Teachers and Servers: Don't you dare talk bad about them!

I am surprised with the vigorous defenses people make when I talk negatively against teachers or servers/waiters.  I could criticize any profession aside from that of a homemaker or soldier, without receiving a passionate response, but my criticisms of teachers and waiters make even the meek write me messages in capital letters.

Why?  (Let's put aside the fact, for a moment, that I criticize teacher compensation structures, not teachers.)


Low wages?
Are you all so protective of teachers and servers because they don't make much?  Garbage men, court clerks, and bank tellers don't make much.  Produce boys at grocery stores don't make much?  Why would you protect a waiter more vigorously than a cashier?  Besides, Waiters make at least minimum wage--they have to--and teachers make as much as social workers, court clerks, and even some nurses.  Furthermore, Teachers and Waiters know how much they will be paid when they sign up.  Their base wages are basically more predictable than any other profession.

Because everyone is related to a teacher or a waiter?
Really? The entire professional should be free from criticism because you know someone?  Your Aunt or sister is a great teacher so all teachers should make twice as much?

Because they are picked on so much?
So are lawyers. People hate us.  Usually they hate us because of one isolated run-in with an attorney or based on some running joke.  But nobody defends lawyers.. My wife wouldn't even defend my profession. :)

Because people underestimate how hard the job is?
Yeah, I get it: teachers work more than 9 months a year, and waiters don't always get great tips.  I'm not sure I understand why that should save them from criticism.

Because their income potential is limited?
This one makes sense.  Although some attorneys and medical residents actually make FAR less than teachers per hour (even super teachers), those attorneys and doctors can go on to make much more.  Still though, is this a surprise?

Because they have no control?
Teacher's don't tend to open their own businesses or move to more exciting fields.  The unions and governments hold teachers down.  So this makes them blameless?  Waiters are stuck with base wages of 2.50 an hour and they can't seem to move up, but they could leave and do something else.

Because I'm not qualified to criticize?
I'm not saying I am qualified to fix the educational system, but I think I have enough experience to point out deficiencies in the system.  Besides, since when does someone have to be "qualified" before they can criticize something?  How does the old cliche` go?  I don't need to know how to sing to tell if someone is out of key? I have attended eleven schools in my life. (4 elementary schools, a "sixth-grade center", one middle school, one high school, one college, and two universities.)  I estimate I've taken classes from 60-75 teachers.  I've been involved in termination hearings for teachers with tenure.  I think I can recognize that there is a MASSIVE difference in the performance of teachers and schools and they all tend to get paid based on anything but ability.  I would think effective, hard-working teachers would be losing their minds over the current education system.
I don't think I am qualified to criticize waiters... so I don't.  But people mostly get upset when I criticize the merits of tipping in America.

I know it's probably a combination of these and other reasons, but I am impressed by the sensitivity.

Ted Talks: Dreams and Responsibility and Brainwashing

Most people don't have time to "find their passion," so they need to learn how to develop their current situation into their passion.  This can happen only if you convince yourself that you must be incredibly good at even what you don't like doing.

Last week, I found myself bored on a four-hour drive, so I downloaded the "TED" app on my phone and listened to some remarkable Ted Talks.  While I was completely overtaken by a new fascination with TED, I couldn't fight back the dissonance I felt.  It was a dissonance between Passion, Dreams, and Responsibility.

In Steve Jobs' legendary Stanford commencement address, he emphasized that the secret to success and happiness was to find your passion.  I suppose you could call that address the "Gospel of Jobs."  He didn't come up with the idea, but he definitely popularized the idea into a near-cliche.  My Dad's response to this type of talk is always, "Go be a pharmacist, and find your passion outside of work."

Several of the TED talks I listened to mentioned passion and dreams, and a few of them even referred directly to the Jobs' address.  One talk spoke about how you will fail to have a great career because you will fail to either find your passion or follow it (mostly because you are scared.)

While the presenters of the TED talks were incredibly inspiring, and undoubtedly successful in their own fields, none of them seemed to acknowledge that most ordinary people simply don't have enough time or freedom to go passion hunting. I found myself saying, "Well, if I could go back to my freshman year of college, I could follow some of this advice."   But THAT is the problem.  If I could go back in time, I would worry constantly about how to ensure that I still find my lovely wife and two daughters.  I sincerely wouldn't give them up for the world.  I simply can't believe that I would have developed into the man she fell in love with, had I spent the five years preceding our meeting running about, sampling all the potential passions.  I dread the thought that I would have screwed up what is great about my life by trying to replace a good career with my "one true passion."

