We've invited a range of panelists—from union leaders to economists to teacher voice organizations—to participate in an online forum on teacher pensions. We’ve collected their responses and will be posting the authors’ contributions here, in their own words, on a rolling basis this week.
Today's post comes from Celine Coggins, a former teacher, who is now the founder and CEO of Teach Plus, a non-profit that operates in six cities training teacher leaders to transform schools and influence policy.
My dad taught for 30 years in the same high school, owned his own home from the early days of his career, and raised 6 children on his income alone. He’s been comfortably retired since his mid-fifties enjoying the return on the three decades he invested in the classroom. His pension allows him to stay in his middle-class home, golf to excess, and, quite possibly, spend more years of his life collecting a pension check than a paycheck. His life embodies the essence of the American Dream circa 1969—the date at which he entered the workforce. He had the good fortune of his working years coinciding with an era of strong unionism and, relatedly, a robust middle class.
His story offers a layman’s entry point into the complex issue of pension reform and how it relates to broader economic and demographic trends. His story—the quintessential Baby Boomer story—presents a sharp set of contrasts to a teacher’s life in 2013.
Career Expectations. A pension system that was ideal in the era where a career was defined as a decades-long relationship with one employer is now serving a world in which the average worker stays at a job for 4.4 years. In urban teaching, where thousands of newer teachers are subject to layoffs annually, the churn is even more frequent.
Middle Class Purchasing Power. In 1973 at the end of his fourth year of teaching, my dad got a mortgage for a $34,000 home (the precise median home price in America that year) based on his $11,000+ annual income. His mortgage fit squarely into the “three times annual income” calculation that banks use in determining how much home a borrower can afford. Fourth year teachers in America today, by comparison, effectively cannot consider a home priced at the national median of $242,300.
Life Expectancy. When Baby Boomers began entering the workforce in the late 1960’s, the average American lived for 69.7 years. Today, the average US resident can expect to live a decade longer (to 79.3), at minimum tripling one’s “retirement” years.
With a few decades of historical perspective, two things become clear: the first is how good teachers’ total compensation was a generation ago and second is how broken the system is becoming now. A teacher entering the classroom today benefits far less from the early stability and purchasing power of his career choice than a teacher in 1969. Even without a degree in actuarial math, it is obvious that retirement benefits become unsustainable when making an extra ten years of payments per average recipient.
Moreover, it is stunning how well the total compensation package for a teacher lined up with workers’ priorities of the day—job stability, a middle class lifestyle, and a secure retirement that one dared hope would have a long horizon. In fact, it makes me both frustrated and jealous for how much of all of those former pillars of the American Dream have evaporated, even from our lexicon of aspiration, just a generation later.
Where do we begin on the path to building a pension system that doesn’t further short-change Millennials?
I would argue we should start with a new set of givens. If job mobility is a given, how can a pension system work with rather than against that reality? If teachers need more cash earlier in their careers to get a foothold in the middle class, what are the implications for the overall structure of compensation? If those entering the classroom today will comfortably live into their 80s, what promises are we prepared to make now and keep through 2070?
I don’t have the answers and I’m saddened that almost any change to the pension system will result in a lesser package going forward. Perhaps that is the reason teachers have not been proactive in re-defining pensions and compensation more broadly. The data shows that this inaction is costing the profession. Since 2008 teachers in 21 states have found themselves with an increase in required contributions while facing reduced benefits, disproportionately affecting newer cohorts of teachers.
An immediate step must be to listen carefully to those early in their careers today. As a starting point, I offer the ideas of Jacob Pactor, a fifth-year teacher from Indianapolis:
Unions should help retain [newer] teachers by fixing voluntary retirement plans. Until I've taught for 15 years in my current district, I'm not vested in a retirement plan. That structure disincentivizes teachers of my generation from staying. Teachers should vest based on classroom performance. Unions can lead on this and incentivize effective teachers to stay by linking voluntary retirement plan contributions to classroom performance. This would encourage more effective teachers to stay in the classroom longer.
Teachers evaluated as highly effective should vest immediately with a higher percentage and with the opportunity for higher matching contributions. If McDonald's can do it with a "supersized 401(k) match" so can schools. Those matching contributions should be extended to all teachers, but at tiered levels: for example, highly effective teachers receive a five percent match of their pay, effective teachers receive three percent, and teachers deemed ineffective lose their district's matching opportunity until they improve.
I’m sure that Jacob’s words sound nothing like my dad’s would have in the early 1970s or today for that matter. Those generational tensions are natural and important to surface. My dad is all set. If we’re going to solve the pension crisis for the long term and in the best interest of teachers, more Millennials like Jacob need to enter the conversation.