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Old 10-25-2016, 07:08 AM
 
Location: Tennessee
23,560 posts, read 17,544,804 times
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In high cost urban areas, you may have a large segment of the population that is low skilled and ill-equipped for the well paid private sector jobs in the area, which bring the income figures for the area. In somewhere like Oakland where Ultrarunner is or Chicago, there are large swathes of urban poor low skilled workers that honestly don't have the skills to fill many vacancies. There can be vacancies for skilled work, but few workers qualified to fill them. The guys working at McD for $10-$12/hr bring the income figures way down, BUT there are may be lots of well paying jobs available for those who qualify. You have parts of Chicago where there are tons of unemployed but also tons of unfilled vacancies in the richer parts of the city.

Because the income figures are skewed lower, the teacher may look comparatively well off compared to a large segment of the population, but that's because that large segment is not doing well. That doesn't mean the teacher is "living large," and may very well earn more with a similar education level and number of years in the private sector. The teachers likely won't earn anything close to what similarly educated professionals in the private sector will earn, and this is likely further eroded by the cost of living (ie. the Chicago finance guys and Bay Area tech crowd can just afford it without a problem, but the middle class teacher salary is strained by the high COL). The pension may or may not make up for it in the long term, but many private sector guys are compensated so well they can get nearly equivalent results on their own. If you're doing well in the private sector in a prestigious area, you're probably doing much better than a typical teacher at retirement.

Also, I've lived in wealthy suburban areas in Iowa and Indiana where teachers are compensated well and have good pensions, but the private sector is also doing very well. The cost of living is relatively low. A teacher in a suburban Indianapolis school district is going to earn pretty decent money, maybe not as much as the private sector, but closer than the prestigious coastal areas - they also have stability and a definite retirement income a similarly educated private sector professional may not get. In this case, it's likely to going to be a toss-up between a white collar private sector professional and teacher at retirement.

People look at teacher retirements often from the perspective of Cadillac pensions in rich, liberal states like MA, CT, IL, CA, etc., but there is another side of the coin that's rarely addressed.

In poor, rural areas and small towns, like where I'm at, there has been a hollowing out of traditional private sector employment. There isn't much of a "white collar" class here. We used to have decent paying blue collar work that provided a living wage - today, those blue collar jobs are all but gone, replaced by food service, retail, and call center work at the low end that is basically all <$12/hr for nonmanagement levels.

The minimum salary in the town I reside in, Kingsport, for a new educator is around $41,000 annually.

http://teateachers.org/sites/default...mum_report.pdf

The median HHI is around $34k, the median family income only about $40k. Most private sector work, outside a relative handful of people working for a few large employers or transplants bringing their out-of-area salaries with them, is extremely low paying, often considerably lower than any of the teacher salaries.

Granted, a teacher starting out at ~$15/hr is still low and sucks in my opinion, but if most people around you are making $12/hr, $15/hr looks good, even though that's a low wage in absolute terms. Also, keep in mind that in small towns and rural areas, there are often few opportunities to utilize that college education. If they do find an opportunity, it's still often lower paying, in relative terms, than many mid-cost metros in the country. If all I can find is something at $12/hr in Kingsport, but can make $20/hr in Nashville, I'm better off in Nashville - the cost of living is more, but not that much more.

In small towns and rural areas, teacher salaries have a floor set by the government, whereas private sector salaries can go as low as the market will bear. Keep in mind that the private sector jobs in small towns and rural areas are likely of lower quality and less likely to be generous with benefits like a competitive urban or suburban white collar labor market.

In the small towns, teacher salaries are often about the best thing you can get with a four year education - offering a salary that is well above median starting out, with a widening gap as the years of service increase, and a benefit suite not seen by private sector workers.

Last edited by Serious Conversation; 10-25-2016 at 07:16 AM..
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Old 10-25-2016, 09:12 AM
 
26,589 posts, read 52,267,707 times
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With all the new minimum wage laws on the books... starting wages in Oakland and other West Coast cities can be $12+ dollars plus sick leave benefits... last I checked it was $12.44 here and other areas are at $15 or higher.

I manage property with educator tenants... grade school and high school... no one is getting rich.

One is young single mom of 2... she makes it work and picks up a summer job teaching summer school and it really helps.

Dad who taught High School always said you have to remember many teachers have far more time off than just about any other profession...