During high school, I was exposed to virtually everything.  From individual sports to the debate team, from shop class to acapella choir.  I learned about economics, science, math, cooking, music, and philospophy, but I lacked the emotional maturity and experience to truly evaluate what my passion would be.  At one point I thought my passion might be medicine; I wanted to be a surgeon.  But how, without spending a single moment as a surgeon, could I know whether that is my true "passion."

Now I have significant family responsibilities.  Would Steve Jobs and the TED talkers still recommend I hunt for my passion?  How does a full-time professional with a family and other responsibilities have time for such pursuits?

I could commit full-time to statistical research and blogging, to a medical education, or to becoming an announcer at the Olympics.   Those things may carry a possibility of being a passion.  But they also carry a limited chance at success, combined with a guaranteed sacrifice of a great career and living situation.

Fortunately, my TED listening also introduced me to the Optimism Bias, and the Happy Secret to Better Work.  While the Speakers would never dare admit it, they stealthily offered a healthy dose of realism into a syrup of idealism.  You can listen to the talks by clicking on the links, but my general impression was that people can control their own passion through their perspective and attitude.  

I've spoken with many law-school graduates who are now saddled with debt.  Several of them are in good jobs in areas they aren't fond of.  A few of them don't have jobs at all.  The natural reaction is to say, "I shouldn't have gone to law school.  I should have _____."  So they spend their days dreaming of what could have been instead of what can be.

An unfortunate reality is that, although your passion can be found within the confines of your choices, the freedom to develop your passion is only granted if you can provide high-quality work in a timely manner.  An attorney with no savings is not going to be able to instantly start teaching "law-practice management seminars" for money.  He will most likely need to dominate the job he is currently in and develop the skills and connections he needs along the way.   This can be negatively referred to as "paying your dues."  I like to think of it as "making yourself valuable."

My suggestion, then, is to convince yourself that completing any mundane, dues-paying, rat-race work is actually an essential step to developing your passion.  In order to find your passion, run straight through your challenges, instead of looking for a way around them.  You will feel proud and accomplished, and your happiness will make you even more effective.
Become an expert in your field, and then carve out your passion.

Teacher Pay

Hey you! Yeah you, the wonderful teacher.  I'm not trying to pick a fight with you, but I'm troubled.  Teacher pay in the U.S. makes no sense to me.

You are a great teacher, and I'm not criticizing you.  I completely accept the possibility that thousands of teachers provide excellent instruction every day.  The time you spend trying to effectively teach children is incredibly valuable to society.

I'm troubled because you work at a public school for the same amount of money as Mr. Crappy down the hall.  I'm troubled because you are a better teacher than Mr. Masters, but he gets paid more for getting a wasteful graduate degree in an unrelated field.  I'm troubled because someone as talented as you doesn't have the means, ability, or courage to go down a different road.  I think teacher pay oppresses you.

As I've said before, the market for teachers suggests there are more teachers available than there are teaching positions.  This is part of the reason why wages have stayed low.  This increased supply of teachers in relation to demand pulls wages down while the unions and social morals pull wages up.   The result, is juuuuust enough money to keep you there and keep your mouth shut.  Public schools are like a smoked beehive.  The bees are angry on the inside, but too paralyzed to really do anything about it.

As an illustration of my point, lets examine the extremes.

First, lets make our hypothetical world.  We announce new federal legislation that will go into effect in four years.  This legislation will mandate that all teachers be fired, that they be eligible for rehire, and that the minimum wage for public school teachers be raised to $120,000.


Maybe I'm wrong, but I think the demand for education-education would explode.  Professionals would go back to school for a career switch, students would choose teaching programs over law school, med school, and pharmacy school.  To counter the massive demand for education and the massive supply of new applicants, entrance exams would be created and schools would begin to require graduate degrees.  Suddenly you'd have to take the GRE or T-SAT to get an education degree.  Perhaps there would even be an educator's bar that would require a teacher bar exam of sorts.

Four years would pass and suddenly schools would have a huge variety of people to choose from.  Unfortunately, the methods used to evaluate teachers suck now, so they wouldn't properly value or measure your years of experience and dedication.  Most likely, they would choose the shiny ivy-league grads who tested in the top 10 percentile on the T-SAT.   Your school board and superintendent would want to rehire you, but he'd have to justify the decision to parents and the community.

Let's say you get rehired.  Phew!  The industry would be hyper-competitive.  Tenure would die because the public would be outraged if you couldn't be fired when you are making that type of money.   The teachers who could handle larger class sizes would get preferential treatment and teachers would put in more and more time to preserve their job.  The teacher evaluation techniques would still be ineffective, and you'd have to impress your managers in the same way everyone else in the world does.  Work more than everyone else and become invaluable.   Bring in private donations to your school, and keep the parents happy.   Publish articles and get famous.  All that jazz.

