The top 25 hedge fund managers make more than all the kindergarten teachers in America COMBINED!
This is the new fancy argument coming from Hillary Clinton, Barack Obama, and every third person you see on any social network. And on the surface, a lot of people feel like this is a real injustice.
It is not an injustice. It makes sense. And I’m proud to live in a country where it can occur.
---First of all, the comparison is complete nonsense. The first giveaway is the use of the long existing tactic of false equivalency. It makes no sense whatsoever to compare the ELITE OF THE ELITE of the hedge fund industry with the AVERAGE kindergarten teacher.
If you really wanted to make an honest comparison, you might compare the average kindergarten teacher with the average hedge fund worker. Unfortunately, this creates the minor inconvenience of completely destroying your argument.
The average kindergarten teacher makes $53,480 per year (which happens to be higher than the median household income in this country. But, I digress.) The average hedge fund worker earns a little over $400,000 per year, slightly less than eight times the average kindergarten teacher. Yes, it’s still more—but it’s NOT 6,320 times as much like Hillary wants you to believe.
But, that understates how flawed the comparison is. A hedge fund worker is at the top of the food chain when it comes to investment banking. For as important and lovely as kindergarten teachers are, you wouldn’t necessarily name them as the top of the food chain when it comes to teachers earnings. The average full-time private college professor earns about $139,000 per year - or about 1/3rd what the average hedge funder earns.
However, a speech punctuated with “hedge fund workers earn about three times as much as equivalent workers in education” isn’t getting you the same amount of applause.
---But, no matter how you slice it, hedge fund workers earn more than teachers. It’s true, and it makes sense. If you desire to be extraordinarily wealthy and you choose the path of a kindergarten teacher – you are an idiot. You probably can’t pass your own class.
One gets into the world of hedge funds looking for the maximum financial reward offered by society. You become a teacher for a different kind of reward. Perhaps you love children. Perhaps you want to make a difference in your community. Perhaps you want schedule flexibility. Paired with an above average salary, that’s a pretty enticing package. But, it is not a package that wins you a yacht. There’s nothing wrong with that.
Studies show that teachers in general work about 12% less hours than other professionals per day, and that doesn’t factor in summer vacation. Hedge fund managers are known for working endless hours and making strangers of their families. (Yes, I know many teachers work very hard for lots of hours. And some hedge fund managers are lazy worthless a-holes. I get it. We’re talking averages here.)
---Do teachers provide more to our society than hedge fund managers? Well, the good ones do. Great teachers impact their students in incredibly meaningful ways. But, so do the crappy ones. Looking back at my life growing up in a middle class suburban world, there we’re definitely stand out teachers that were a positive influence in my life. There were a lot of awful ones, too.
Of course, the same is true for hedge fund managers. Think about this: all of the worst hedge fund managers combined don’t earn as much as one kindergarten teacher. That’s because the worst hedge fund managers earn zero. Nothing. If they invested in their own fund, they might even do worse than zero.
They have to deal with risk. As you introduce risk, you introduce a stronger reward. Working in the field of education provides stability. Investment banking provides higher risk and higher reward. I want to live in a country where that high end is possible. I don’t want to live somewhere where everyone makes the same amount of money. That’s been tried several times, and the results are a country as dull as their architecture. (And often, very bloody.)
Amazingly, the exact policies that could result in great teachers earning more and closing these gaps, such as pay for performance and more private control of education, are the policies the left and their union supporters oppose.
The bottom line? When someone says “the top 25 hedge fund managers make more than all the kindergarten teachers in America COMBINED!” respond appropriately: “Good. For. Them.”
Featured image, “kindergarten is fun” is copyright (c) 2008 woodleywonderworks and made available under a Attribution-Noncommercial-Generic2.0 license