the salaries and benefits paid to school superintendents.
FWIW, Houston, Texas teachers average $40,000 for nine months work. If they teach summer school, 6 weeks, they can earn an extra $2,900.
Elementary principals earan $79-82,000, middle school principals, $81-89,000 and HS principals $87-102,000.
No progress as yet? Next step, when it’s ripe, maybe the CTU needs to unbox the T-Shirts with a clenched fist. They should be Beefy-T’s, which will last.
The CTU needs to win this at the right time, though, so they can carry the torch for better pay elsewhere. It needs to be a “there, you see?!” moment, and remembered.
bp, I heartily agree. The MOST important job on this planet, in this galaxy is “educator”!!!!!!
Second place – cops anad firefighters.
Third place – garbage collectors.
So why is it that if the teachers strike for better working conditions and pay they are called greedy. Yet if a CEO whines about his inadequate multi million dollar bonus and we call them out on it, we are punishing success? I would be interested to see an aggregate failure rate of teachers to these MOTU and see who really is getting paid for performance.
(Hint: I do not believe it is the latter.)
Then when in the world would Obama have him for his Chief of Staff?
MOTUs get paid for non-performance as well. The really bad ones get $5 million golden parachutes.
That is exactly what I meant. When they walk into the job guaranteed to leave rich because of there signing bonus and golden parachute, where is the incentive to actually, you know, make the company better? All they care about is how much they can loot before they leave.
I feel that you can judge how much a companies books are cooked by the size of the CEO’s pay.
Why don’t you think Rahm got paid too much for his role as a de facto government employee (GSE)? Just because others got paid excessively, it doesn’t mean that should be justification for even more people being paid excessively. Speaking as someone who has served on non-profit boards, certain non-profits for instance have multi-million dollar salaries (like more than a few in the health industry), which I think is way too high and abuse of the tax code. Rahm is an example of abuse, not a model that compensation should be based on.
This happens with “charities” as well, which the Obama administration IRS is ready to go after people for non-paying into these guys salaries in the healthcare industry, but won’t have the IRS go after these “charities” for abuse of non-profit status.
Just around the Sacramento area in the healthcare field alone there’s dozen of non-profit healthcare execs pulling in over $1 million per year:
“Of 137 nonprofit health executives listed on tax records for 14 nonprofit health care organizations, nearly half work for Sacramento-based Sutter Health or its affiliates. Of 27 executives receiving compensation of $1 million or more, 22 are from Sutter.
Roseville-based Adventist Health listed 17 executives, including 4 with compensation above $1 million. Rancho Cordova-based CHW Medical Foundation, affiliated with Dignity Health, listed 16 executives, including two that received at least $1 million.”
http://www.bizjournals.com/sacramento/news/2012/06/27/sacramento-nonprofit-medical-millionaire.html?page=all
The CEO of the “non-profit” “charity” sutter health made nearly $5 milliion!…This is not an isolated incident!
Jeez, Dean. You might have wanted to read what things the CTU is holding out for that’s *not* about pay rises or benefits, too, before writing this. Here’s CTU President Karen Lewis speaking about the particulars.
Some folks will never rest until all the aspiring middle class wage slaves are reduced to the lower class.
It’s “Upstairs, Downstairs” in a “hell of a town” – so, I can’t wait for the strike busters and other dirty busters to appear.
Seriously, lumping all employees of the Chicago school system together and calculating “average pay” tells us nothing. Average pay takes into account the highest paid, six-figure-a-year superintendents and all manner of positions within the public school system. What is the starting salary of a teacher in the system? What is his/her salary after five years? How about an elementary school teacher? And it’s not just about pay and benefits, as wendy said.
Doubtful – Superintendents on the high end and lunch ladies on teh low end are not Teacher Union employees.
2010-2011: the CPS gives a starting salary of $50,577 for a first-year teacher with a bachelor’s degree. Just a bit higher for the average of all other Chicago workers who make average $47,000. Which means the long term teachers who are striking are making close
to $100,000.
As far as after 5 years, I guess they’d make 16% more than that if they took the current contract offer (some reports differ, but I think the average Chicago worker would be happy with 4% per year.
Can’t find numbers for elem vs. high school, but they’re all on
strike, so if the elem are making $30,000, then the high school teachers that are striking are making $110,000 or some such.
Ok, one more time.
The Chicago Teachers Union strike is not primarily about pay.
Read the rest for the actual demands. They’ve been discussed in posts and comments at FDL for the last two days.
The income of the bottom 90% of our country has remained flat for 30 years, while the income of the top 1% keeps growing. This is reflective of an economic and financial system that by design has been transferring wealth upward for decades.
This isn’t the fault of the Chicago teachers.