So, you tell me, would that make education better?  Would test scores go up?  Would "real" learning increase?  My guess is that currently under-achieving schools would benefit greatly from the program while those schools that currently perform well would see marginal gains.  Maybe I'm wrong and new teachers wouldn't fix the broken system.

Now for the opposite extreme.  Sorry folks, we are still going to require the same standards and pre-requisites, but we have to cut your pay.  You will make $18,000 per year plus $750 per year of experience.

I'm not totally convinced, but I can imagine demand for education-education would slow down substantially.  However, the current teachers would probably revolt.  Maybe the unions would do what they do and get the teachers to strike.  Everyone would chant and holler and stare at each other for a while.  Strikes make a difference, but I don't think it's that substantial.   OR Maybe, just maybe, some teachers would get motivated and set up a lobby for vouchers or start fund raising for scholarships.  A group of great teachers like you would break off and start competing with the public schools and you would own them.  Maybe parents would realize that your school performs better than the public school and they'd start to lobby for more schools like yours.  Maybe the wait list for your school would get so long that copy cats would pop up all over.

Maybe.  I don't know.  But you do, don't you?   You can beat them, can't you?

The median state in the union spends about $11,000 per pupil each year.  If you and four friends figure out how to educate 150 students, your school would have a gross revenue of $1.65 million dollars.   Pay some MBA you trust $150,000 to run the place, spend $950,000 a year on expenses and you'd still have over $100,000 each for your salary.

I know this is oversimplified.  But have you at least crunched the numbers?  Could you sell a school to parents without a football field or bus system?  Could you use a caterer for school lunches?   Or are you paralyzed by union and bureaucratic smoke?
With all of the complaining I hear about teacher wages and treatment, I can't believe there isn't one private school business plan for every two teachers out there.  Why don't you help get someone elected who can clear the way for private schools and vouchers?
Maybe it's because you are content with the wages you get.

How can I possibly draw any other conclusion?  You go to school knowing what you'll get paid when you graduate, you know that you won't get merit pay, and you know that it will be a largely thankless job, yet you do it anyway.  An on top of it, your lobby opposes private schools.  You pay dues to a union, and it strikes down any competition that could provide better employment.

I honestly think the education lobbies want your pay to stay low, but not that low.  If it gets too high, they know the pressure for merit pay and higher qualifications will be intense.  If it gets too low, both the quality and willingness to play the game will drop.

I'm troubled.  I don't get why so many people do what you with the wage ceiling where it is.  At least underpaid professionals in other industries can dream of making it big one day.  I'm troubled that you don't seem to be doing anything to change the system.  You are seriously leaving education reform to the lawyers... and that's suspect.

Price Point: Raise student loan interest rates.

Summary:  The easy access to cheap federal financing has created a tuition bubble.  The cost of tuition is not tied to it's true value or the real costs of educating students, but to the massive demand for education which has been inflated by federal programs.

I've railed several times against the cost of education, especially graduate education.  I'm convinced that tuition and state funding are tied to manipulated supply and demand curves rather than the actual cost of service.  Unfortunately, since schools are mini government bureaucracies, the expenses tend to rise to or above the revenue.
There has been a recent hub-bub about subsidized student loan rates going up (the reductions are expiring).  Allowing these rates to return to 6.4% is seen as an assault on students and the poor/middle class families many of them come from.  I recognize that the immediate effects of a rate hike can be nasty, especially on those students who pay their interest payments during school.  However, I would like to focus on students entering school in 2014.

Let's assume that President Obama or Romney decide to extend these lower rates into 2016.  Also assume that President Obama takes other measures to ensure access to government loans and more affordable education through grants and other financial instruments.

The direct effect of rate reductions is to make leveraging your future wages more affordable.  The interest costs of $50,000 in student loans are $266.67 per month at 6.4% and $141.67 per month at 3.4%.  That $125 a month in savings would pay your electric bill or your car insurance.

The indirect of rate reductions, however, is to increase the demand for education at expensive institutions.  (The rate changes won't affect demand at cheap colleges as much because the savings will not be as significant).  Furthermore, the effect of easy access to financing in addition to a rate reduction is to explode the demand for education.

For example, there is no way I could have personally financed my legal education, and private loans seemed insane to me.  The easy access to federal loans and great consolidation programs provided just enough security for me to invest so heavily in education.   I added up all the loans I would need and figured out what the payments would be in the future.  Then I decided whether my probable income as a lawyer would be sufficient to cover the lifestyle I wanted, retirement (ha!) and the loan payments.  Because of the semi-affordable (yet soul crushing) interest rates, I decided that it was a worthwhile investment.

