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Patriotism is a non-sequitur in any case. Many people who enter the military are not particularly patriotic, they are looking for a career option.
Faculty, and non-academic staff, who work at higher-ed institutions are probably not doing so as a patriotic act. They are doing it to assist people in gaining an education, for the love of their discipline (English, Math, Physics, Art...), as a job. Additionally, only some institutions are government, many other institutions are private.
A few examples of faculty not getting raisesis not statistically significant. I know dozens of faculty who have gotten raises year after year. It’s pretty boring to write about the math professor I know and had lunch with last week, she was hired 5 years ago and has gotten a raise every year since. I have a friend who is a museum curator at an academic museum, who has gotten raises consistently. One of my former student workers landed a faculty job at a UC school a couple of years ago, and I am pretty sure she has received annual raises.
I could go on.
except of course that the entire premise of the thread is these examples of academic employees who aren't getting a raise. So I guess your criticism was actually meant to agree with me, and to question the basis of having a thread about these presumably very isolated instances?
Even better than pensions, they get a 401k with match (which in itself is amazing) AND stocks... often valued at 50% to 100% of their salary.
I used to peruse LinkedIn and read these executives' work histories in a search of "what pathway did they take to reach this position?" It would blow my mind when I would read that someone left a company (one known for generous benefits to employees reaching "full retirement" or 30 years) just shy of a milestone that would have set them for life. But they knew more about their portfolio than I did, so who was I to judge?
I did not consider that even more valuable compensation could lie in wait for someone to cross a certain threshold (be it director level and above, or what have you). RSUs are being given to IC talent as well as the executive ranks to retain employees and remain competitive.
An RSU grant or annual refresher may equal several years of pension payout. Depending on how the person decides to manage their career (willing to change jobs to leverage a salary increase) or dead set on putting in 30 years at one company, this will determine which option appeals most to them, I suppose.
I can see how, in a small town, a city job with a pension can be the end-all-be-all of career aspirations. The security of a defined benefit far outweighs any market upside *for this person* because perhaps money was never plentiful enough for the retiree to justify the kind of risk exposure a 401k would involve. And we've seen plan participants' behavior when the market tanks (sell sell sell!)
Also, employers offering pensions also tend to extend at least one subsidized group healthcare option in retirement. This is also more attractive *to some people* than being cut loose with a lump sum and paying 100% of the premium.
If you provide two retirement options for someone at 60 years old, 1.) $50k pension w/ COLA and group healthcare, or 2.) $2 million lump sum but you have the freedom to spend as much or as little as you want on managing your own healthcare, I'm picking #1, because if I can balance a monthly budget, I can't screw it up.
Well, when you work for the government you're supposed to be doing it out of patriotism, to serve your country. You're not supposed to be trying to get a high salary.
So University Professors, Custodians, Basketball Coaches, Postal Clerks, Teaching Doctors, Interstate Construction Workers, CDC Scientists are Patriots who are doing it for the country?
We're not talking military here. We're talking Federal, State, and Local Governments- the LARGEST employment sector in our country.
They need talented, skilled, and educated employees- and they need to pay them market rates or they won't be able to fulfill what they need.
This isn't a charity, this is what people do for work.
If you provide two retirement options for someone at 60 years old, 1.) $50k pension w/ COLA and group healthcare, or 2.) $2 million lump sum but you have the freedom to spend as much or as little as you want on managing your own healthcare, I'm picking #1, because if I can balance a monthly budget, I can't screw it up.
Not that I'm a fan of annuities, but to simplify this -- $2M in a 5% return annuity starting now would be $100K a year for life. There is nothing to screw-up, even if you aren't capable or interested in managing your own investments. Health care insurance for a married retired couple would be between $8K-$12K a year, depending on what is selected. You have to look at the math, and not get emotional about things like a "pension", "healthcare" and "COLA". At age 65, then you have Medicare. If you do manage your retirement IRA like you would have been doing to build all along up to $2M, you can expect an average of 8% return with a moderately-aggressive investment plan. Let's also not forget, you would be getting Social Security on top of this return on investment from the IRA or annuity, which can't be reduced like some pensions when you are taking Social Security and a pension.
I doubt few people who went into teaching were doing so thinking that there would be many years to pass without a raise. Some were told their kids could go to college tuition free, only to find out that college moved many costs out of tuition column to the fees column and are forced to pay for student fees which can be expensive.
I have no idea in academia what is considered doing a great job that the college would give someone good raises. Maybe they look at the market, and decide most of their faculty are stuck there so they are able to get away without giving a raise for six years. Which makes them similar to people working low wage jobs in the grocery stores. Management feels they don't need to pay very much because they know the people working there have few options.
I have a friend of a friend who is a tenured college professor. He was complaining to us at lunch that he has not gotten a raise in six years. Not even cost of living. His gross pay is exactly what it was six years ago he said. Is this normal in academia? Man, so much for chasing a tenured job. Meanwhile college tuition costs have been going up, but no raise for this guy.
