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In fact, trying to do this all with lump sums tends to be more expensive in the long run: businesses can often save on total labor costs in the long run by using merit-based base salary raises, provided they can do a good job of identifying who in fact merits them. The only businesses that really benefit from a lot of lump sum compensation are those with highly volatile revenues, which of course is not the case with schools.
Definitely not true. Maybe in skilled labor, but I am talking the usual overhead. I once worked for a company where people were making double what other people doing the same job were making. The company would get rid of these folks every time they would have a layoff. They made up layoffs just to get rid of these folks. Customer Service workers shouldn't make $60-$70K when people will do it for $8.50.
By the way, I really do think it is instructive to look at what has happened with charter schools. Part of the whole idea of charter schools is that they have the flexibility to pay teachers in different ways if that seems like a good idea, and by their very nature they cannot guarantee a lot of job security (since their charter is typically for only a limited number of years).
The end result is that charter schools have in fact varied a bit from the traditional model in the ways we have been discussing (more merit pay, higher pay differentials for hard-to-fill positions, and so on). On the other hand, they have not in fact ended up paying less overall in salaries. Indeed, when you consider that charter schools on average have lower per-student budgets, they are actually spending a greater percentage of their budget on teacher compensation.
All of which makes sense. Quality teaching is highly-correlated with every significant measure of educational success, so charter schools need to get quality teaching if they are going to meet the standards and goals laid out in their charters. And the fact that they generally can't pay less overall to get quality teaching is a very useful piece of information, because it does indeed suggest that overall, teacher salaries are not excessive.
...because they are competing with public school teachers, they must pay equal, or they will lose their teachers to public schools.
Bottom line. What would happen to our kids education if we capped our teachers at $60K plus lump sum merits? Absolutely nothing. If anything would happen, we should fire the teacher.
Definitely not true. Maybe in skilled labor, but I am talking the usual overhead. I once worked for a company where people were making double what other people doing the same job were making. The company would get rid of these folks every time they would have a layoff. They made up layoffs just to get rid of these folks. Customer Service workers shouldn't make $60-$70K when people will do it for $8.50.
Obviously it depends on the circumstances, but most employees will accept smaller raises in net-present-value terms if they come in the form of base salary raises rather than a series of lump sums. The only general circumstances in which this doesn't tend to be true is with the aforementioned businesses with highly volatile revenues, because their borrowing costs tend to be high, which means their NPV calculations swing in favor of the lump sums even if their employees would ordinarily prefer something else (in other words, you get a lot when they have the cash, little when they would have to borrow it).
Incidentally, customer service is one of those fields experiencing a lot of out-sourcing to places able to provide cheap labor (not all overseas, in fact--you can locate call centers in parts of the United States where labor is cheap, including sometimes prisons!), although there has been some pushback recently as customers have protested and businesses are re-evaluating. In any event, it is true that in such a field, competition from cheap labor is driving down salaries.
...because they are competing with public school teachers, they must pay equal, or they will lose their teachers to public schools.
But if it is that easy for the people charter schools are looking to hire to get traditional public school teaching slots at will, then the traditional public schools must be undersupplied with teachers, which means they must be offering less than competitive wages.
More broadly, all schools, including charter schools, aren't just competing with each other for teachers. Rather, they are also competing with the rest of the labor market for people with similar abilities (and it doesn't take long for compensation changes in various field to filter through into people's decisions about what careers they will pursue). So if charter schools aren't finding it easy to hire people away from the rest of the labor market to become quality teachers at total salaries lower than the traditional public schools are offering, it implies that traditional public schools wouldn't have much more luck in doing so.
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Bottom line. What would happen to our kids education if we capped our teachers at $60K plus lump sum merits? Absolutely nothing. If anything would happen, we should fire the teacher.
What you are ignoring is the problem of hiring the teacher in the first place, and also retaining them once they hit the cap. Again, it changes the attractiveness of the initial teaching offer considerably when you incorporate this new rule that their base salary is going to be capped in the future, and reduces the incentive for people to stay once they hit your cap.
But one more time, in my view it would be fine to shift some of this compensation from longevity-based pay to merit-based pay, as in fact charter schools have found they can do. Again, you just aren't likely to save money that way, although hopefully you will get better performance.
Obviously it depends on the circumstances, but most employees will accept smaller raises in net-present-value terms if they come in the form of base salary raises rather than a series of lump sums. The only general circumstances in which this doesn't tend to be true is with the aforementioned businesses with highly volatile revenues, because their borrowing costs tend to be high, which means their NPV calculations swing in favor of the lump sums even if their employees would ordinarily prefer something else (in other words, you get a lot when they have the cash, little when they would have to borrow it).
Incidentally, customer service is one of those fields experiencing a lot of out-sourcing to places able to provide cheap labor (not all overseas, in fact--you can locate call centers in parts of the United States where labor is cheap, including sometimes prisons!), although there has been some pushback recently as customers have protested and businesses are re-evaluating. In any event, it is true that in such a field, competition from cheap labor is driving down salaries.
I just did another check out there at that site. It looks like all the teachers who have 10 or less years experience are really getting shafted. It is amazing how many teachers are there with 20+ years experience. I guess it ain't too bad with so little turnover....
All your talk about npv is good, the problem is we have a major issue because 1/2 our teachers are making double than the other half. What a mess.
One thing about Pittsburgh I hate is how we could really be the best place to live in America, but these taxes and pensions are killing us.
I just did another check out there at that site. It looks like all the teachers who have 10 or less years experience are really getting shafted. It is amazing how many teachers are there with 20+ years experience. I guess it ain't too bad with so little turnover....