These constant “divide and conquer” comments pitting one segment of the working class against each other serve no one except the 1%. And by 1% I probably mean the much less than 1%.
There is no reason teachers should be above the process of give-and-take in terms of pay, benefits and working conditions.
I would love to see some business-style accountability brought to bear on public schools – all of the staff from top down.
The stance often communicated is “this is hard, we are tired, the students are poor, the admins are doofy and the parents are clueless. Leave us (teachers) alone.”
Um, no.
That’s our tax money, at close to $10,000 per student (if correctly calculated.) I would like to have some audited reports about this money sink hole.
The teachers may be underpaid, overworked and under-supported by admin and with supplies and physical plant. OK, then.
Show us. Don’t whine, chant, disrupt the school year and act entitled and naive.
Good grief. Be professionals if you want to be treated as such.
They have been following that process. This is the first strike in 25 years.
There’s a concerted effort in this country to replace public education with for profit institutions that have as their sole purpose, as”free enterprisers” are so fond of saying, increasing shareholder value – not education, community, or country. That’s what the teachers, parents, and communities are fighting now.
Currently your tax dollars go to public education, not always perfect, but subject to public review and community pressure, and to changes and improvements if the public isn’t satisfied with the results.If the teachers and their supporters (if all of us) lose this fight, your tax dollars will go to corporate profits instead.
osage–
Emanuel is carrying out the Duncan/Obama educational policies (Race to the Top, etc.).
I live in the state that took the top prize, over 500 billion dollars, in grant money from O’s “Race to the Top” program. The contest was based upon the following criterion: which state is most willing to dismantle public education (via charter schools, school vouchers, standardized testing, busting teacher’s unions, etc.).
Think about it, one-half trillion dollars is given to “one state” in order to dismantle public education, while the PTB have planned a “Grand Bargain” for seniors, which will include massive cuts to their Social Security checks, Medicare insurance program, etc.
The “Grand Bargain” is being enacted in order to “pay for” what amounts to part of a so-called stimulus package (arguably, unless you consider the destruction of our public school system to be “positive”).
Of course, no one in Washington dares call it stimulus spending, lest the right wing goes ballastic. I have no problem with needed spending for some infrastructure projects (repair of interstate highways and bridges), but since our infrastructure projects will be overseen by a “public-private board,” most of the actual spending probably will not go to rural areas and the heartland, but to serve the needs of the elite and business classes, in the cities (high speed rail).
The fares will be “market-based,” since the infrastructure bank will be financed by private investors, with the exception of billions of dollars of “seed money” from the US government, we can be certain that the “average” guy or gal won’t be utilizing a high speed rail system. Same for many of the new roads. Many folks don’t realize that the roads O promises, will be “toll roads.”
I was curious when I heard so much made of VP Biden back and forth to Delaware everyday, for years. So I checked out the fares at Amtrak. Heck, an outdated ‘piece of crap train’ like an Amtrak trains from D.C. to Wilmington, DE cost from $46, $65, $69, up to $116, for a round trip ticket.
So, I can’t imagine spending the vast sums of tax payer money that would be required to build high speed rail systems, until such time as our major interstate highways, bridges and state roads are maintained and upgraded. Then, the logical next step would be to catch up with the rest of the world by building high speed rail systems.
It always cracks me up to hear the PTB whine that we don’t have this capability. Should have thought about that, before projecting American power throughout the world
And, I definitely don’t agree with funding any of these projects with the “savings” from cutting Social Security and Medicare (which, of course, is what the “Grand Bargain” is all about).
Blue
(Sorry, got a bit OT)
Dean Baker–
And, no, $70k is not too much to pay an inner city teacher (or any teacher, for that matter).
Recommended.
Blue
Thanks for the info. I plan to do some more reading about this.
The “4% per year” line is nonsense. It’s actually less than that. Not to mention the past two years’ pay raises which the city reneged on.
Oh, and there is such a thing as “inflation”, even now. It’s not as if the teachers are going to use these raises to buy Bentleys, ffs.
Thanks.
I was just answering the questions posed in #23.
So to solve that we take tax money from the tax payers of Chicago (average salary $47,000) and pay teachers more (average salary $76,000).
Problem solved.
This notion that a taxpayer shouldn’t have to pay teachers more than the taxpayer earns is a strawman. Taxpayers also pay doctors, accountants, fast food workers, local merchants, etc. some of whom make more than they do, some less. We all pay each other all the time.
The problem, as the charts show, is that all the money goes to the top. That’s the problem that needs to be solved. The teachers don’t make too much money. Other people make too little. They need to form unions and fight for better pay for all of us. Driving wedges among working people only benefits the 1%.
I don’t blame teachers for striking, but in a society that is not creating work and most of the jobs being created pay next to nothing they will be cast by the media and others as just being greedy and spoiled.