I know nothing about working in academia and teaching, but it seems to me if you have not gotten a raise in six years, they aren't interested in keeping you there at all. Or is this just something those who teach in college have to put up with? They have such a huge pool of talent to select from so the colleges don't care?
No company would do this and expect employees to stay there. I guess with a college, they have few options. It isn't like there are thousands of colleges in a single town for you to find a job elsewhere like in other industries.
Many higher ed jobs will often have salary or wage freezes in response to funding cuts or issues with state budgets. While six years is a long time, especially with the economic expansion, many government jobs had pay freezes for many years during the last recession.
Private sector companies can and do implement pay freezes. Given whatever the conditions of the individual market and economy at large are, this may be more or less likely to happen.
But if you work in the private sector, you're salary is not tied to taxes, or whether the community votes to increase taxes so you can get a significant raise. It's based on the performance of the company. If you're company is doing well, your bonuses and pay increases may better reflect that.
That's true, in theory. The reality can also be much different.
Several months ago, video game publisher Activision-Blizzard posted record profit. You'd think that might trickle down to employees in some manner, correct? No, in fact - several hundred staff were laid off because the company "didn't reach its full potential."
That's the video game industry, but I thought it was illustrative of corporate greed and the idea that more is never enough.
Not that I'm a fan of annuities, but to simplify this -- $2M in a 5% return annuity starting now would be $100K a year for life. There is nothing to screw-up, even if you aren't capable or interested in managing your own investments. Health care insurance for a married retired couple would be between $8K-$12K a year, depending on what is selected. You have to look at the math, and not get emotional about things like a "pension", "healthcare" and "COLA". At age 65, then you have Medicare. If you do manage your retirement IRA like you would have been doing to build all along up to $2M, you can expect an average of 8% return with a moderately-aggressive investment plan. Let's also not forget, you would be getting Social Security on top of this return on investment from the IRA or annuity, which can't be reduced like some pensions when you are taking Social Security and a pension.
I doubt few people who went into teaching were doing so thinking that there would be many years to pass without a raise. Some were told their kids could go to college tuition free, only to find out that college moved many costs out of tuition column to the fees column and are forced to pay for student fees which can be expensive.
I have no idea in academia what is considered doing a great job that the college would give someone good raises. Maybe they look at the market, and decide most of their faculty are stuck there so they are able to get away without giving a raise for six years. Which makes them similar to people working low wage jobs in the grocery stores. Management feels they don't need to pay very much because they know the people working there have few options.
Sorry to hit you with so many questions at once... the gears are really turning today.
Do you think that someone could convert that lump sum today, at age 60, for an annuity product paying that rate? Or are you speaking of managing the money by yourself and taking the dividends?
Is someone continuing to draw from their nest egg in a down market actually spending more than they can recover from? (violating x% per year max distribution if you require a flat amount of cash each year)
Sorry to hit you with so many questions at once... the gears are really turning today.
Do you think that someone could convert that lump sum today, at age 60, for an annuity product paying that rate? Or are you speaking of managing the money by yourself and taking the dividends?
Is someone continuing to draw from their nest egg in a down market actually spending more than they can recover from? (violating x% per year max distribution if you require a flat amount of cash each year)
Last year a neighbor of mine who was about to have a 60th birthday told me he looked into an annuity to see what it would start paying him now on a million dollar portfolio. The money was from his IRA and 401(k). He's been working since he's been a teenager and has no children. He said they could start paying 5% now. So that rate should still be current I would expect. There are very different types of annuities with all kinds of options and a ton of legal language with them. I'm not a fan of them, but I used that as an example for retirement to compare it to a pension, because a pension like Social Security is a sort of annuity. 5% now sounds good, but that's only $50K a year. You could keep the money and take out $50K a year yourself for the next 20 years before you would run out of principal money. Even if you didn't want to invest that in anything else other than cascading FDIC CDs which would be very safe, the added interest would help the money last more than 20 years.
As for investing it yourself, I was referring to selecting your own FA (financial advisor) at a major brokerage that is highly recommended to you, and work with them to come up with a plan for retirement. I wasn't suggesting playing the market by yourself. Part of what a good FA does, is do an extensive facts gathering from you for things risk tolerances and investment goals. Then they run retirement "what if" type of reports and it takes everything into account to determine probability of outcomes. From there, you can decide what to do. I prefer this over an annuity, because you still have access to all the money. The drawn for the retirement plan I've seen was 4% a year. The retirement plan from the FA takes all this into account including inflation. The calculations to do good retirement planning are more complex than people think, and the FA's retirement plan is very helpful and gives you a clear picture of things.
Last thing to say about annuities, is they are good for people who can't manage their own money, and are susceptible to have others (family members, friends, new friends, etc.) come to them during retirement to extract money from them. An annuities the money is gone and there is only the monthly payment, so there is nothing to give to that son-in-law that doesn't work who wants you to buy him a boat or whatever. :-)
Someone staying in a low paying job in academia just for a pension, well, there has to be more of a reason to do it than that. I guess if you really wanted to do teaching, there are corporate educational jobs, but I suspect they don't have the same level of satisfaction. The corporate training I've been through at best lasted 2 weeks and you might never see that instructor again.
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