But what if the rates were high, or if the schools required a massive down payment?  Or what if every student loan required four co-signers?  Demand for education would drop.  Universities would be left with a few options: 1) Raise tuition on those who can pay (not likely to work for lower ranked universities); 2) cut costs and drop tuition; 3) Beg the state for more money; or 4) cut costs, keep tuition the same, and have less students.

If option 1 happened, you'd inevitably see more low-end competitors dropping prices.  Better students would opt for lower ranked institutions, and more employers would hire from lower ranked institutions, and those institutions would suddenly rise in the rankings.  Alternatively, employers would be forced to hire workers who were not as educated or finance the education of their employees.  Professional and technical schools would quickly begin to take a greater share of the market.  Additionally, you'd see degrees that do not generate significant income either vanish or become much cheaper. (Why in the world does an english degree cost the same amount as a organic chemistry or computer science degree?)  Liberal arts education might suffer, but much of this education could now be done online.

If option 2 happened, then the more expensive financing options would be offset by lower tuition costs.  Anyone who has ever gone to a major university knows that money is wasted like crazy.  Tuition, donations, and state funding are all hogged up with ravenous hunger, and trust funds continue to grow regardless of waste and luxury.   If the numerous "non-profit" schools could somehow tie tuition to actual cost of education, you'd see the market work much more effectively.

Option 3 is a no-go at this point, but some states might do it.  I think it would be insane.

Option 4 would probably be fine as well.  Education is wonderful, but it's not as restricted as it used to be. You can access free Harvard and MIT lectures on a number of websites.  Obviously the information is valuable, but institutions charge for the degree, not the information.  A fancy school degree is great primarily because employers hire students with fancy degrees.  The quality of education at cheaper institutions is often very high (depending on the quality of the student). If a prospective employer wanted you to take 6 credits of math, science, and foreign language, they could require all applicants to possess it.   If society benefited greatly from a well-rounded education, then charities, states, and donors could supplement the "less practical" fields.

So while I understand that there are drawbacks to options 1-4, I think they are necessary to make the cost of formal education more closely resemble it's true value.  You'll hear thousands of people whining about student loan interest rates and an "unfair deal", but I doubt they've really thought through the ramifications of federal interference in the education market.

Consider an additional example in the legal field.   There are several Tier 4 law schools (presumed to be ranked below 130 in the nation) with tuition levels every bit as high as the top 14 law schools.  There is a high demand for these low end schools because there are plenty of students with average LSAT scores and GPAs who cannot gain admission to Harvard or Yale.  In most areas, the lower quality products are cheaper because everyone has access to the higher quality stuff and the price point determines whether they will buy a particular good. (Demand on goods is rarely lower than supply, but there are exceptions like nintendo wiis and iphones.)
Harvard and Yale's high rankings are primarily due to prestige, which attracts the best teachers and students. (I'll write about how rankings are driven by student quality (aka employer demand) later).  As a result of the high student quality and high ranking, most ivy educated law students get good jobs, and the investment pays off.  However, a high percentage of tier 4 law students end up wasting a ton of time and money because there are more students than jobs.

So why do so many people risk so much to go to crappy schools and face a 50/50 shot of never being a lawyer?   Human Nature.   Humans are far more eager to risk future gains than sacrifice current money.  If you required a $50,000 down payment in cash to go to a T4 school, almost nobody would go.  But when you spread out the 100,000-150,000 in loans over 25 years, many students figure they are the exception, and the "investment" is worth the risk.

Now read through that again and see if you agree with me on how ludicrous it is.   In what industry can you obtain the same level of financing regardless of product quality or reasonable rate of return?   If you can prove you can pay the payment, you can probably get 500k in financing for a 550k home.  But you can't get 500k in financing for a 250k home.   The truth is, most private lenders would never invest money in a tier 4 law student unless they could come up with a true business plan for how they were going to make money.  Only the government would apply funds so recklessly... they can get current voters by offering great "education" reforms, and then they'll be long out of office before the taxpayers get nailed with the billions (or trillions) in defaulted loans.

Reducing the rates is a grant... and the grant is applied evenly regardless of merit.  Why subsidize all programs the same?  And why subsidize all students the same?  If you want to give a grant because a student is poor, then do that.  If you want to give a grant because the student is exceptional, then do that.  But don't pretend that lower student loan rates are good for anyone in this insane economy.

Romneycare vs. Obama Care (Short)

I'd love to spend all day writing about this topic, but I can't. I do want to say that those arguing that what Mitt Romney did is the same as what Pelosi and President Obama did are crazy.

