Thursday, December 8, 2011

It's the Poverty, Stupid: Part 2

This is the second part of a two part series. The first part discusses poverty in general, especially as it applies to the Occupy Movement. The second part relates poverty to the link between academic achievement and the economy.

Let me say this very clearly. The 1% are pretty much irrelevant to the education of (most of) the 99%. There is a motivating myth in our society that hard work will pay off financially. True to human nature, people cannot seem to resist putting everything in pendulum-swinging, either-or terms. Get an education and get rich. Forego an education and be poor. As if 1% of the population is rich and the full 99% are not. The Occupy movement got the Gallup people to wondering, so they melded 61 surveys to come up with a demographic comparison of the 1% and the 99%. What they found is startling.

The official top 1% of American households in 2010 includes those with incomes of at least $516,633, according to data from the Tax Policy Center as reported in The Washington Post.

Unsurprisingly, 49% of the 1% have postgraduate degrees, compared with 16% of the 99%. We have all heard critics of the Occupy activists say that if they stopped occupying and worked as hard as the 1%, they too might have a chance at becoming the 1% (a mathematical impossibility, given the nature of percentages, but never mind).

This is not to say that college degrees guarantee vast wealth. To the contrary, only a small fraction of all Americans who report having a postgraduate education (1.5%) or an undergraduate degree but no postgraduate education (0.8%) fall into the top 1% category. However, the comparable rates are many times smaller -- no greater than 0.3% -- at all other educational levels.

Let's get this straight. Although nearly half of the 1% have postgraduate degrees, only 1.5% of postgraduate degree holders are members of the 1%. In other words, the 1% did not get there by virtue of their education; they were born into the 1%.

Maybe we should look at the median knowing full well that raising the median income will also move the median. There will always be an amount that 50% fall above and 50% fall below. The 2010 median income in the US is $49,445. Instead of obsessing on statistics, we should focus ensuring that all students have a fair shot at reaching their potential. Fact is, poverty dramatically reduces those chances. Fact is, Dad's socioeconomic status is the major predictor of children's socioeconomic attainment. Fact is, worthless either-or polarities aside, education is still the best route out of poverty.

More generally, college education is strongly correlated with household income. Nine percent of Americans earning less than $20,000 per year are college graduates; this rises to majorities of adults in all income groups above $100,000. Similarly, few adults in low-income households have postgraduate education, and this rises only into the teens among middle-income adults. But it sharply increases among those earning $100,000 or more, peaking at 49% among those earning between $250,000 and $499,000, and those earning at least half a million.

What the rich do for their children is put them on a different “trajectory” of wealth.

some high poverty schools that were also high performing. These schools were able to lift student achievement, close gaps, and set their students on a trajectory of success.

The different trajectory includes different frames of reference, work approaches and loci of focus. Rich kids “inherit” a different ability to compete and different access to opportunity. Even the family junk mail is different. We could begin by funding all schools equally, ignoring the protests of those who say they do not want their tax money paying for other children, or those who hesitate to donate if they cannot designate which school receives the donation.

In the United States, we actually fund poor schools less than other schools. The highest performing countries do the opposite. More than that, the highest performing countries have less poverty because they invest in infrastructure designed to expand the middle class. In the United States, we are killing the middle class, and our student achievement will pay a dear price.

We could stop pointing to achievement outliers as feasible role models. Just because Abe Lincoln did it does not mean everyone can (and the corollary: it's your own darn fault if you don't). Every field has outliers. Not every highly talented cellist can be Yo-Yo Ma. Not every great tenor can be Pavorotti. Not every terrific actor can be Meryl Streep. Not every highly skilled computer geek can be Steve Jobs. Most of us do not realistically have a chance at being the 10%, never mind the 1%. If you make more than $138,000, you already make more than 90% of the population. $138,000 puts you in the top10%.

In my experience, success at high poverty and high performing schools is not based on merit pay, high stakes testing, vouchers, bureaucratic personnel evaluations systems, alternative certification, or any other glitzy idea that politicians seem to embrace so easily.

