According to the Federal Reserve, median family income in America fell 7.7% in the period from 2007 to 2010. Simultaneously, the median net worth of families fell 38.8%, largely because the collapse of the housing market wiped out most of the net equity folks had built up in their homes, with many now having mortgage balances greater than their house's market value.
During that same period, the compensation of the teachers in our school district looked like this:
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This chart shows the 12 year salary history for three example teachers. One is a New Teacher who was hired in 2002 with a Bachelors degree and no experience, but who goes on to earn BA+150 and Master degrees during this span of time. Next is a teacher who in 2002 has a Masters degree and ten years of experience, and achieves Masters+15 status three years later. The third teacher reaches 30 years of experience by 2013, and has been Masters+15 status the whole time.
If you are not familiar with how the salary grids work, this article may help.
The new, mid-career, and end-of-career teachers would experience annual income growth over these 12 years equivalent to 7.4%, 5.3% and 3.2%, respectively. This reflects the design of the salary schedule, which gives larger percentage increases to the teachers who are just starting out.
Teachers and other public school employees haven't been completely immune to this recession of course. They've lost value in their homes as well. Less tangible to them are the losses they've taken in their retirement fund; I've been reporting about the woes of STRS for a long time now.
But it is fair to say that this new report from the Fed shows that this recession has been much harder in general on folks in the private sector than it has been on the teachers of our district, and most school districts around the country.
This chart depicts shows the inflation-adjusted growth in spending by all State and Local governments (ie - Federal spending is not included here) as compared to the growth in Gross Domestic Product over the past sixty years. It says the State/Local spending (which includes public school districts) has grown at twice the rate of GDP.
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There are many things I admired about Ronald Reagan, but I heard it once said that he invited the whole country to a great steak dinner, then bugged out without picking up the check. I think it might also be fair to say that Bill Clinton gave us a great ride, but it was paid for using frequent flier miles that had been built up during the Reagan years.
Now the frequent flier miles are all used up, and the credit card bill for the steak dinner is still hanging over our heads, not looking like it will ever be paid off. Meanwhile, we've kept putting lots of new stuff on the credit card, and have been getting the credit limit raised all the while to make sure we can charge even more.
It's a scary time.
Our teachers and staff recognized this, and their 2011-2013 collective bargaining agreement dramatically slows the rise in compensation costs compared to prior years. You can see the effect of this agreement in the salary chart above, with 2011-2013 showing essentially flat salaries. As I've said many times, I am appreciative of their understanding in this new reality.
The real question is: Where do we go next?
I'm not trying to ignite a dialog about what teachers are paid. As my friend Marc Schare says, some teachers aren't paid enough, and some are paid too much. Maybe we'll soon have a effectiveness-based reward system which both teachers and the voters will trust, and we can start to deal with this issue. But let's leave that discussion for another time.
The question I'm raising here is about how we're going to survive the next several years. We need to drop the political and emotional rhetoric, and talk about what will work for all the stakeholders in our community.
This may be a particularly tough recession to work our way out of, but I have confidence that we'll slowly get to a better place. On the way there, we'll have lots of gut-wrenching, emotional, and unfortunately hurtful conversations about what is fair, and who should pay for what. These will range from "pay-to-play" decisions at the level of local school districts all the way to figuring out how our nation's Social Security and Medicare/Medicaid systems are going to be kept viable.
We'll hear more of the "tax the rich" and "cut the size of government" rhetoric. We need to do some of both I expect. And we'll need to figure how to keep nudging our economy in hope of getting things going again.
By that, I don't mean we should repeat the ill-conceived first stimulus package that was intended to prime the economic cycle by giving money to the consumers, and expecting them to spend it. Instead, many used it to pay down credit card debt, and if they did spent it, it went toward consumer products typically manufactured overseas. Good for the Chinese, not so much for us. At least the money we borrowed to fund the stimulus came from China as well.
I do think it's appropriate for the government to stimulate the economy, but I think it should done via spending programs that put Americans to work at highly skilled jobs. Reagan used a massive military buildup to accomplish that. Good idea then, maybe not so much now.
Maybe the best place to apply leverage is with big public works projects, like repair and upgrade of our infrastructure. No, we don't need high speed rail. Other than the densely populated Northeast Corridor, which is already well served by passenger rail service, airplanes are a better form of public conveyance for America. That's the reason the passenger railroads disappeared in the first place.
But we do need lots of highways and bridges repaired. Our national power grid is remarkably efficient and reliable given the technology in place, but we can do lots better. Some major dams need significant repair, while others need to be removed. These are all jobs that pay well, and can't be sourced overseas. The people in those jobs will spend their income here, supporting local economies. If we're smart about our other national priorities, we can set our economy back on a growth path in a year or two.
In the meantime, we need to protect our local economy and our property values by keeping the desirablility of our school district high. That means that we need to continue to bear down and be more cost efficient in our operations, and maybe even decide to curtail or eliminate some course offerings, programs and services. We voters may have to pass a levy every once in a while to offset what I believe will be a continuing State policy to reduce funding to school districts perceived to be affluent, such as ours.
And if we ever want to give raises to our teachers and staff again, we'll likely need some new levy money to fund that as well.
Teachers and staff - our community respects you and appreciates the way you care about our kids. But we need you to continue to be cognizant as to how scary this economy is for folks who don't have the same degree of job security as you. It will get better, we just don't know when.
We'll be negotiating new labor agreements in about a year. I hope we'll all go into that conversation with tons of empathy and information, and a shared goal to protect our community.