Two main principles:

Limited Powers and the Tenth Amendment

Police Power

The founders knew that they would never get a constitution on the books unless they made concessions with the states. The end solution was for a powerful, but very limited federal government. "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

There are many reasons why the 10th amendment was a good idea. Among them are First, it's the reason the country survived; second, the states became laboratories for experimentation; third, freedom increased wildly because people could move to other states freely if they were looking for different laws or environments.

There are many cases which have expanded (or just interpreted) federal congressional power. The necessary and proper clause and the commerce clause are two of the main provisions that congress uses to justify it's actions. "Obamacare," at a minimum, stretches the commerce power. Many argue that the Raich court case provides a precedent to uphold the individual mandate. I think Raich was wrong, and I think this case is distinct from Raich.

By contrast, Massachussets has broader powers including a police power. Romneycare could possibly be unconstitutional under the Massachusetts constitution, and it could be argued that it violates the first, fourth, fifth, and sixth amendments to the federal bill of rights. However, Romneycare is not analyzed under the federal commerce power. The analysis would be wildly different. Furthermore, anyone who wishes not to be involved in Romneycare can move to another state, which is much easier that moving to another country.

I am moderately federalist, (meaning, I believe most decisions should be made at the lowest (local) political level possible. I want states to have more freedom because I want to have options in the future. I hope that some states can remain as havens for freedom. I hope those states offer few entitlements and require great personal responsibility. And I hope those states can prove that through freedom and responsibility, citizens may gain prosperity. Unfortunately, federal involvement in almost anything is making it nearly impossible for any states to engage in the psuedo-libertarian model.

I support what Governor Romney did even though I don't completely agree with the bill, but that doesn't mean that he would do, or be allowed to do, the same thing at the federal level.

The Individual Health Insurance Mandate

My two-year-old post on the individual health insurance mandate.

If the average patient does not know or care about the cost of her healthcare, it will never be "affordable."

But before we get to that, I need to address the core issue:

Is health care a fundamental right? I believe it is to a certain extent. We can debate that all you want, but it won't be that effective. Instead, let's talk about fundamental rights for a moment.

The Right to Privacy from unreasonable searches and seizures

You have a fundamental right to privacy under the bill of rights. Privacy from your neighbors?? Nope. Sure, you can sue someone for trespassing (probably not going to get much money) and a person can be arrested for trespassing (if a state has that law).

Your neighbor simply cannot violate your constitutional right to privacy, because the Fourth Amendment applies to intrusions from the government. The government can't search your stuff or take control of your stuff unless certain conditions are met (Ask me about this if you really want to know all the criteria).

Does the government mess with your stuff and violate the 4th Amendment sometimes? Yeah, it happens all the time. "The Constitution says they can't do that! Why didn't the cops stop them from doing that?"Because the government doesn't have to stand outside your house and make sure cops don't bust in without a warrant.

You don't have a fundamental right to a security system that will help protect your 4th amendment rights. You have the right to sue the government if they violate your rights. Additionally, the Government probably can't use the evidence they find against you if they Violated your rights.

Nobody has the job to stop the government from violating your rights, you just get a chance to use the judicial sledgehammer and smash them. Hopefully the fear of punishment will stop them from doing the same thing in the future, but there is no preemptive strike provision in the bill of rights. The government doesn't have to build a wall around your house, they don't have to give you locks for your luggage, and they don't have to make sure you have a private place.

Health Care compared to Privacy

The health care debate is very similar. The Constitution simply cannot be interpreted to guarantee that the government will proactively provide healthcare. Also, the Constitution can't possibly be interpreted to mean that the government is responsible to make sure the quality of health care is acceptable. Maybe people should be able to sue if they are not allowed to offer emergency or clinical services, but that doesn't mean they shouldn't have to pay for it later.

So then any "fundamental right" to health care must be some sort of moral human right. Some Governments have the authority to codify human rights. The U.S. Congress specifically has authority to regulate interstate commerce, and that's a big ol' umbrella that covers almost everything. (This is another complicated legal subject that requires more explanation that I don't have time for here) So this issue is a bit tricky, but lets just assume that congress has the authority under the Constitution to fine people if they don't get insurance.

Heck, let's assume congress could just create a new health care amendment like:

"No Citizen of the United States shall be denied access to care in hospitals operated by the several states"

Such an Amendment would suggest that there is some type of fundamental right to health care, or at least access to health care. I don't see how an Amendment could do much more than this.

What are you going to say? "Everyone shall get free healthcare." Well it simply can't be free. Someone has to pay for it. So basically that's the same as saying "All people who don't pay taxes shall get free health care"

Or maybe you could say "The government shall establish hospitals funded by the treasury"

Well how many hospitals? Does each city and small town need one? How far should someone have to drive for health care? "I have a fundamental right to health care within a 20 minute drive!!!"