In fact, what American education needs most of all is a blessing high performing schools enjoy on an individual basis, a blessing high performing education systems take as a societal given, relational trust. Another disturbing fact: too many powerful stakeholders in our society are well-satisfied with the education status quo for their own self-interested reasons.

Saturday, November 26, 2011

It's the Poverty, Stupid: Part 1

This is the first part of a two part series. The first part discusses poverty in general, especially as it applies to the Occupy Movement. The second part relates poverty to the link between academic achievement and the economy.

Tracking the stories we tell each other can reveal societal and cultural priorities. When the middle class was big, strong and vibrant, preachers claimed that when God promised His people abundant life, he meant believers would be healthy and wealthy in today's world. Now that income inequities have never been greater, churchgoers do not hear the “prosperity” gospel so much.

On another front, the US Census Bureau recently modified the determination of poverty levels. However, as Aaron Task points out, media avoids covering the rising rates of poverty in America.

Rising poverty is a national tragedy and a brewing humanitarian crisis in America...Most groups saw their poverty rates increase using the new calculations, including married couples, whites, Asians, immigrants, homeowners with mortgages, those with private health insurance and the elderly...I didn't hear one word about this during the Republican Debate on Wednesday and you probably didn't hear much about it either...I'd like to take the rest of the so-called serious media to task for burying this story.

I get that poverty is a depressing topic and a change to how it's measured is a complicated story to tell. But I've never had a viewer tell me they want LESS depth or more 'infotainment.'

More than ever Americans want news organizations to focus on the hard stuff...instead of the salacious (Victoria Secret's runway show), the sensational (Sharon Bialek's press conference), the sophomoric (Rick Perry's 'oops' gaffe) and the ridiculous (anything about the Kardashians) developments that pass as "news" in our society.
Blaming the media is easier on the collective ego than each member of the 99% taking personal responsibility for their contribution to the problem. Media companies sell what they perceive consumers want to buy.
Bashing the press is great fun. But the fault, dear Brutus, is not entirely in our media stars or their corporate overlords...it's important for all of us to be aware of the messages we're sending to the media in the stories we watch, share, favorite and Tweet about.

Same with the Occupy Movement. The 1% did not cause the Great Recession all by themselves. Corporations had a lot of help from greedy members of the 99%. After all, the income line between 2% and 98% is merely $250,000. Remember median income means 50% make more and 50% make less. One reason for the backlash from the so-called 53% is that some of them are (or were) your next-door neighbors and their enablers such as real estate agents, financial advisers (read: salesmen), mortgage sellers, landlords, property managers, employers, et al, who take their cut and move on, leaving economic ticking time bombs in their wake. For example, in 2003 did any real estate agent tell prospective buyers NOT to buy because houses were so overpriced relative to the underlying demographic? No, like Pavlov's dogs, they drooled over the mere thought of those juicy commissions.

Remember what your mother said. When you point a finger at someone, there are three fingers pointing back at you. The story is told that Lord Chesterfield famously entered a contest to write the shortest possible essay identifying the biggest problem in the world. His response? “I am.” Members of the 99% who are actually serious must first look to themselves. For example, landlords need to charge fair rent relative to the typical income of tenants, instead of what the market will bear. Tenants need to take good care of other people's property. One-sided contracts must be rejected in favor of contracts that promote mutual benefit of both parties.

Wherever economic injustice is occurring, the 99% must make their power of their mass felt. For example, close bank accounts with exorbitant fees. Actually, banks should not be charging maintenance fees at all. The depositors own the capital that banks use to make money. For the privilege of use, banks should pay a fair rent, called “interest.” This interest needs to be equal to at least the rate of inflation in order to prevent erosion of value and buying power. If depositors lock up their money in a CD, then the interest rate should be greater than the rate of inflation, increasing with the term length.

Reject the bank manager's insistence that interest rates need to be near zero because the bank is a profit-making business. Paying fair rent for use of someone else's property is a cost of doing business. We know what would happen if a store owner told his commercial landlord he was no longer going to pay rent in order to make a profit. We have recently learned the power of consumers in mass when banks canceled their plans to charge monthly debit card fees. What was the consumers main argument? “It should not cost me money to use my own money.” Same goes for maintenance fees and interest rates.

