Sterling Terrell

smart ideas from books (mostly)

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Are You Sick of Highly Paid Teachers?

Are You Sick of Highly Paid Teachers?

As I write, there is an email forward and social media post that is floating around by the same title.

It asks, “Are You Sick of Highly Paid Teachers?” and then goes on to show that, actually…teachers are not paid enough.

I say: Teachers are paid plenty.

While that may or may not be true 😉, the economics of the article does deserve a closer look.

In full, the note says:

Teachers’ hefty salaries are driving up taxes, and they only work 9 or 10 months a year! It’s time we put things in perspective and pay them for what they do – babysit!
We can get that for less than minimum wage.

That’s right. Let’s give them $3.00 an hour and only the hours they worked; not any of that silly planning time, or any time they spend before or after school. That would be $19.50 a day (7:45 to 3:00 PM with 45 min. off for lunch and plan– that equals 6 1/2 hours).

Each parent should pay $19.50 a day for these teachers to baby-sit their children. Now how many students do they teach in a day…maybe 30? So that’s $19.50 x 30 = $585.00 a day.
However, remember they only work 180 days a year!!! I am not going to pay them for any vacations.

LET’S SEE….

That’s $585 X 180= $105,300 per year. (Hold on! My calculator needs new batteries).

What about those special education teachers and the ones with Master’s degrees? Well, we could pay them minimum wage ($7.75), and just to be fair, round it off to $8.00 an hour. That would be $8 X 6 1/2 hours X 30 children X 180 days = $280,800 per year.

Wait a minute — there’s something wrong here! There sure is!

The average teacher’s salary (nation wide) is $50,000. $50,000/180 days = $277.77/per day/30 students=$9.25/6.5 hours = $1.42 per hour per student–a very inexpensive baby-sitter and they even EDUCATE your kids!) WHAT A DEAL!!!!

Make a teacher smile; repost this to show appreciation for all educators.

Update: I’m glad that many people have shown their support for teachers by reposting this note, but I am not the original author.  I received this as an anonymous chain letter email, and I wanted to share it to support the public workers of Wisconsin.

While this note is seemingly clever and cute in its own way, it has a problem.  It was written by someone with no grasp of economics.  Not only does the note only discuss salaries, it completely excludes the entire notion of fixed costs.  On this account, the note should not be taken seriously.

Let’s look at it.  And for the sake of confusion, assume that the numbers presented in the note are actually correct.

The note says that in the USA, a teacher’s average salary is $50,000 per year.  But, if teachers were just paid like daycare workers or “inexpensive babysitters,” making between three dollars an hour and minimum wage, they would be making between $105,300 and $280,800 per year.

Well.  This implication begs the question:  Why don’t daycare workers, working for a daycare that charges $64 per day, per student, make $280,800 per year, or more?

The answer is fixed costs:  Quite simply, salary is not the only expense that a school has.

Said differently, schools that take in X dollars in revenue do not pay out X dollars in salary.

If 30 parents pay $8 per hour, or $64 per day (for an 8 hour day), to put their child in daycare, for a total of $1,920 per day — the teacher is not paid $1,920 per day.  There is more to operating a school than that.  First, there is the cost of the building that has to be built and financed.  Utilities must be paid.  Insurance costs have to be taken into account.  A maintenance crew must be retained for building repairs and cleaning.  A bus must be bought if the children ever wish to take a field trip.  An administration staff must be kept.  Computers and software must be purchased.  And most employees will require the cost of health benefits, social security taxes, and retirement.

In contrast, many people would probably consider it a bargain to educate students for $9,360 ($280,800 / 30 students) per year as a good deal.  This is because as late as 2009, Houston school district’s stated per-pupil cost was $8,418.  Los Angeles reported a cost of $10,053 per pupil, Chicago was $11,536, and the District of Columbia $17,542.  But, as the Cato Institute reports, these numbers are actually guilty of the same problem: In many cases, school districts leave out many fixed costs from reported statistics.  When all costs are added to the figures, Houston’s per-pupil cost jumps to $12,534, Los Angeles goes to $25,208, Chicago to $15,875, and the District of Columbia rises to $28,170.

The entire rationale behind this popular note is wrong.  Prices are not determined by false analogy.

Just as easily, one could make a similar mistake in regard to both truck drivers and merchant ship captains.

Tractor-trailer truck drivers are in charge of transporting one tractor-trailer over long distances.  For this, tractor-trailer drivers make, on average, $44,873 per year. Therefore, merchant ship captains, who routinely are in charge of transporting the equivalent of 15,000 tractor-trailers, should be paid approximately $673,095,000 per year ($44,873*15,000).

