Academic journal article Social Education

Teachers Can Be Millionaires, Too: Two Economic Educators Outline Strategies for Wealth Building

Academic journal article Social Education

Teachers Can Be Millionaires, Too: Two Economic Educators Outline Strategies for Wealth Building

Article excerpt

TEACHERS OFTEN REGARD themselves as unlikely candidates for financial success, chiefly because they earn low starting salaries. But people of modest means can build wealth over time if they adhere to certain simple strategies. Our goal here is to explain this point as it applies to K-12 teachers. We begin, however, by acknowledging the salary constraints that might make "wealth building" seem, at first glance, to be an impossible dream for teachers.

According to the Bureau of Labor Statistics (BLS), the average annual (2001) salary of a person with a bachelor's degree in education after one year of full-time employment was $27,600. The American Federation of Teachers made a somewhat higher estimate of the national average salary for beginning teachers in 2003-2004: $30,496. By both estimates, a teacher's starting salary is well below the average starting salary for other professions. For example, the BLS estimated that the average starting salary of people with degrees in engineering was $47,900 for 2001. For people with degrees in business and management, the average starting salary was $41,000; for people with degrees in the health professions, it was $39,400; for people with degrees in the social sciences, it was $33,900.

These numbers don't tell the whole story. Teachers enjoy some benefits that are uncommon in other professions. One is simply that as teachers gain experience, their salaries go up, predictably. According to the American Federation of Teachers, the average salary of a teacher in 2002-2003 was $45,771. And apart from steady salary increases, other factors also help to explain why people are willing to work as teachers despite the low salaries they earn at the outset.

* Many teachers work in school districts that provide defined-benefits pension programs. Such retirement packages are very rare in the private sector. Today, 92 percent of pension programs are defined-contribution programs whose value depends on the stock market. Unlike defined-benefit programs, they don't guarantee any particular level of retirement income.

* Many teachers work in school districts that provide generous health insurance. In many districts, teachers' direct contributions for health insurance amount to little or nothing.

* For teachers with children, teaching schedules are family-friendly. Moms and dads who teach can be home to care for their children on holiday breaks. Many also spend their non-teaching time during the summer with their families.

* Jobs in teaching tend to be secure. Teaching positions are not much influenced by the business cycle. While teacher layoffs and dismissals sometimes occur, they remain rare.

* Many teachers are able to retire in their early or mid-50s. This is because teachers often are provided with good retirement and health-care packages.

* The work teachers do is often satisfying. While grading papers is often tedious and managing a classroom can be challenging, many teachers are able to teach courses they enjoy to students who, for the most part, enjoy learning. Teachers often work with colleagues who share a sense of commitment and community. Many people in other professions lack a similar sense of fulfillment.

* Teachers often earn other income from part-time jobs or businesses. Many teachers often work at non-teaching jobs during summers. Many manage to run their own businesses, farms, and ranches, even during the school year. Some teachers earn more income from their summer jobs and businesses than they do from teaching.

The Three Rules of Building Wealth

Still, salary issues loom large for teachers. Is it realistic to suppose that, on their salaries, teachers could engage in building wealth? How could they do it? And is building wealth something that teachers should care about? After all, many would assert, they didn't get into teaching for material rewards.

Wealth building is good for individuals, families, and society because it improves people's quality of life. …

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