Refuse to rent from landlords and property managers who charge rent in excess of the HUD zip-code-based fair market rates. Report poor landlords and their properties to your city. If you are justifiably afraid to do so, go to your local Occupy Movement and find out if someone there can collect a group of anonymous reports from present or former tenants to present to the city hall.
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If you need a financial adviser, seek out the rare one who not a salesman. This is hard because certification is less about learning to be a competent adviser and more about getting a license to sell financial products. A clue: an ethical financial adviser will not try to sell you what you do not need, like stocks when you have an insufficient emergency fund.

“One critique of the protest is it lacks a unified message or mission. Indeed, in my reporting I found evidence of people supporting any number of issues, including:

* Higher Taxes on the Wealthy
* Prosecution of Financial Fraud
* Anti-Fracking and other "Green" issues
* Mortgage Modifications
* Campaign Finance Reform
* Anti-War
* Universal Healthcare
* Student Loan Forgiveness and, of course,
* Jobs, Jobs Jobs

So, sure, maybe the Occupy Wall Street movement is a bit unclear in its views and lacks leadership. But to those who mock the protesters, I have to ask: What exactly is it that you're defending? Crony capitalism? Bank bailouts? Rising income inequality and the slow death of the American dream?

March if you want. Sit on the grass if you want. In the meantime, take concrete steps aimed at encouraging the rest of the 99% to resist exploitative, zero-sum type capitalism in favor of fairness. Do not let anyone suggest that fairness is synonymous with entitlement or that other favorite emotional button, socialism. It is not. The 1% are not the only ones who keep the profits but pass on the losses. Many members of the 99% either do the same thing, or would if they could. The 1% do it so spectacularly.

I mean, what do you make of Santa Barbara's Occu-Pirate$?
The Occupy Santa Barbara protests on Saturday brought out the “Occu-Pirate$” to represent the 1 percent vs. the 99 percent of the people. Dressed as pirates, they wore signs and shouted slogans, including “Money Is Power,” “Profit Is King,” “All Hail the Mighty Dollar” and “Pirate$ for Corporate Personhood.” When the Occupy group marched up State Street, most of the crowd chanted, “We are the 99 percent!” while the Occu-Pirate$ chanted, “We are the 1 percent!”

Personally, when I came back from a long sojourn overseas quite a while ago, I was appalled at what had happened to America while I was gone. I felt like Rip Van Winkle as I took steps to re-establish myself, opening bank accounts, buying health insurance, etc. I said at the time that I wondered why Americans were not marching in the streets. A friend recently told me that I have gotten my wish. One reason for the long apathy might be the lack of financial education in our schools. It is a common canard that a democracy requires educated citizens. That education must comprise both civics and finance. Finance is not yet another curricular add-on for an already overly burdened education system; it is an absolute necessity for our students' adult lives.

Friday, October 7, 2011

Omnipresent Poverty and US Competitive Advantage

Using test-scores to hold teachers accountable for student education variables not under teacher control is clearly wrong-headed, but for some reason, it makes illogical sense to many education policy-makers. Similarly, using test-scores from international comparisons to hold teachers responsible for the nation's economic health makes even less sense. There are just too many variables outside teacher control.

“Although we cannot predict future economic trends, we do know that test-score rankings are a poor basis upon which to understand these trends or to know what to do about them. The reason is clear: Other variables, such as outsourcing to gain access to lower-wage employees, the climate and incentives for innovation, tax rates, health-care and retirement costs, the extent of government subsidies or partnerships, protectionism, intellectual-property enforcement, natural resources, and exchange rates overwhelm mathematics and science scores in predicting economic competitiveness...

“It is specifically the low-income populations... that are at the most severe disadvantage in competing for jobs in a global economy.”

