Rick Melmer is leaving USD's College of Education to do more of the consulting work that he finds so profitable. But as he leaves, he suggests top students considering teaching as a career will put service over profit:
Rick Melmer, education dean at the University of South Dakota, said in a rural state, top students might be more likely to go into teaching to give back to their home town — “that whole idea of service” [Josh Verges, "Future Teachers Lag Slightly," that Sioux Falls paper, 2013.06.01].
Besides, says Melmer, South Dakota teacher pay isn't that low:
As for overcoming low teacher pay in South Dakota, he said, “The salaries in the Midwest are probably a little suppressed in all areas, so maybe there’s not that big a discrepancy” [Verges, 2013.06.01].
One of Melmer's consulting gigs involves helping implement Common Core standards. I assume he'll be in charge of the standards on wishful thinking, not math. Melmer's mights and probablies don't stack up against the real data on regional teaching salaries:
| State | Average teaching salary | Per-capita state taxation | Salary in pocket after state tax | Cost of living (US avg = 100) | Adjusted post-tax salary power | Additional purchasing power from teaching here instead of SD |
| IA | 51528 | 3660 | 47868 | 96.1 | $49,811 | $13,876 |
| MN | 56268 | 4727 | 51541 | 104.4 | $49,369 | $13,435 |
| MT | 49999 | 2089 | 47910 | 102.1 | $46,925 | $10,990 |
| ND | 47344 | 3733 | 43611 | 102.1 | $42,714 | $6,780 |
| NE | 48931 | 3853 | 45078 | 94.1 | $47,904 | $11,970 |
| SD | 39580 | 3035 | 36545 | 101.7 | $35,934 | $0 |
| WY | 57920 | 3721 | 54199 | 100 | $54,199 | $18,265 |
And let's look at overall average wage data from the neighborhood that we discussed on Sunday:
| State | Average weekly wage | Rank |
| Iowa | 756 | 41 |
| Minnesota | 915 | 15 |
| Montana | 689 | 48 |
| Nebraska | 742 | 43 |
| North Dakota | 872 | 18 |
| South Dakota | 683 | 50 |
| Wyoming | 828 | 24 |
Melmer is just down the street from truth: three neighboring states rank with us in the bottom ten of average wages. But three other neighboring states are in the top half of that category. And whatever is happening in the general labor market, South Dakota's teaching salaries are still significantly lower than anywhere else, from 20% lower than in North Dakota to 46% lower than in Wyoming.
With a pay discrepancy that big, Melmer has to resort to the South Dakota strategy to keep teachers: appeal to notions of "service" and "home town" loyalty—in other words, go for the guilt trip.
Hey cut Melmer some slack - he does teaching, man, not math or economics.
Cory, I noticed your SD cost of living index was 101.7... but the SD website you linked to indicated it was 98.0 - the 101.7 was for retail merchandise. An honest mistake, I'm sure, but perhaps you should double check your figures.
I'm surprised South Dakota's website is using ACCRA COLI scores - they only measure urban areas, of which, South Dakota has precious few.
The Census Bureau put the Median household income for SD at $48,010. The Median household income for the US is $52,762. So our median income lags behind by $4,752.
Put another way, our median household income is 91% of the national median household income.
Our median value of owner-occupied housing is $127,000 compared to $186,200 for the nation. So our housing is 68% of the national median.
Sioux Falls heavily skews the statistics for South Dakota - the median household income is nearly that of the nation ($51,831), yet housing is still significantly cheaper than the nation at $149,600.
I like looking at the median because it helps control for the zingers in income and housing (ie doctors).
However, we have to be very careful about what COLI is used to make apples-apples comparisons. ACCRA is good for comparing urban areas. It's not good at comparing states with significant rural populations.
Oops! Sorry about that, Wayne! I copied the chart from my March post on teacher salaries and the new "Northern Exposure" teacher scholarships. And it appears I did run down the far right column, not the annual average column. Interestingly, as I look at the columns, it appears that everywhere but in Wyoming, that Misc. column is about 2 points above the composite column.
Urban vs. rural: what's your sense, Wayne: would the rural differences make a net increase or decrease in cost of living?
By the latest ACCRA figures for 2013 Q1, South Dakota's COL is at 97.9, beating MN, ND, MT, and WY, but not as good as NE's 91.4 and IA'a 94.2
A thought for you on teacher pay Corey.
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I invest a million in a biz, take a 6% return and pay all my overheads(health care, FICA etc) and net out somewhere around $30,000. You gross out at $37,000 plus the $12,000 health, ?? Retirement, 7% shared by employer ss about plus $2500 and you are over $51,500, $21,000 more than my 1Mil investment returns. How do I pay more wages without further lowering my poverty income?
My sense is that property values are lower in rural settings by a considerable margin (the median home price in Geddes is $27k for instance, where their median household income is $26k). As one of the largest factors in cost of living (theoretically it should account for 1/3rd take home pay), properly weighting property values can make a huge difference in COLI scores.
Wayne, for guys like me who view a house as a home, those lower porperty values are great. But for most rational actors in the marketplace, aren't those lower property values one more deterrent to setting up shop here? City folks with $300K in home equity can trade even across town or move to a lower market. The guy in Geddes who sells his house doesn't get enough money to move anywhere else but another small, low-value town.
If property values drove migration, you'd think we'd see more movement to more affordable rural areas. But my post this morning on rural population decline shows folks trending in the opposite direction, toward the places where we figure property values must be higher. Chickens and eggs, property values and migration: which drives which?
Les, I'll admit that teaching suits my risk-averse soul better than the capital investment you're talking about. But that doesn't change the wage dynamic that makes it easier for folks committed to teaching to pick anyplace else over South Dakota... and it doesn't change the fallacy of Melmer's wishful math.
You've got a valid point, Cory. Most migration into Geddes (minimal as it is) is people from California or Kentucky retiring, selling off their $500k home, and buying a home outright (with $470k left in cash assets). For the most part they're not business creators. They're here to enjoy retirement.
There's no doubt that other states pay teachers better, and that those teachers will have more real disposable income. The true question is: how much more? We can't really know that without a better COLI, and without knowing what benefits / retirement packages are like.