The Teacher Retirement Hoax
One of the most persistent, and frustrating, myths in education is the myth of the fatcat teacher stealing precious school dollars to sock away in her gold-plated pension fund. This notion got an extra jolt yesterday from Chad Aldeman of Bellwether Education Partners, who made this interesting claim on Twitter:
Bobby Bonilla's salary trajectory is similar to how many teachers are paid: Underpaid in early years, large back-end raises, big pensions: pic.twitter.com/7TpCd0FRX9— Chad Aldeman (@ChadAldeman) October 3, 2016
You might be asking yourself: who the heck is Bobby Bonilla? Bonilla was a six-time all star professional baseball player, and finished in the top three in MVP voting twice. He was a productive player. Not as productive as his salary might have suggested (Aldeman's use of the "Wins Above Replacement" metric is intended to show that he made more money than he earned), but still pretty productive.
It's funny that Aldeman chose Bonilla as his example, though, because Bonilla is also known for something else. See, Bonilla left Pittsburgh for New York, and after bouncing around some, landed back in the Big Apple in 1999. That year Bonilla hit .160 and drove in only 18 runs in 119 at bats, so with a $5.9 million salary looming in 2000 the Mets agreed to restructure his contract. Luckily for Bonilla, he had an agent named Dennis Gilbert who negotiated a sweet deal with the hapless Mets: Gilbert convinced them to defer Bonilla's salary and pay him over 25 years instead. With interest. Eight percent interest, to be exact.
As a result, every year on July 1 Bonilla gets a check from the Mets for $1,193,248.20. When the last payment comes in on July 1, 2035, Bonilla will have turned his $5.9 million into $29.8 million. To which I say: well played, sir. Anything that sucks money out of the Mets' payroll is okay with this Braves fan.
This is how deferred compensation is supposed to work: you give up something in the short run for something better in the long run. Unfortunately this is not how things work for teachers, who are not only underpaid during their careers but underpaid after them too. Where are all these teachers picking up "large back-end raises" and settling into retirement with "big pensions"? The reality is that teacher pensions are hardly "big" at an individual level and "large back-end raises" are simply a figment of the public's imagination. Have you ever seen a pay scale for teachers? Here's one. Here's another one. And here's another one. I don't know about you, but I'm not seeing big back-end raises. I'm seeing very small incremental raises, year over year—probably not even enough to keep up with inflation. I'm seeing one scale that ends at twenty steps. That probably means that after your 20th year of teaching not only do you not get a "large back-end raise"—you get no raise at all. End of story.
I'm also seeing a scale that tops out at $57,867. That's the top of the scale! And you'd have to work for 32 years to get to it. Let's just put this to bed: you'd have to draw a much straighter line than the one representing Bonilla's salary to actually represent the salary histories of most teachers. "Large back-end raises" just don't exist in teaching. For a lot of teachers, small ones don't either.
So what about those "big" pensions? Bellwether Education Partners clears that one up for us. As you can see if you click through, the average benefit for new retirees is hardly what I think anyone would characterize as a "big pension." Most teachers have traditionally received a portion of their final year's salary as an ongoing pension benefit (it's called a "defined benefit") after they retire—not their full salary, and nowhere near gold-plated levels considering that most are not making high salaries when they retire to begin with.
And there's more to the story. As Aldeman himself has said, "pension averages tend to be skewed by a small number of large winners." He correctly points out that many teachers never receive any pension benefits whatsoever, usually because they leave teaching before their contributions vest, and even those that do remain rarely teach in the same place long enough to max out their benefits. To jump from "a small number of large winners" to the claim that "many" teachers enjoy large raises and big pensions seems disingenuous, at best. At worst, it's irresponsible.
Of course, this is exactly the jump you would want to make if you were trying to convince policymakers and the public that defined benefit plans are bankrupting America's economy and that defined contribution plans would be better. You might even go a step further and blame collective bargaining by those hated teachers unions for making things worse. Rick Hess is definitely on that bandwagon: he blames collective bargaining by teachers in Chicago for ruining the city's finances since teachers there refuse to "pick up their full nine percent pension obligation." He suggests that greedy teachers (or at least their unions, who have "have siphoned vast sums out of classrooms and into retirement and health benefits that do nothing for students") should simply tear up the agreements they made with the city and pay for their own retirements themselves. This would be like the Mets demanding that Bobby Bonilla stop being greedy and give back some of the money they agreed to pay him because they changed their minds. Who needs contracts anyway?
Hess would have us believe that the only solution is to wean all of these self-interested teachers off this wasteful system and deliver them straight to Wall Street, where they can have their retirements managed like everybody else. How's that working out for everyone?
Is that the only solution? I'm not so sure. At the end of the day, the real source of trouble in teacher pension plans is not that plans are too generous, or that teachers won't contribute enough of their salaries to support them. It's that politicians can't seem to find the political courage to deal with a ridiculously inadequate education funding problem. Chicago's mayor, Rahm Emanuel, says taxpayers "stepped up" to resolve the city's financial crisis by agreeing to higher property taxes and now wants Chicago's teachers to do the same. He forgets, of course, that teachers are taxpayers too. They've already stepped up. Now we need elected leaders to step up and admit that their responsibility to taxpayers includes a responsibility to ensure that schools are adequately funded and are capable of delivering a high quality education to all kids. In part that means compensating teachers with professional-grade salaries and benefits.
Yes, the pension system is badly broken, but, no, it's not because teachers are robbing us blind. You don't negotiate your salary or your pension if you're a teacher in this country. You accept it. That's just the way it is. Blaming teachers for the pension mess is no better than blaming "welfare queens" for the failure of government to provide an adequate safety net for poor Americans. This is scapegoating, pure and simple, and it's designed to take your eye off the ball.
If we kept our eyes on the ball we'd know that we can have it one way or another but not both ways. We can entice people to consider teaching and pay them low salaries with the promise of secure benefits, or we can promise them higher salaries with less generous benefits. If we choose the first route we'll be choosing stability in the teacher workforce; if we choose the latter, we'll be encouraging people to teach for a short time and then move on to something else. Either way, let's start with accurate assumptions so we can at least have an honest conversation about our options.