(click on images to enlarge)

Quick note for people who feel they’re not good at math: These graphs show the percent change in people’s wages from the year before.

The figure 7.5%, on the left side of both graphs, means that in 2006 the “average” Irvington teacher received a 7.5% increase in salary over what he or she earned in 2005. That same year, the “average” employee of state and local government received a pay increase of 2.8%, while the “average” private sector employee received an increase of 2.5%.

To make things simple (I tutor pre-algebra – !):

Suppose it’s 2005, and we have three workers: a teacher in Irvington, a person working in the private sector, and another person working for state and/or local government.

Let’s say that each worker earns $100,000 for that year’s labor.

Here’s how things change the next year, 2006:

  • Irvington teacher now earns: $107,500.
  • State and local government worker now earns: $102,800
  • Private sector worker now earns: $102,500

The year after that (2007), here’s the situation:

  • Irvington teacher now earns: 115,562.50
  • State and local government worker now earns: $106,706.40
  • Private sector worker now earns: $106,087.50

After just two years, the Irvington teacher is pulling decisively ahead of both the private sector and the government employee – and this difference continues to compound over time.

The gap gets wider.

+++++

Arguably, the two graphs above tell our story.

First of all, by way of background, until very recently no one knew what the average teacher compensation actually was. Proposed budgets were extremely difficult to decipher, and the district flatly refused to tell voters – or the one board member who asked – what the average teacher was being paid. Contracts had to be FOILed, and the salary schedule was not published.

Average teacher salary was the one figure many people needed in order to make sense of the situation. Most of us aren’t accountants, and the arithmetic of percent increases and compounding over time isn’t intuitive.

All of that said, here is the story I think these charts tell:

  1. Prior to the crash, the district was paying salary increases to teachers that were in all likelihood far above the salary increases many or most Irvington taxpayers were receiving.
  2. After the crash, in a depressed economy, the district is still paying salary increases at least double what workers in the private sector are receiving (assuming they still have jobs) and nearly 4 times as large as the increases government workers are receiving (again, assuming the government worker still has a job).
  3. Irvington voters may have failed to notice just how large the district’s annual pay increases were in part because the annual increase in home value was even higher. We were in the midst of a boom, and (almost) everyone was getting richer. The financial reality of district budgets failed to register on voters (and the details of the budget were obfuscated by the administration).
  4. The crash changed everything. Home prices are now far below the level they were when voters were funding 7.5% wage increases and voting ‘yes’ on bonds.
  5. For their part, although Irvington teachers are still receiving annual raises double that of most taxpayers’ annual raises, they also, between 2008 and 2009, suffered a far steeper drop in their annual wage increase than private or government workers: from 7.5 to 4.5 on the day the 2006-2009 contract expired. Their increase decreased more. That matters greatly. People make financial decisions on the basis of projected future income, and suddenly, virtually overnight, teachers’ projected future income changed dramatically.
  6. Thus teachers feel they have made unprecedented concessions during negotiations for the new contract, while taxpayers feel they can’t afford to fund 4% pay increases when they themselves aren’t receiving anything close to 4% pay increases and the value of their homes has tanked.

Both are right.

Wages & Salaries: Private Industry Workers (FRED)
Wages & Salaries: State and Local Govt (FRED)

AND SEE:
4 is not 2

Average pension for new retirees: 2011
Compare and contrast: IBM raises & benefits

Hamilton Project Jobs Gap Calculator