Focusing just on the Pittsburgh School District, as mentioned the highest-paid Kindergarten teacher had a Master's Degree and 27 years of service, at $78400. The lowest paid Kindergarten teacher with a Master's Degree had 4 years of service, and got $44400. It turns out that is a 2.5% increase in pay per additional year of service.
Again, to me that isn't an unreasonable differential. In fact, I bet in a lot of professions you would find a similar differential, or indeed a lot more substantial differential, between the salaries of the most junior and most senior professionals.
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All your talk about npv is good, the problem is we have a major issue because 1/2 our teachers are making double than the other half. What a mess.
But I thought one of your concerns was saving taxpayers in cash-strapped school districts money. If you want to do that, lowering the NPV of the total expected compensation you are offering is a good thing.
Focusing just on the Pittsburgh School District, as mentioned the highest-paid Kindergarten teacher had a Master's Degree and 27 years of service, at $78400. The lowest paid Kindergarten teacher with a Master's Degree had 4 years of service, and got $44400. It turns out that is a 2.5% increase in pay per additional year of service.
Again, to me that isn't an unreasonable differential. In fact, I bet in a lot of professions you would find a similar differential, or indeed a lot more substantial differential, between the salaries of the most junior and most senior professionals.
But I thought one of your concerns was saving taxpayers in cash-strapped school districts money. If you want to do that, lowering the NPV of the total expected compensation you are offering is a good thing.
BUT WE CAN'T BECAUSE THEY WILL STRIKE! This is what the whole argument is about.
And your math is wrong. $44K to $78K may be 2.5%, but that teacher making $78K probably started out at $16K.
BUT WE CAN'T BECAUSE THEY WILL STRIKE! This is what the whole argument is about.
Striking is a whole different issue, but the point I was making is that a typical employee will accept less in expected total compensation (NPV-calculated) if they anticipate predictable increases in base salary. That is actually very unsurprising, because it is an implication of something economists call risk-aversion. Anyway, the point is that school districts likely can save some money on teacher salaries by structuring their compensation in this way, but the downside is that taken to an extreme, you lose the ability to provide merit pay. So, the sensible approach is to balance something like a bit of seniority pay with a bit of merit pay.
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And your math is wrong. $44K to $78K may be 2.5%, but that teacher making $78K probably started out at $16K.
I am doing everything in "real" terms, meaning inflation-adjusted. So, the 2.5% per extra year of seniority I calculated is in real terms, since it is calculated based on today's dollars on both ends. Looking forward, however, on top of those 2.5% real increases the $44K teacher should also be getting inflation adjustments (or COLAs). Thus, in 23 years this teacher should be making more than $78K in nominal terms, but if he or she only gets 2.5% real increases, he or she will only be making the $78K in real terms at that point.
Conversely, I don't know what that $78K teacher was making 23 years ago, but again assuming 2.5% real increases plus COLAs, it should have been much less than $44K in nominal dollars back then, even though it would be $44K in real terms.
Striking is a whole different issue, but the point I was making is that a typical employee will accept less in expected total compensation (NPV-calculated) if they anticipate predictable increases in base salary. That is actually very unsurprising, because it is an implication of something economists call risk-aversion. Anyway, the point is that school districts likely can save some money on teacher salaries by structuring their compensation in this way, but the downside is that taken to an extreme, you lose the ability to provide merit pay. So, the sensible approach is to balance something like a bit of seniority pay with a bit of merit pay.
I am doing everything in "real" terms, meaning inflation-adjusted. So, the 2.5% per extra year of seniority I calculated is in real terms, since it is calculated based on today's dollars on both ends. Looking forward, however, on top of those 2.5% real increases the $44K teacher should also be getting inflation adjustments (or COLAs). Thus, in 23 years this teacher should be making more than $78K in nominal terms, but if he or she only gets 2.5% real increases, he or she will only be making the $78K in real terms at that point.
Conversely, I don't know what that $78K teacher was making 23 years ago, but again assuming 2.5% real increases plus COLAs, it should have been much less than $44K in nominal dollars back then, even though it would be $44K in real terms.
Your point is not reality based. You must be a lawyer or something. We have elementary school Librarians making $89K (I saw one of those) and you are trying to justify it by presenting different statistics. Your argument maybe based on mathematical fact, but it doesn't add in the real world. When you have a declining tax base, and you have elementary school librarians making $89K, it is wrong, no matter what calculation you make.
With Kindergarten teachers making $35, while others are making $87K, it is wrong, no matter what. No matter what statistics you give us, it is wrong, and it is damaging our students, and our communities.
In conclusion (again), the teachers are holding our children hostage by striking for outlandish wages, benefits, summers off, and pensions, that none of us in the free market get. Yes, I could stop complaining and join the destruction of our community, but that is not my point. (for those saying quit complaining and become a teacher).
You can easily see from that website, that if you capped the salaries at $60K, you could lower property taxes about 20-30%. Many school districts have half of their teachers making $87K. No wonder there is so little turnover.
Just think how things could turn around in this state if everybody had 20-30% of their property tax dollars back in their pockets. Businesses would boom, house values would skyrocket, and maybe our kids could go to year round schooling, like in other countries.
Well, with all due respect, I am the one noting things like that when charter schools are freed to provide teacher compensation as they see fit, they have ended up structuring it a bit differently, but not actually cutting overall compensation. In contrast, you are the one imagining a radical new approach to teacher compensation that would end up dramatically cutting costs, without any indication in the real world that your purely hypothetical approach would be successful. So, I am not sure why you are the one in this conversation who is being more "reality based".
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