Public sector unions want their members to believe that their union membership and the dues they pay are worth it because a well-funded union is a powerful union, and a powerful union is one that can determine who is elected in the first place, influence those elected officials, and win higher salaries and benefits for workers.  

To a large extent that’s true, where strong unions = higher salaries, which the above chart demonstrates, but since public employees are taxpayers too, there are costs to public employees for their own higher salaries.  Since anyone climbing the income ladder faces the progressivity of the federal tax code, earning another $1,000 a year doesn’t mean anyone has another $1,000 in take home pay.  Additionally, since unions demand Defined Benefit pension plans which workers themselves partly fund, there is an additional diminishment of take-home pay since a higher salary equals larger pension payments.

Finally, union dues are a non-trivial expense too that must be paid for with post-tax dollars and consume part of a strong-union teacher’s salary premium. 

For this piece I’m going to compare take-home and discretionary income between teachers and principals in New Jersey and Florida.  I’m comparing New Jersey to Florida because it’s a very stark contrast between strong-union/high-salary/high-taxes/high-dues state and a weak-union/low-salary/low-taxes/low-dues state.  

Florida teachers actually do have collective bargaining, but teacher unions there are very weak financially and politically.

Only 55% of Florida teachers are even union members, compared to 95% of New Jersey teachers.  The NJEA’s revenue was $149,947,159 in 2018-19 (that amount doesn’t include the independent but allied AFT), versus $36,432,637 for the Florida Education Association, which has merged with its state AFT affiliate.  Various surveys rank the NJEA as one of the most powerful teacher unions in the US, whereas Florida’s is one of the weakest.

And that NJEA power has paid off. New Jersey’s Fiscal Effort for education is 4.48% of state GDP, which is #1 in the US.  Florida’s Fiscal Effort for education is only 2.76% of state GDP, which is 47th.  

New Jersey Spends a lot More on Schools

Whereas Florida spends $12,291per pupil in 2020-21, New Jersey spends 43% more, at $25,109. Those numbers are inflated by federal Covid aid, but the ratio between NJ and FL is consistent year to year.

The higher education spending in NJ translates into better working conditions for New Jersey teachers.  NJ’s student:teacher ratio is 11.5:1 while Florida’s is 19.6:1.  In fact, despite Florida having nearly twice as many students as New Jersey (2,538,834 versus 1,294,592), Florida only has 22% more teachers (142,110 versus 116,717).  

As you would expect, Florida teachers aren’t paid nearly as well New Jersey teachers.  According to the NEA’s Rankings & Estimates for 2020-21, New Jersey teachers on average earned $77,677 per year (#7 in the US) versus only $51,009 per year for Floridians  (#48).  The difference in salary between NJ and Florida is an enormous $26,668 per year, or 52%!  Only a handful of NJ districts pay below Florida’s average.  Many NJ districts have starting salaries above Florida’s average!

In comparison to what other college grads earn who aren’t in teaching, Florida teachers do worse than New Jersey teachers do too, with a -25.7% wage gap for the Sunshine State versus a -12.3% wage gap for the Garden State.

Salaries and Post-Expense Salaries Compared

Having smaller classes is a huge advantage for NJ teachers, but what about salary after taxes? pension costs? cost-of-living? pension contributions, and even union dues?  Who comes out ahead?  What about discretionary income after housing, food, and transportation?  

The answer to that question is that teachers in the New Jersey teachers only keep about 10% more during a teacher’s active career.

With taxes, healthcare pension costs, and union dues factored in, the nearly $26,668 per year salary premium is whittled down to $2,000-$4,000, depending on what healthcare and union dues decisions a Florida teacher makes.  However, with non-tax cost of living factored in, an active Florida teacher would come out ahead, although in retirement the New Jersey teacher would have substantially more because the pension is calculated off of a much higher salary and New Jersey retirement income is tax-free for an individual getting less than $75,000 a year.  NJ seniors are eligible for property tax reductions which take the bite out of property taxes too.

Let’s take a look!

Federal income and FICA taxes?

According to Smart Asset’s income tax calculators, a New Jersey teacher would end up paying $5,739 more in federal income taxes and $2,040 more in FICA taxes.  

(Yes, Florida teachers DO receive Social Security)

Average Teacher Salary After Itemized Deductions, Federal Income Taxes, & FICA Taxes* 

New Jersey:     $61,580

Florida:             $42,691

Difference:       $18,889

I gave the New Jersey teacher a $10,000 deduction versus only $5,000 for the Florida teacher.  Florida teachers would actually use the Standard Deduction anyway.  If you feel that a single New Jersey teacher would be eligible for a larger deduction and pay less in federal taxes then it would still not affect the basic claim of this post.