For example, the children of a local county supervisor did not have to go looking for high school jobs. The shakers and movers CALLED HIM to offer his children great jobs. Nevertheless, "the adverse effects of poverty and concentrations of poverty in schools (affects) student performance in all countries." Even so, if international comparisons favored the US, we would be crowing, not attempting to explain them away.

First, our rhetoric has assumed that test-score rankings are linked to a country’s economic competitiveness, yet the data for industrialized countries consistently show this assumption to be unwarranted. For example, the World Economic Forum’s 2010-2011 global-competitiveness report
ranks the United States fourth, exceeded only by Switzerland, Sweden, and Singapore. Many of the countries that ranked high on test scores rank lower than the United States on competitiveness—for example, South Korea, No. 22, and Finland, No. 7.

The same report shows that the US has actually lost two places in the last year, dropping from No. 2 to No. 4, while Sweden, Germany, Japan and the Netherlands, all in the top ten have each gained two places. What we need to remember is that test-score rankings may be a leading indicator, that is, the significance of the rankings is that they may foreshadow future competitiveness (or lack thereof). The sheer size of the US economy may guarantee its competitiveness, at least in the near term.

Many observers worry about the future competitiveness of the U.S. The reason may be the increasing poverty of US students at a time when US income inequities are increasing at alarming rates.

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall...Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today.

My local newspaper just reported that 50% more people fell below the poverty line this year. Poverty, especially chronic poverty, limits opportunity in ways the public does not fully understand. As a simple illustration, even junk mail is different. The poor get credit card offers, the rich get stock tips.

First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible

For example, a poor child is not going to be able to study violin to a proficiency sufficient to make a decent living. The instrument, lessons, books, sheet music, competitions, concert apparel, etc. all cost too much. Even a talented musician who works really hard to overcome the effects of poverty and persevered by his own tenaciousness may find the poverty disadvantage too overwhelming. Such an academically high achieving musician will likely be compelled to abandon music in favor of a career that will actually pay the bills, and relegate his superlative violin-playing to a “hobby.” Who knows how much talent has been lost?

America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels.

Schools do not lead society; they reflect society's priorities. Education is simply not a priority for US society.
“The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes...But one big part of the reason we have so much inequality is that the top 1 percent want it that way.”

The same could be said for education.

Tuesday, September 20, 2011

The Lake Wobegone Effect Plagues Parent Surveys

THEN (not so then)

A 2008 poll from Education Next and the Program on Education Policy and Governance (PEPG) at Harvard University found that Americans are increasingly disappointed with public schools, and that by a 3 to 2 ratio believe that Democrats have a better record on education than Republicans (Q18) and are more likely to improve schools (Q19). The other, a Phi Delta Kappa (PDK)/Gallup poll, found that most Americans believe President Barack Obama (46%) would be more likely than President John McCain (29%) to improve public schools.

As with surveys in other fields, respondents rate themselves higher than others.

As other surveys have shown, the public’s evaluations become somewhat more favorable when the subject turns to the public schools in their own communities (see Figure 1)... But teachers offer the schools systematically higher grades than the rest of the public. Thirty-four percent give the schools an A or a B, while only 14 percent give them one of the two lowest grades (Q.1).

The demographic at the losing end of the achievement gap ranked the nation's schools even lower. This group also depends most on public schools.

On the whole, survey respondents offered slightly lower evaluations of the nation’s schools in 2008 than they did in 2007, and some groups posted sharp declines. Twenty-seven percent of African Americans gave the public schools an A or a B in 2007, but in 2008, that figure fell to 20 percent. Meanwhile, the share of African Americans giving schools a D or an F rose from 20 percent to 31 percent. The share of Hispanics awarding schools a similarly poor grade doubled during the period, from 16 to 32 percent.

Although public school teachers (34% A or B) graded public schools significantly higher than the general public (20% A or B), nevertheless teacher opinion implies that a full 66% of teachers believe public schools are performing below expectations. For the education system of the richest, most powerful country in the world, a C or below is simply unacceptable.


40% of teachers gave schools nationally an A or B grade, but 61% gave their local schools an A or B grade. It seems obvious that teachers are essential to school reform, but if all politics is local, and by extension, all education reform is local, education reform must overcome teacher satisfaction and consequent inertia first.

