Commentary and Criticism about the National Education Association
We have absolutely no affiliation with the National Education Association and do not represent its views in any way, shape or form.
“Teachers don’t go into their field to get rich. But they have reasonable expectations of earning a middle class living, being able to own a home some day and raise a family.”
Lawrence Mishel, President, Economic Policy Institute
THESIS OF BLOG POST – There is something more going on here.
The NEA correctly identifies a gap in pay between teachers and other workers. But the reason that teachers have fallen behind is much more complex than the NEA realizes. Stronger unions, collective bargaining and more funding for public education will only go so far towards solving the problem. To understand the real reason behind the erosion of teacher pay, you actually have to go back to 1913. This was the year that the Federal Reserve Act was passed and signed into law by President Woodrow Wilson.
THE NEA’S CASE – Accurate but it’s only part of the story …
I started thinking about this pay gap issue after I read an article by Robert Rosales on the NEA Today website called “Moonlighting” (January 2, 2018).
He makes an excellent case that teachers are not getting paid nearly enough to live a typical middle class existence.
“Nationwide, many public school teachers … work nights and weekends to supplement the income they receive from teaching … They are simply trying to keep their financial boats afloat.”
Rosales cites two studies which support his point about low teacher pay.
I didn’t read the details of these studies but I do accept them as most likely true based on my own research into the pay gap issue (my research appears below).
But the problem with Rosales’ article is that it only explains part of the story.
For instance, he quotes Sylvia Allegretto (a labor economist at the University of California, Berkley) who blames the gap on the
“… weakening of teachers’ unions, pervasive anti-government sentiment, defunding of public education and the spread of charter and private schools …”
Unfortunately, these words are just classic “NEA-speak” for what ails public schools today. They simply do not get to the heart of the issue.
On the other hand, Lawrence Mishel (president of the Economic Policy Institute) comes closer to the truth when he recognizes that:
“Collective bargaining … [is] not enough. Even unionized teachers have seen their pay erode relative to other workers.”
By realizing that unions are “not enough” to solve the pay gap issue, he is acknowledging that there is something else going on here.
WHERE THE NEA IS CORRECT: US Teacher Salary vs. Average US Wage
Below you will find my calculation which supports the NEA’s contention that teachers have fallen behind in their pay.
As you will notice, I am only considering data from the years 1971 to 2015.
The importance of the year 1971 will be explained later. As for why I stopped at 2015, more current figures were not available for all of the indicators I report about in the Research section of this blog post. Also, I don’t believe that gathering data for 2016 & 2017 would have resulted in any significant difference in my eventual conclusion.
So here is the data on teacher salary and average wages:
Average Public Teacher Salary (1970-1971 school year) - $9,268
Average Public Teacher Salary (2014-2015 school year) - $57,379
Percentage Increase in Average Public Teacher Salary (1971 – 2015): 619%
Now compare this increase (619%) to the average increase of general worker wages in the United States during that same time period.
Average Wage (1971) - $6,497.08
Average Wage (2015) - $48,098.63
Percentage Increase in Average US Wage (1971 – 2015): 740%
Conclusion: Obviously the NEA is correct. According to my calculation, the average US wage from 1971 - 2015 was 121% higher than the average teacher salary.
WHAT IS REALLY GOING ON HERE Pt. 1 – The Federal Reserve creates money.
Any possible connection between the passage of the Federal Reserve Act in 1913 and today’s teacher pay gap may, at first blush, appear ludicrous. How could some 100-year-old piece of legislation possibly affect teachers in the present day?
The detailed figures that appear in the Research section below should make this connection clear. But before introducing them, you need to understand some things about the Federal Reserve and what it does. I am going to be simplifying to a certain degree when I talk about the Federal Reseve, but this does not have any impact on the accuracy of my explanation. If you actually want details about how the Federal Reserve operates, you can find a great video at the Peak Prosperity website.
For the purposes of this post, I am content to just supply the basics.
So here are the basics:
The Federal Reserve has the ability to create money (dollars). This means that it is responsible for the total supply of dollars that currently exists. I am referring to all the money in your wallet, in your bank account, in the cash registers of the stores, etc. All of the money is out there because the Federal Reserve has created it and put it out there for our use.
WHAT IS REALLY GOING ON HERE Pt. 2 – The Federal Reserve causes inflation
But if the Federal Reserve can just create money, why not just create it in infinite amounts, give it to all US citizens and make everyone rich?
Because it runs into a problem if it really attempts this. You see, the more dollars it creates, the less each dollar is worth.
This is basic economics.
For example, if the total supply of money is $1,000,000 (and this is equal to the total value of things out there to buy with those dollars) and the Federal Reserve doubles this money supply to $2,000,000 (and there is no increase in the total value of things out there to buy), then the value of each dollar has actually been cut in half.
Because we have the same exact things to buy but we have twice as much money out there to buy them with. This means that the price of all of that stuff to buy will double (which is the same thing as value of dollar cut in half).
That is why the Federal Reserve cannot print infinite amounts of dollars. The more it prints, the less each dollar is worth.
You experience this declining value of the dollar as inflation. It is not that prices are going up at the grocery store – although that is how it appears at first. In reality, it is the value of the dollar that is going down. When the value of the dollar goes down, you have to use more dollars to buy the same thing. .
So it appears to you that the price went up.