What if the government set up a big-A hospital in washington DC, and everyone could just go there for free. Wouldn't that give everyone in the country access to health care? "But John, that hospital would be overrun. That just doesn't make sense."

So what would you have the constitution say? "The Government Shall Establish Hospitals which are solely funded by the treasury, and such hospitals shall be established within 37 'as the tire rolls' miles from every city, town, or association with a population of more than 632 citizens."

Can you see what I'm getting at here? No matter what you do, someone would be screwed. So you can't really guarantee that everyone has equal access to health care. What standard of quality would you use? Would the government have to make sure that doctors passed a federal certification to be qualified under the constitution? It would be nearly impossible to regulate.

So what does that mean.

This leads us back to where we are today. Congress realizes they can't actually guarantee any standard of quality, so they are pretty much just saying that everyone gets reimbursed for whatever health care they can find. So either the government will provide insurance, or they will just require everyone to have insurance. Sure, there will be some level of quality required before a clinic or hospital can be eligible for reimbursement. But what if a little doctor's office doesn't want to take the government insurance? (A lot of Doctor's won't take Medicaid/care)

Doesn't that mean the rich would have access to health care that the poor don't get?

Under the bill, the government will fine an individual for refusing to get eligible insurance. Even if you've self insured over the last 20 years, and you've got a "health fund" set up. Can the government fine a business for not accepting insurance? That's kind of like the government fining a private business for not taking food stamps. It's probably in their best interest because they get reimbursed for the food, but it should be up to the company.

The Power of the Consumer

Do you want the best health care in the world for free, with no lines, and close to your house?

That's impossible. Can we at least accept that?

I almost never had to pay health care bills when I had insurance at my old job. Seriously, when I wrecked my motorcycle at 75 mph, I saw amazing doctors and went to great facilities. The care was immediate and effective. (Even before they knew I had insurance)

Do you think everyone should have access to the same insurance? I don't. Why? Because that insurance sucks.

I paid about 200 bucks a month for my health coverage. The coverage was awesome; it had a super low deductible, low out-of-pocket, and great access to doctors. So I thought that was a pretty good deal. Except my company was spending $600 a month on my plan as well. $800 dollars a month? Yeah, that's $9,600 dollars that I didn't get paid, because the company was giving me the "benefit" of coverage. Don't get me wrong: I'm extremely grateful that I had insurance when I got hurt. But that accident was hopefully just a freak occurrence. And that's what I believe insurance is for.

Health Savings Plans

You just say those three words and some people stop listening. "That just won't work for the general population."

I simply don't understand why not. Maybe you can educate me.

Let's crunch the numbers.

A "deductible" in insurance is a dollar amount that you have to pay toward your healthcare every year before the insurance company starts paying. My old insurance had a deductible of $250. (That's amazing) So I had to pay the first $250, and then the insurance company paid 85% of everything after that.

A $10,000 Deductible health plan costs almost nothing. If you spread that out over a medium company, say 100 employees, the average monthly premium would be something like $65 bucks a month. Why so cheap? Because the insurance company doesn't have to pay for the first 10,000 bucks. That means most traditional procedures, pregnancies, prescriptions, and general emergency room visits wouldn't be covered by the insurance company.

Well who has 10 grand sitting around to cover that? Almost nobody.

Well my insurance cost me and the company $9,600 a year.

The new insurance would cost me and the company $780 a year. Which would leave $8,820 in savings.

What would the company do with that 8800? If I were running it you would have two options.

Option 1: A debit card loaded with $5,000 that can only be used for medical purposes, and a $3,800 raise.

Option 2: A debit card loaded with $8,800 dollars that can only be used for medical purposes.

So you would have the responsibility of covering the first $10,000 of your medical expenseseach year, but 8,800 would be covered. So if you did have a disaster, then you'd have to come up with $1,200 bucks, and that shouldn't bankrupt you (especially since you could spread it out over 24 months or whatever).

If you wanted to gamble a bit, you could choose option one. Then you might have to come up with 5,000 bucks for a disaster, but you'd have more money coming into your paycheck, and hopefully you could invest in your own health fund. Maybe you'd even be able to make some money with it.

Oh, and one more thing. THE MONEY WOULD ROLL OVER.

Under option 2, if you are healthy for 10 years, you'd have 86,000 buckaroos in your health savings account, and you'd still have insurance. In my company, as soon as you built up an amount twice the size of your deductible (or $20,000) then the rest of the contributions would go into your retirement account.

And this wouldn't cost me any more that the expensive insurance you were already getting.

