It’s no secret that we need to get more STEM teachers into our classrooms. These fields are high-growth and high-paying. But there’s a problem: we currently don’t have enough STEM teachers already in classrooms to get today’s students interested and prepared for these fields.
So how do we get more STEM teachers? One idea is to convince folks leaving a STEM job to start a second career in the classroom. 100Kin10 and Troops to Teachers are two among many organizations that recruit nontraditional candidates into schools.
But there’s a catch for these would-be teachers.
Career-changers, particularly in STEM fields, would most likely have to accept both a significant pay cut and lower retirement benefits.
To most people, the decrease in salary is probably obvious. But the lower retirement savings could come as a shock. This happens because these individuals will have two separate retirement saving plans. And, unfortunately, they will be unlikely to realize the full benefits of either.
Most likely someone who is switching careers from the private sector to become a teacher already has a 401k or similar retirement plan to which she and her employer have contributed. These plans are pre-tax and grow through regular contribution and returns on investment. However, to grow significant wealth these plan depend on regular contributions that can then grow through the life of a worker’s career.
For many, the pension plan they enroll in as a teacher won’t be enough to make-up for the lost years of contributing toward their 401k. This happens because teacher pensions take a long time to accrue wealth. On average, it takes a 35-year-old new teacher about 19 years for a teacher to build a pension that is worth as much as the amount of money they put into it through pre-tax paycheck contributions. It will take 13 years for a 40-year-old new teacher.
This carries serious consequences for a teacher who started teaching mid-career. She will need to teach a long time just to avoid taking a loss. To make matters worse, her 401k from her previous career will have grown only through interest while she was in the classroom. In all likelihood, a mid-career teacher will have far more money in her retirement if she had remained in her previous job, or if she had taught for her entire career.
With these facts in mind, changing careers to teach is a far more costly transition than previously thought. It’s clear that we need more STEM teachers in our schools. What’s not clear, is why those teachers who have years of professional experience in the field should have to take a significant pay cut and have their retirement benefits slashed in order to help our students. It’s unfair and makes it more difficult to recruit people with years of real-word experience to teach STEM.
States will need to develop innovative ways to ensure that highly valued mid-career STEM teachers do not face two barriers to the classroom: lower salaries and lower retirement savings. One way could be for states to forgo the pension system and instead contribute to the 401k of teachers who changed professions mid-career, or at least give teachers the option to do so. This way these teachers can continue to grow their 401k investments and avoid significant losses to their retirement funds.