As for private Sector I just don't know many with traditional pensions... I worked in a Union Shop after earning my engineering degree... none of those shops exist today... all of the schools from my childhood are still going strong... although a few have become charter schools.
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Old 10-25-2016, 09:36 AM
 
Location: Tennessee
23,560 posts, read 17,544,804 times
Reputation: 27618
Quote:
Originally Posted by Ultrarunner View Post
With all the new minimum wage laws on the books... starting wages in Oakland and other West Coast cities can be $12+ dollars plus sick leave benefits... last I checked it was $12.44 here and other areas are at $15 or higher.

I manage property with educator tenants... grade school and high school... no one is getting rich.

One is young single mom of 2... she makes it work and picks up a summer job teaching summer school and it really helps.

Dad who taught High School always said you have to remember many teachers have far more time off than just about any other profession...

As for private Sector I just don't know many with traditional pensions... I worked in a Union Shop after earning my engineering degree... none of those shops exist today... all of the schools from my childhood are still going strong... although a few have become charter schools.
They're not getting rich in terms of salary or even pensions in a place like the Bay Area where there is so much private sector wealth and innovation. Even if you count the value of the pension, a lot of professional, private sector workers in the Bay Area are still going to do better than the average teacher. In areas where the private sector professionals aren't doing as well, that pension becomes a much bigger benefit. Of course, these are legacy pensions and many new teachers aren't going to get as good of a deal.

I know several teachers and probably half of them have sort of side business or income coming in. I had an English teacher in high school who was also a realtor and took client calls in class. I know one teacher for a vocational class who has a small construction business of some type. Others with master's degrees have taught classes at community colleges. Summers off also give them time to hold a seasonal job if they choose.

Are there some excessive pensions? Yes, but probably not the majority. Are most teachers getting "rich?" No. Are they probably better off by retirement than any similarly educated and skilled private sector professionals? Definitely.
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Old 10-25-2016, 11:44 AM
 
30,065 posts, read 47,312,423 times
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Quote:
Originally Posted by TuborgP View Post
Again this isn't about their pensions but about their investment portfolios's. 150K income with no savings/liquidity is no panacea.
Those are teachers who taught in Union states, I imagine, to enjoy such a large pension...

In Texas, not a union state, I think only top administrators like superintendents who earn 100k or more yearly, college professions in state/public colleges and universities, and jobs like athletic directors/coaches can have any hope of getting a pension over 100k a year...

Plus teachers who do not pay into Social Security on their earnings--as most Texas teachers/admins/regular staff like custodians--are hit with a penalty on their spousal SS benefit if their husband/wife/same sex partner did pay into SS and draws a SS pension...and on any of their personal SS pension from working in jobs outside education will lose part of that SS amount as well...

So receiving a teacher's pension based on earnings outside SS system results in two penalties on any SS pension a retired teacher might qualify for in retirement...

And I will say this again...
Teachers are paid by their contract days...
They are NOT paid for days in the summer vacation...and while they get X number of sick/personal leave days depending on their district and state policies, they are not paid for Christmas or Easter or Sprimg Break...they are paid for the number of class instruction days plus teacher/professional development required by the state...

Their checks are PRORATED over 12 or 24 pay cycles which is to the districts' benefit...
The time they spend at home grading papers is not paid.
The time they spend after the contract school day is over tutoring, preparing lessons, cleaning their classroom because the janitor is overworked--that is unpaid labor...
And plenty of teachers do it...unpaid!
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Old 10-25-2016, 11:45 AM
 
29,772 posts, read 34,856,103 times
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Interesting concept and idea emerging in NYC to provide retirement saving plans for folks:


https://nextcity.org/daily/entry/nyc...t-savings-plan

http://www.pionline.com/article/2016...ctor-employees
Quote:
Under the umbrella title of “New York City Nest Egg,” Mr. Stringer proposed creating:
•The Empire City 401(k), which would enable employers to join a single, publicly sponsored 401(k) plan based on a new federal law allowing multiple employers that are unaffiliated to join a single plan.
•The NYC 401(k) Marketplace, a voluntary exchange overseen by an independent board that would offer employers a choice of “screened, competing 401(k) and other retirement plans from private and public providers,” according to a news release.
•The NYC Roth IRA, an automatic default designed for eligible private-sector employers that do not select a plan on their own or through the NYC 401(k) Marketplace. Their employees would be automatically enrolled in a payroll-deduction IRA, which is not subject to ERISA. Employees could opt out at any time. “Research shows that automatic enrollment in retirement savings accounts vastly improves participation, so employers would be required to automatically enroll eligible employees,” the news release said.
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Old 10-25-2016, 11:50 AM
 
29,772 posts, read 34,856,103 times
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Quote:
Originally Posted by loves2read View Post
Those are teachers who taught in Union states, I imagine, to enjoy such a large pension...