The opposing argument would suggest that this strategy wouldn't work for the whole population. Some employers don't provide benefits at all, and the drop in contributions to health insurance would make insurance rates go up for everyone.

First, everyone can afford disaster insurance or get on medicaid. You can find a way.

Second, nobody can predict the exact effect on premiums, but you can bet your bottom dollar that health care costs would go down.

why? Because in the current system you don't know how much stuff costs.

The food insurance metaphor is a bit silly. "What if you had food insurance. Someone else is paying, so you'd just buy steak every time you went to the grocery store!"

Well take that and add on the fact that you have no idea how much you'll be charged until AFTER you get the care. Some people do know the price, some of the time. But most people go to the same doctor for everything. That's insane. I don't even buy all of my dairy products at the same store.

If you had a health savings account that would eventually turn into your retirement, you'd start shopping around.

Need to get a funny spot on your neck checked out? Don't just run to your regular dermatologist, call around to every dermatologist in town.

Doctors would start to run specials, they would start to compete. If quality went down, the business would disappear.

You'd find prices listed on the wall in Doctor's offices. "Strep throat test: $42.50"

"Oh, well I can go to the walgreens clinic and get that procedure for $29, bye"

"MRI that you probably only have a 1.7% chance of actually needing: $1,700"

"Need surgery, choose an anesthesiologist:

A: 2 years of experience, Utah Medical School: $1,200

B: 29 years of experience, John's Hopkins: $4,400"

Prices would start to go down because:

1: Doctor's couldn't get away with as much

2: Unnecessary procedures would be eliminated

3: Doctor's would get paid in cash and collection costs would go down, so they would have an incentive to market to these people.

4: People would be encouraged to live healthier lives in order to save money.

A big argument against me is that people would get scammed, some people would choose not to have procedures they ended up needing, and lives would inevitably be lost.

First: Is that worse than the current system? Not really.

Second: That argument works on two faulty assumptions (1) that people can't take care of themselves and (2) that people who make bad decisions shouldn't be responsible for the consequences.

I just don't think it would be that much of a problem. You'd be able to get more informed and get more involved in the process, and you'd still be able to sue people who scam you or who harm you out of negligence.

Could someone tell me where I'm wrong?

Should bank tellers be rich? How everyone misunderstands potential.

The going rate for a new bank teller is in the range of $9.00-$11.00 per hour. That's ridiculous. Bank teller's should make $20 per hour. This article is about poor management (which is interesting) even though it seems like an article about bank tellers (who are boring).

I returned home from a two-year church mission in the spring of 2003 at the age of 21. I was ambitious, big-picture wise, but I wasn't in a hurry to do anything. My parents prodded me to get a job, so I attended an interview at a local credit union (My father set the interview up). I had no resume, and no relevant skills, but my father is kind of a genius, so the bank manager thought I might have good genes. After several interviews, the manager decided that none of the candidates were good, so she went with the best of the terrible options: me. Her decision to hire me as a teller, and my decision to take the job impacted my life in significant ways. Were it not for that first teller job, I would be in a completely different career and probably in a different state right now.

Throughout my five-year mini-career in consumer banking, I was employed in seven different positions. Although these positions were in the same industry, the skill-sets each required were all over the map. I quickly picked up on tellering and became an excellent cash handler and customer service agent (in my own mind, at least). Six months in, I was pushing hard for a promotion and a raise from my meager $7.25 per hour. The powers that be recognized that I was a talented teller, so they made accommodations to give me a part-time consumer loan officer job to mesh with my busy school schedule.

I was an A or A+ teller, and I was a B or B- auto loan officer. I quickly learned the loan policies and procedures, but there were a few areas of the job that I was not cut out for. Nevertheless, my good performance earned me another promotion and I moved on. My third position was challenging and rewarding and I excelled again, back up to the A- range. My pay increased along with my responsibility. At that point I managed to impress a manager at another bank and he offered me a job so I went. The new position required a completely different skill set and was insanely boring. My performance dropped down to a C+. Luckily, my old boss at the credit union hired me back as assistant manager where I managed to do a fine job, possibly a B rating. I was eventually promoted to a seventh position and the company had high hopes. They still viewed me as that A+ teller, and they expected nothing less. Unfortunately, I struggled until I left for law school. I hate to say it, but I was probably a C- or D+ quality in that last position.

At some point, my company paid good money to have me tested. The test consisted of personality profiling and IQ testing. The results showed that I was a 90% match for one particular position with a lot of responsibility, and I was an 88% match for a job as a teller. The testing computer felt that I would not be a good fit for many other positions. Not surprisingly, the company didn't listen to the results. They evaluated me as a $20+ per hour employee, and a teller was a "less-than-$10" type of job, so they stuck me in an available job that I wasn't cut out for, and I eventually quit.

