Last month we released “The Pension Pac-Man: How Pension Debt Eats Away at Teacher Salaries,”which used data from the Bureau of Labor Statistics to show that, like the proverbial Pac-Man, the rapidly rising costs of teacher retirement and insurance benefits are gobbling up funds that could be spent on salaries. The BLS released new data for 2016 last week, and the trends are all in the wrong direction:
- Since 1994, teacher salaries have not kept up with inflation, but total teacher compensation has. That’s because benefit costs are rising much faster than inflation and eating up larger and larger shares of teacher compensation. As a share of total compensation, teacher salaries have never been lower. For the average teacher, their salary is only 68.8 percent of their total compensation; benefits consume the remainder.
- Thanks in part to the Affordable Care Act, insurance costs have finally begun to moderate for all workers, including teachers. Retirement costs have not.
- Teacher retirement costs hit new all-time highs in 2016, in both dollar terms and as a percentage of teacher compensation.
- Retirement costs tend to be higher in the public sector, but retirement costs for teachers remain much higher than for any other profession, including other public-sector workers. While the average civilian employee receives $1.74 for retirement benefits per hour of work, public school teachers receive $6.67 per hour in retirement compensation. As a percentage of their total compensation package, teacher retirement benefits eat up more than twice as much as other workers (10.9 versus 5.1 percent).
As I note in our full report, teachers won't ever see most of this money. It's money that must be used to pay down unfunded pension liabilities, not actual retirement benefits. On average, for every $10 states and districts contribute toward teacher retirement, $7 goes toward paying down past pension debt, and only $3 goes toward benefits for current teachers. Without a change, teachers will continue see the Pension Pac-Man eat further and further into their take-home pay.