1971 – THE EROSION OF TEACHER SALARIES BEGINS
I indicated earlier that 1971 was significant. The reason is that on August 15 of that year, President Richard Nixon “closed the gold window.” This meant that, going forward, no one would be allowed to turn in paper dollars to get gold. Of course, US citizens had not been able to do this for decades but now it also applied to foreign governments as well.
Starting on August 15, 1971, paper dollars were just that – paper and nothing more.
I can hear so many of you saying:
“So what? When I go to the store, my paper dollars are accepted. A dollar is a dollar. Why do I care if I can’t get gold for it? Why would anyone want a lump of gold? You can’t buy a cup of coffee with a lump of gold. You can’t buy groceries with a lump of gold. What is the use of a lump of yellow metal?”
Remember what was said earlier about inflation?
Well after 1971, the Federal Reserve was able to create money at will. Where before it was restricted from creating dollars based on how much gold it had to back them up, now it was free and clear.
As the figures in the next section illustrate, Nixon’s actions in August of 1971 led to the unintended consequence that teachers and all middle class Americans are now facing.
The reason why teachers are now forced to “moonlight” to survive can be traced back almost 50 years.
MY RESEARCH – Gas, New Cars, New Homes, College Tuition
I established earlier that teacher salaries increased 619% from 1971 to 2015.
That kind of looks like a large number until you start comparing it with how much the cost of other items have gone up since 1971. To highlight just how meager it actually is, consider the comparative increases below:
Gallon of gas (1971) - $0.33
Gallon of gas (2015) – $2.51
Percentage Increase in a Gallon of Gas (1971 – 2015): 760%
Average Cost of New Car (1970) – $3,742
Average Cost of New Car (2015) – $33,560
Percentage Increase in Average Cost of New Car (1971-2015): 897%
Median New Home Price (December 1971) - $25,300
Median New Home Price (December 2015) - $297,100
Percentage Increase in Median New Home Price (1971 – 2015): 1,174%
Tuition, Room & Board Public Institution (1970-71 School Year) - $1,287
Tuition, Room & Board Public Institution (2014-15 School Year) - $21,728
Percentage Increase in Tuition, Room & Board (1971 – 2015): 1,688%
THE SQUEEZE – TEACHERS (AND THE MIDDLE CLASS) GET SCREWED
These numbers should speak for themselves.
Teacher salary only increased by 619% while the increases in gas, cars, homes and tuition went up anywhere from 760% to 1,688%.
Is it any wonder that teachers are having a hard time keeping up?
The same can be said for workers of all types. Although they did somewhat better than teachers (up 740%), this is still below the price increases we researched.
The bottom line is that all middle class Americans are having difficulty keeping up.
When you hear the expression “The rich are getting richer and the poor are getting poorer,” you are not getting a full picture of modern America. That expression implies that everything must be fine with the middle class.
Well it’s not.
The middle class has been continually squeezed since at least 1971. Salaries simply have not kept up with the cost of living.
CONCLUSION: Stop Rallying for Social Justice – It’s Time to End the Fed
Usually this blog criticizes the NEA’s policy views and positions. This time we are sort of on the same page.
But only sort of….
The NEA thinks it can solve this salary problem by organizing politically and lobbying for more funding for public education. It wants a stronger union that can collectively bargain for better wages and benefits for teachers.
Unfortunately, this is only going to go so far towards solving the problem. It is merely a temporary patch - a band-aide at best.
As long as the Federal Reserve continues its policy of debasing the US currency, teachers and other middle class income earners will fall farther and farther behind.
So maybe the NEA needs to change its tactics.
Instead of spending so much time, energy and money worrying about social justice issues (like gathering in Washington to support the DACA Dreamers), the NEA should be lobbying Congress to stop the destructive policies of the Federal Reserve.
NEA members should become Economic Justice Warriors rather than Social Justice Warriors.
Our rallying cry should be: END THE FED!
APPENDIX: Money Supply, Gold & the National Debt
As of August 15, 1971, US money was no longer backed by gold. This meant that the Federal Reserve could print as much money as it wanted.
Did this actually happen?
Yes, it did – in spades as they say.
US Money Stock (M2) in December 1971 - $710.3 billon dollars.
US Money Stock (M2) in December 2015 - $12,330.8 billion dollars.
Percentage Increase in US Money Stock (M2) from 1971 – 2015: 1,736%
Still another way to get an idea of the destructive policy of Federal Reserve money printing is to look at the price of gold. Before 1971, gold’s price didn’t change because countries could always turn in their dollars and get a fixed amount of gold from the US.
But after Nixon closed the gold window, the price of gold started increasing. It actually increased more than the supply of money.
Price of Gold (end of 1971) – $44.60
Price of Gold (end of 2015) – $1,060
Percentage Increase in the Price of Gold (1971 – 2015): 2,376%
Of course, it is important to keep in mind that gold is not really increasing in price. As more money is printed and its supply increases, its value decreases. This means that you need more dollars to buy the same amount of gold.
One final point concerning unintended consequences. Ever since 1971, the Federal Government has gotten quite reckless in its spending habits. It acted as if it had a credit card with no limit. This can clearly be seen if you look at the increase in the national debt.
National Debt (1971) $398 billion dollars
National Debt (2015) $19,573 billion dollars
Percentage Increase in the National Debt (1971 – 2015): 4,917%