What misguided reasoning.

As I said, prices are not determined by false analogy.

In the absence of intervention, prices are determined by the supply of, and the demand for, goods and services.

The price of labor is no exception.

Saying, or implying, otherwise is simply false.

This post was first published by LvMI Canada.

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Filed Under: PotpourriTagged With: #Economics, #Teachers

The Eccentric Economist

The Eccentric Economist

Everyone knows serious academics can be odd.  You probably even struggled through a few of their classes back during your days in academia — as nearly everyone has a story to tell about some odd professor that couldn’t be bothered to comb his hair or take the ornate wicker basket off the front of his single speed bicycle from 1980 that he still rides around campus.

In reality, maybe we should all have a soft spot in our hearts for the eccentric.

Maybe it’s because we find their acts amusing, maybe it’s due to the good stories that result, or maybe it’s because we have all been accused of a few eccentricities ourselves.

The question I ask is:  What can we learn from them?

If you are looking for eccentricities in the world of economics, look no further than Thorstein Veblen.

Born on the frontier of Wisconsin in the mid 1800’s to Norwegian parents, Veblen was an enigma, to be sure.

Famous for his work, The Theory of the Leisure Class, published in 1899, Veblen approached economics in an erratic way.  The book became a bestseller for its satirical portrayal of the upper class.

A telling excerpt exhibits his quirkiness and writing style:

“A certain king of France…is said to have lost his life through an excess of moral stamina in the observance of good form.  In the absence of the functionary whose office it was to shift his master’s seat, the king sat uncomplaining before the fire and suffered his royal person to be toasted beyond recovery.  But in doing, he saved his Most Christian majesty from menial contamination.”

Stories of Saudi royalty reaching over steaming teapots for the telephone to call the tea-boy — to come and pour more tea, come quickly to mind.

However, the success of the book made Veblen more notorious than popular — and, unfortunately, found him more acclaim as a satirist than a serious economist.

In his writings, Veblen held both contempt for the uselessness of the businessman and a dislike of Marxism, and wrote critically on the economics of the “leisure class” while, after taking a Ph.D. from Princeton in 1884, lived at home for the next seven years, “unable to find work.”

In every way, he approached the world as an outsider, looking at odd things everyone else took for granted.  Opposed to the traditions of normalcy, it is even said that he frequently gave all of his students the same grade, regardless of their work.

Robert Heilbroner, in his 1953 book, The Worldly Philosophers, describes Thorstein Veblen in this way:

“As might be expected, he was a mass of eccentricities.  He refused to have a telephone, kept his books stacked along the wall in their original packing cases, and saw no sense in daily making up the beds; they were thrown back in the morning and pulled up again at night.  Lazy, he allowed his dishes to accumulate until the cupboard was bare and then washed the whole messy heap by turning the hose on them….  Curiously sadistic, he was capable of such meaningless practical jokes as borrowing a sack from a passing farmer and returning it to him with a hornet’s nest inside.”

Veblen began his academic career at the University of Chicago but after spending 14 years there, left in 1906 for Stanford.   His wife left him in 1911, reportedly due to not only his unbearable nature, but his proclivity for extramarital affairs, as well.  Unapologetically, he once even traveled abroad with another woman.  At the time of the divorce, Veblen moved to the University of Missouri.  He married again in 1914 but his new wife was sent away for having “delusions.”

While at Missouri he worked on his new book The Higher Learning in America and later Imperial Germany and the Industrial Revolution.

When World War I came, Veblen, in service to his country, was put into an insignificant post at the Food Administration.  While there, his ideas had their usual stamp of style.  When searching for a wartime use of “butlers and footmen,” Veblen said:

[they] are typically an eminently an able bodied sort, who will readily qualify as stevedores and freight-handlers as soon as the day’s work has somewhat hardened their muscles and reduced their bulk.
1918 brought Thorstein Veblen to New York where he wrote for Dial Magazine and tried to teach again.  Eventually, he went back to California alone and withdrew into himself even further, passing away just before the Great Depression began.
In final retrospect, Robert Heilbroner notes of Veblen:
“It was neither a happy or successful life on which to look back.”

How sad.  It sounds like an odd and petty old man simply aged out of a broken life and died alone.

What a waste, some people might say.  But maybe not.  What can we learn from Veblen?

Don’t take yourself so seriously.  Do what you love.  Love what you do.  Have fun with life!

And never — never — cheat on your wife!

First published by American Thinker.

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Filed Under: PotpourriTagged With: #Eccentric, #Economics

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