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“Risk-free” jobs?

Let me try to explain the argument regarding the strike with the Chicago Teachers Union using some financial terms.  If teachers have a “risk-free” job (i.e. can’t be terminated) then there must be a discounted rate to offset that risk. It’s like investing, higher risk yields higher returns. You can put your money in the stock market, which we all know is volatile, or you could put your money in a Treasury Bond. The difference is peace of mind. For more peace of mind, you have to pay for that. The graph below, from the Washington Post, shows how payrolls have changed since the economic crisis. Construction pay has been hit the hardest while education/health have steadily increased over this time period.


Another question for me has to do with the incentive programs being suggested, are teachers risk-averse or risk-seekers?  People often say that it takes a special kind of person to be a salesperson.  Sales jobs are synonymous with huge incentives and typically are risk-seekers.  These people are driven by challenges to “earn” their living and usually love their job for these exact programs.  So the question isn’t do we want our teachers to be like salespeople, but do teachers even want these incentives?

  • By Molly McCarty on 9.19.2012 at 10:27 am

    My senior year of high school the teachers’ union, which teachers are required to join upon being hired by many school districts, began protesting. There were threats of a strike but it never really came to fruition. The CTU strike is of a very similar nature. I think that an incentive-based pay program could be effective, especially because it would reward performance which has been lacking over the past 15 years or more. The issue is that many already have pensions, benefits and hefty salaries. So where do you go from there with incentives? Would the industry do away with tenured positions? Would the unions allow for this method of compensation?

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