Perhaps surprisingly, given union activism on the issue, somewhat more public school teachers (47%) favor the formation of charter schools (Q11) than the general public (42%). On the other hand, twice as many public school teachers (33%) oppose charter school compared to the general public (16%).

The survey concluded, among other things, "...while Americans retain an abiding commitment to public education, the grades that they assign the nation’s schools are increasingly mediocre."



AND NOW

The 2011 Gallup/PDK poll found 69% of Americans give high grades to their local teachers.

Perhaps the most significant finding was that more than 70 percent of Americans said that they have trust and confidence in the men and women who are teaching in public schools. The percentage of Americans who would grade their local schools as A’s or B’s continues to be at an all-time high. The percentage was even higher among people under the age of 40...

69 percent of Americans would grade teachers in their communities with an A or B – higher than their principals or school boards. This confidence also exists despite the fact that most Americans said that they hear more bad stories than good stories about teachers in the news media.

As usual, people graded their community schools higher than the nation's schools (page 18 and 19). 51% gave their their own children's schools an A or B, but 81% rated the nation as a whole C or below.

In Lake Wobegone, all children are above average. Most Americans seem to think their children go to Lake Wobegone schools.

Friday, September 2, 2011

The Teachers' Social Security Safety Net

Over at Justin Baeder's blog, there is a lively discussion of Social Security. I suspect I provoked some of it. Please read the original blog entry and its comments for the context of what I am about to write.

Justin says, “...but as a 30-year-old, I'd much rather just pay SS tax and never get anything back (to provide a societal safety net for others) than have additional money taken from me only to be given back later at a very poor rate of return.”

Kudos to you, Justin, if you are really fine with paying in and never getting anything back in order to provide a safety net for others. There are plenty of people who resent Social Security precisely because it is a safety net. They would rather think of it as an investment or an entitlement instead of the insurance program it was designed to be. Before the Baby Boomers came along (don't blame them, blame their parents:), the 1% premium was cheap insurance. In the 1980s, it was raised to 6.2% to save for the Baby Boomers. It would be nice if the premium could drop back once the Baby Boomers are gone, but I do not see this happening for at least three reasons.

1. The Boomer Echo-Baby Boomers had kids, and the Echo Generation is having kids, so the population is permanently higher than without the Baby Boomers.
2. Spoiled Government-The government has gotten used to having the extra funds to borrow for General Fund expenses.
3. Longevity-People are living longer, thus needing the safety net for longer periods of time.

As far as the 12X return is concerned, please remember that one dollar is not the same as another. If I bought, for example, Netflix stock a year ago for around $150 and sold at about $200 recently, those dollars are roughly the same dollars, so the 33% gain is an accurate perception. However, if I bought GE in the early 1970's for $1.00 and sold for $55, close to GE's historic high 30 years later, it appears to be a super impressive 5400% gain. But consider what $1.00 could buy in the 1970's versus what it could buy in 2000. Here is a sample: A $0.05 ice cream cone from Thrifty cost $2.79 now, a 56x or 5480% increase. Here's another: It used to cost $0.25 to go swimming for four hours in the community pool. Now it costs $5.00, a 20x or 3100% increase. I remember these figures because I used to ride my bike to the pool every Saturday and get an ice cream cone on the way home out of my dollar a week allowance. In terms of buying power, the $1.00 of 1970 and the $55 of 2000 are roughly the same.

Consider an index fund that tracks the DOW. From the 1970's to 2000, the index fund would have posted a gain of only 14x or about $1310%. If you retire now, you have had no additional gain due to the “lost decade.” Beloved Thirty-Somethings, this could happen to you. If the index fund is your retirement, regardless of the appearance of being a multi-bagger, it did not keep up with inflation, and will only lose ground to future inflation during retirement when the typical retiree converts it to a fixed-income stream.

The 12x return on Social Security only has the illusion of being huge. The fact is the 12x increase is potentially sustainable because past dollars, present dollars and future dollars are not the same. Even so, the nominal 12x return on Social Security payments will not even pay the rent.