I managed one teller who somehow got every male customer to fall in love with her. (There are at least four of my former co-workers that will think I'm talking about them) People would add accounts and services just so they could see her more often. Sometimes, business owners would wait in-line strategically to use her as their teller. These men never dated her (she was in a relationship) and she dressed modestly, but for some reason these men loved to interact with our star teller.

The company wanted to promote her to something else, but luckily her schedule wouldn't allow it. She would have been a terrible loan officer. Fortunately, she continued to excel as a teller, but eventually her schedule cleared up and she had to leave to do something else for more money. My manager desperately wanted her to stay, but the big-wigs would never pay $20/hr for a teller... ever... and no other positions were open. "Teller positions are not worth that much. The market doesn't pay tellers that much."

The first problem with this type of job evaluation is that managers and owners suck at evaluating jobs. The second problem is that most companies see front line employees and staff as a cost rather than an investment.

The market evaluates the worth of a teller position at a low wage because companies apparently don't see the value in a teller. "Wells Fargo doesn't pay more, so I won't!" I can tell you from first hand experience that managers often see tellers as a necessary evil. (They won't admit this though) The question then is what data or what criteria do managers use to determine that a loan officer or assistant manager position is any more important or profitable than a teller position? Our star teller made something like $9 per hour, but I guarantee she made or saved the credit union ten times that. We got new accounts and loans all the time because of her skill set (She was fast and accurate, in addition to her ability to charm).

Our Star was replaced by an atrocious teller that stuck around for quite a long time. She made something in the neighborhood of $10 bucks an hour and she probably lost us accounts every single day. She made mistakes, but they were never fireable offenses.

The difference in wages between what we wanted to pay Star, and what we paid her replacement was $20,000 per year. That's the kind of money that makes the big-wigs drool or cry. "What kind of idiot would pay a teller $20,000 more per year than he had to??" Unfortunately, management didn't realize that a substandard teller actually cut away from profits. She single handedly destroyed two large business accounts. I can't remember the exact numbers, but I'm sure that her terribleness easily cost the company over $20,000 per year. Star teller, on the other hand, would convince upset business owners to stay at the credit union, she'd bring in her friends, her friends friends, and her friend's fathers. Every time a customer came in to the branch, he was exposed to our brochures, our posters, and all of the advertising material we could throw at him. That teller projected an image onto customers which made them think that our entire credit union was as high-quality as she was. She independently increased the value of our entire brand because people saw her every day.

Most managers and big-wigs would promote a teller like Star. They wouldn't think about how the skill set required for a teller is drastically different than the skill set required for a loan processor or manager. They wouldn't consider that the value of an employee who enjoys her job is exponentially better than the value of an employee who hates her job. Unfortunately, most established bankers are too stubborn to even consider paying a teller enough to keep them around. As a reaction to this stubbornness, one company actually started to value applicants who were boring, ambitionless, and shy. The theory was that these people would stick around for a longer period of time, so the training costs per employee would go down.

On a side note (I wish I could use footnotes): Aside from stubbornness, many companies are afraid of risk. They feel, as explained above, that tellers or other front-liners are a necessary evil and they assume that a $20/hr employee is just as likely to fail as a $10/hr employee. This indicates that their interviewing and training methods are inadequate.

So what does it say about your company when your front line is just a fill-in employee. What does it say when the person who interacts with the most clients and customers is the least qualified employee in the entire company? What does it say when your company is unwilling to pay a front-line employee for dominating the position, but your company is willing to promote the employee they could be terrible at?

I believe my argument also holds up in different industries as well. Consider a receptionist at a law firm where the attorneys charge incredibly high rates or a billing clerk at a dental office where the dentist charges even higher rates. One client is probably worth between $5,000 and $10,000 to the company. If four clients quit coming back because they are put off by your front line, your company gets nailed for $20,000 to $40,000 per year. If your clients feel welcome, informed, and comfortable, they will refer their friends. I don't have time to do a study or full analysis, but I would be willing to bet that a front line employee is credited with 10-20% of a customer's feel for the company. That 20% could quickly turn off your customers.

My point in all this is that managers should evaluate employees in isolation. How much does X employee make or save my company? How much more will I have to pay X employee to stay? What negative impact would replacing X employee with Y employee have? If the negative impact of removing X is greater that the extra you will have to pay them, you've made a poor decision. I don't think this is that novel of an idea, but I'm convinced that most managers just look at what everyone else pays for that position, and refuse to pay much more. Preconceived notions that do not stand up to logic cause slowness, dullness, and stagnation. Hopefully future managers can avoid that trap.