In Texas, not a union state, I think only top administrators like superintendents who earn 100k or more yearly, college professions in state/public colleges and universities, and jobs like athletic directors/coaches can have any hope of getting a pension over 100k a year...

Plus teachers who do not pay into Social Security on their earnings--as most Texas teachers/admins/regular staff like custodians--are hit with a penalty on their spousal SS benefit if their husband/wife/same sex partner did pay into SS and draws a SS pension...and on any of their personal SS pension from working in jobs outside education will lose part of that SS amount as well...

So receiving a teacher's pension based on earnings outside SS system results in two penalties on any SS pension a retired teacher might qualify for in retirement...
Sure, I was also talking about couples each having pensions etc etc etc. To reach the 120K plateau they would only need 60k each and to reach the 150K plateau 75K each. The point is that even having a high fixed income retirement the lack of liquidity can play out over the years in negative ways. Now with savings instead of spending if they didn't have a tax sheltered nest egg from their working years they can given time create a taxable nest egg during their working years or ideally have both. The reality is that all workers with tax sheltered plans are equal in how ROI friendly their plans are. Our options changed over our working years and became much more worker friendly as they did. Eventually we had a range of choices. Some we considered excellent and some we didn't. Others may have opted for but we didn't
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Old 10-25-2016, 11:58 AM
 
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I won't have a retirement. The newest Tier3 retirement plan simply sucks. I won't have a pension when I retire.
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Old 10-25-2016, 12:02 PM
 
Location: Tennessee
23,560 posts, read 17,544,804 times
Reputation: 27618
Quote:
Originally Posted by TuborgP View Post
Sure, I was also talking about couples each having pensions etc etc etc. To reach the 120K plateau they would only need 60k each and to reach the 150K plateau 75K each. The point is that even having a high fixed income retirement the lack of liquidity can play out over the years in negative ways. Now with savings instead of spending if they didn't have a tax sheltered nest egg from their working years they can given time create a taxable nest egg during their working years or ideally have both. The reality is that all workers with tax sheltered plans are equal in how ROI friendly their plans are. Our options changed over our working years and became much more worker friendly as they did. Eventually we had a range of choices. Some we considered excellent and some we didn't. Others may have opted for but we didn't
The teachers can also save privately or through an employer sponsored plan other than the defined benefit pension if one is available. Nothing says that the defined pension benefit has to be the entirety of their retirement plan. There could also be a decent nest egg to draw upon for large expenses, purchases, what have you.

The difference is that most of the private sector has no defined benefit plan. Most only have defined contribution plans of various flavors. I would much, much rather have the $120k in defined pension money coming in like clockwork than having to try to get this amount from private savings. It would take millions to generate this kind of income with a normal withdrawal rate.
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Old 10-25-2016, 12:24 PM
 
30,065 posts, read 47,312,423 times
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The fact is that many public school districts have a cozy arrangement with local insurance companies who sell 403b annuities because they buy advertising space in football programs or on the stadium scoreboard or because one of them is related to someone in the district...

People who market 403b plans to teachers in a district have to have passed some type of vetting process in order to,do business with district employees...
Too bad the district doesn't ask some more searching questions in that vetting process--like what profit are you making off this investment vs an indexed fund...

Of course there are many teachers who like getting the security of an annuity check just like,other investors who buy annuities...
But the true cost of the investment is often VERY difficult to ferret out...
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Old 10-25-2016, 12:58 PM
 
4,776 posts, read 6,605,705 times
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Quote:
Originally Posted by tnff View Post
Really? Who is getting $200K pensions with full medical? Got a cite? Would love to read that.
That's what I want to know also....my husband will only have right at $29,000/year when he retires after around 30 years (not sure when he's going to do it yet). Also, no Social Security for him.

Not complaining, glad to have it (especially since I will continue to get it if he goes first), but he will have to get another job when he "retires". He will be around 60, so I don't know what kind of jobs there are for that age group....but we know God will provide.
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