Week in Review
President Obama stood firm during the fiscal cliff debate to raise taxes on the millionaires and billionaires. To get those who can afford it to pay a little more. The visible millionaires. To help pay for the secret millionaires. Public school teachers. And public sector employees (see Millionaires, Billionaires, and Teachers by Randall Hoven posted 12/10/2012 on American Thinker).
Our President likes to use the phrase “millionaires and billionaires.” A person whose net worth is $1 million or more is a “millionaire.”
Most of us working stiffs have trouble thinking in terms of net worth; we are more used to the concept of annual salary. How does net worth translate into annual income, or vice versa? In round numbers, the annual income equivalent is 4% of an investment nest egg. So if you have $1 million socked away, consider that to be equal to $40,000 income every year…
That relationship can be turned around: if you have an annual pension of $40,000, you are effectively a millionaire, especially if that pension is adjusted for cost of living…
Now let’s look at public school teachers. In Illinois, where I live, the Illinois State Board of Education puts out a report on teachers’ salaries. The table below is a pretty good summary of that 110-page report. A beginning teacher with a Bachelor’s degree in a median school district might make about $40,000 per year. But by the time a teacher retires, she could be making $55,000 to $120,000, depending on how much graduate education she got and her school district.
And when that teacher does retire, what is her pension? If most school districts are like Chicago’s, the teacher will make about 50% of her final salary if she retires at age 55, or 75%, the maximum, if she waits until age 59…
In short, a lot of retired Illinois teachers are millionaires.
But that’s not all. Teachers who retired from the Chicago school district get 60% of their health insurance premiums subsidized. In round numbers, let’s call that a value of $8,000 per year.
Also, the above values do not include any other savings or investments made over the teachers’ careers, including home values. If they have their own 401k’s in addition to their pensions, those were not included. Social Security was not included either.
Wait, there’s more. These pensions are for life. Many or most of them are also adjusted for cost of living. Every month, for the rest of their lives, retired teachers get checks or automatic deposits of a reliable amount, indexed for inflation and guaranteed by the government. They don’t have to worry about investment risks…
The situation of the retired public school teacher is also not that much different from fire fighters, policemen, postal workers and other public employees. Nor is it that much different from a lot of other retired workers, especially union members such as General Motors retirees. If such people are getting pensions and benefits of $40,000 per year or more, not an exceptional amount, they are millionaires…
The main reason the US Post Office, the federal government and many state and local governments face unsustainable debt, bankruptcy and default is due to the costs of public employee pensions. GM went bankrupt largely due to the costs of its retirees’ pensions and benefits.
Businesses go bankrupt, governments face default and economic growth slows to a near standstill. Meanwhile, retired public school teachers, who had to work 9 months of the year during their careers, now pull in checks 12 months a year, indexed for inflation and guaranteed by the government, in amounts that often make them millionaires, maybe twice over.
So public school teachers, fire fighters, police officers, postal workers and other public employees are not the same as people who work in the private sector. For when people retire from middle class jobs in the private sector they don’t live a long retirement like a millionaire. They live a shorter life in retirement worrying that they may outlive their retirement savings. Or that some illness may wipe out their retirement savings. Forcing them to return to work in the last remaining years of their life. Something school teachers, fire fighters, police officers, postal workers and other public employees don’t have to worry about. As long as they can maintain a privileged class in America. An American aristocracy, if you will. The thing we fought the Revolutionary War to put an end to in the New World. Old World aristocracy.
Not everyone can live like this. For there just isn’t enough taxpayer income to tax away to pay for everyone. Which is why the aristocracy is a privileged class. In a ‘classless’ America. A class that attacks rich people to pay their fair share. So they can enjoy their millionaire retirements. Without having the talent or ability of an entrepreneur. The investment savvy of a Mitt Romney. Or simply not having been lucky enough to be born into an aristocratic family. Like a Kennedy.
And if you think these millionaire retirees have earned their good life like an entrepreneur, consider how hard they have to work for their Masters Degree.
You might notice from the table of teacher salaries that a Masters Degree with extra graduate hours can add $20,000 or more to a teacher’s annual salary. Just for fun I want to show you two course descriptions. The first one happens to describe an engineering course I teach which is for undergraduates, required of all engineering students and generally taken in a student’s 2nd or 3rd year of college.
Engineering Mathematics: The Laplace transform and applications; series solutions of differential equations, Bessel´s equation, Legendre´s equation, special functions; matrices, eigenvalues, and eigenfunctions; vector analysis and applications; boundary value problems and spectral representations; Fourier series and Fourier integrals; solution of partial differential equations of mathematical physics.
This second course description is taken from the University of Missouri St. Louis bulletin. It describes a graduate level course in the Education school.
The Educational Role of Play: Emphasizes play as a constructive process with applications to cognitive and social development. Special attention to facilitating play in early childhood classrooms.
Note that the first course description (the one with all of that math) was an undergraduate course. While the second course description (all about having fun) is a graduate course in the school of education. The person learning about fun in the classroom will live like a millionaire in their retirement. While the odds are that the one that worked so hard to learn all of that math to help create the wonderful things in our high-tech economy will not. Why? Because brilliant engineers have to earn their retirement. While the privilege class makes the engineers and other hard working Americans pay for their millionaire retirement. Is that fair? According to the Left, yes.
Worse, these are the people teaching our children. This privileged class that exploits the taxpayer so they can live a longer and more comfortable retirement are teaching our kids the evils of capitalism. To turn them into Democrat voters. So they vote for the party that attacks those who earn their wealth. To make them pay their fair share. So these teachers and public sector workers can continue to live their millionaire retirements. While most of their student’s parents struggle in their own lives because they’re paying so much in taxes to support the better lives of their children’s teachers.