So Justin is partially right. Individual investors have the potential to get a return greater than that of Social Security. The question is whether individual investors can actually achieve such a return, and more importantly, keep it. Statistics say that regardless of what the historical returns of the market may be, the typical individual investor gets a 1% return. And to get that paltry return, they have to break the first rule of investing: do not put money at risk you cannot afford to flush down the toilet. Retirement savings surely qualify as money most people cannot afford to lose.

People have learned the hard way they cannot count on their 401(k) plans, not only because of market risk, but also because studies have found that most 401(k) plans are actually pretty low quality. In my mind, maybe the best thing to do is buy a house when the rent vs. buy comparison is in your favor. Even if you end up spending twice the price of the house because you took the full 30 years to pay, you would have paid a similar amount anyway as rent and have nothing to show for the rent after 30 years. At least with a house, after 30 years you have secured a roof over your head. You can keep it for only the cost of the approximately 1% property tax and homeowners insurance, reducing your total retirement expenses by at least 25%-30%. Then your Social Security benefits, if you need the safety net, can go toward other expenses---like food.

Many, many people, even after a lifetime of hard work and doing everything right, are finding themselves looking over the edge of the abyss. Dear Thirty-Somethings, this could be you. And if you are a public school teacher, there are people out there going after your so-called exorbitant pension.

Wednesday, August 24, 2011

Last Hired, First Fired Punishes Expert Teachers

Steve Owens has posted quite a fine article about the single salary schedule used by most districts to determine teacher salaries.

I'm afraid Mr. Owens' article leaves out some important information about how most schools actually implement their single salary schedules.

The single salary schedule rewards only teachers who stay in the same district their entire career. A teacher who moves to a new district is deemed an out-of-district teacher. IF such a teacher can even be hired ( and the more years of experience, the more unemployable), that teacher will have to take a pay cut to the level of 5 years since most districts will give credit for no more than 5 years of experience.

Pity the teacher who returns to the US after decades of experience overseas as a DODDS teacher. They are out-of-district for every district in America. They have to be willing to take a steep pay cut relative to their education (most have Masters degrees) and experience. They are bargain basement teachers, but most schools consider their extra pay too high when compared to a new graduate with no experience “because we have budget cuts, doncha know?”

Mr. Owens states, “Seniority is "last in, first out" which prevents veteran teachers from being terminated in favor of younger, cheaper workers.” Last in, first out guarantees that newly hired expert teachers will also be the first let go, in favor of younger, cheaper teachers, never mind the expert teacher is a bargain to begin with.

He also states, “A large population of career educators has stuck around, and has acquired additional training and education.” It is exactly those teachers, who instead of being rewarded, get punished by the way the single salary schedule is implemented in most districts.

Many private schools have similar single salary schedules and implement them with the same deleterious policies and effects.

Tuesday, August 16, 2011

Why Data Drives (Instead of Informing)

According to Justin Baeder, “Data is merely one tool at the disposal of skilled, experienced, and knowledgeable professionals.”

The crux of the matter is no one is confident that our classrooms are indeed staffed by “skilled, experienced, and knowledgeable professionals.” In fact, just the opposite. Districts routinely reject expert teachers in favor of novices, whether traditionally or alternatively certified. Even more unbelievable, it is possible for expert teachers to encounter insurmountable obstacles to certification in other states.

No wonder expert teachers end up selling insurance.

No matter how much we debate teacher accountability and the control, or lack thereof, that teachers have over the variables which affect academic achievement, it is beyond dispute that teachers have a huge impact on quality of instruction. The first thing our society needs to do is value education, not only in word, but in deed, by ascribing to teachers the highest esteem. Only then will schools of education be able to become way more selective. Then our most able students might be attracted to a career in teaching.

Right now, about half our education students are idealistic and highly able, and the other half are pragmatically looking for a job. There needs to be a lot more of the first group. Nevertheless, Mr. Baeder's points about the role of data are well-taken. Data is in the driver's seat because teachers are not.