And state income taxes?

The relevant New Jersey income tax brackets for teachers are:

Income Range              Percentage

$0-$20,000:                    1.40%

$20,001-$35,000:           1.75%

35,001-$40,000:              3.50%

$40,001-$75,000:           5.53%

$75,001-$500,000:         6.37%

Officially NJ income taxes are the “Property Tax Relief Fund.”  In FY2022 81% of income taxes went to education ($17.8 billion out of $22 billion).  If you factor in the half cent of the sales tax going to education and slightly more than half lottery profits going to TPAF (NJ teachers’ pension system), NJ’s education spending is equal to about 100% of income taxes.   The Property Tax Relief Fund, in honesty, should be called the “Education Fund.”

The relevant Florida income tax bracket for teachers is:

Income Range             Percentage

$0-Infinity                      0%

A New Jersey teacher making the average salary would pay $2,191 in state income taxes, even with the property tax deduction.  Thus, the New Jersey-Florida gap is shrinks to $16,698.

Average Teacher Salary After Federal and State Income Taxes Plus FICA Taxes*

New Jersey: $59,389

Florida:         $42,691

Difference:    $16,698

Pension Contributions?

In New Jersey, teachers pay 7.5% of salary towards pensions, which is $5,826 a year at the  $77,677 average.  In Florida they only pay 3%, which is $1,350 at the $51,009 average. 

Average Teacher Salary After Federal and State Income Taxes, FICA, & Employee Pension Contribution*

New Jersey:   $53,563

Florida:           $41,341

Difference:      $12,222

So, as you can see, New Jersey and Florida teachers’ take home pay converges further. 

As for the value of the pensions in retirement, the DB pension formulas in the two states use a similar multiplier: in Florida it is 1.6% of the terminal eight years of salary whereas in New Jersey it is 1.66% of salary for the final five years worked.  However, since NJ teacher salaries are so much higher, the NJ pension would be much larger.  (Farcically, the New Jersey Policy Perspective says that Florida’s pensions are among the most generous and New Jersey’s are among the least generous, but that’s because they compare pensions to a percentage of former salary, not dollars per retiree.)  Florida’s new Defined Contribution plan is even worse for retirees.

Some would say that pensions shouldn’t be considered an expense like taxes because a teacher will eventually get the money back.  Yes, point taken.  But my intention is just to look at active career post-expenses pay.

NJ teacher unions would adamantly reject that it is their fault that teachers pay 7.5% of their salaries towards pensions and say that that 7.5% percentage is to make up for 30 years of pension underfunding which was entirely the state’s fault. But the NJEA, through its superior lobbying power and control over the Education Law Center, had a role in creating NJ’s pension underfunding that doesn’t have an equivalent with NJ state workers whose pensions are also underfunded.

In 1990-91 the NJEA ferociously opposed the partial pension localization plan that Governor Jim Florio wanted to pay for the Abbott II decision and the state aid cuts to higher-wealth districts that were budgetarily necessary to equalize DFG I+J and Abbott spending.  Florio’s budget plans were cancelled before they were implemented, despite nothing being put in place to create new pay-fors for Abbott.  By the mid-1990s the NJEA also became a major funder of the Education Law Center, whose education spending victories at the New Jersey Supreme Court diverted billions into K-12 education spending and PreK that could have been used to fund the Teachers Pension And Annuity Fund.

From 1999-2006, New Jersey only contributed an average of $23 million to all the state-funded pension plans, the same years which had huge increases in PreK-12 opex aid.

Additionally, the NJEA supported the pension enhancements of 2001 which lowered employee contributions to 5.5% and raised benefits and lowered the retirement age, which further strained the system.  

Health Care

A single Florida teacher also pay at least $1,500 less per year for healthcare, although plans differ more between districts there than in New Jersey.  

In Florida, teachers have a variety of healthcare plan options, at varying costs.  For Miami-Dade, which I’ll use as an example, teachers in 2021 could choose a plan called Cigna SureFit which is $0.  Single teachers who want more comprehensive coverage, and who are at that $51,009 average, can pay $588 per year for Cigna OAP High.

To give another example of a large Florida district that lets teachers pay $0, the School Board of Broward County, Florida offers a rich selection of benefits (medical, dental, vision, life and disability) for its employees. The Board pays 100% for employee-only healthcare. These Benefits are currently valued at approximately $8,178 annually for every benefits eligible employee, with an annual Board expense of approximately $220 million dollars.”

Some Florida districts offer Health Savings Accounts which would reduce an employees federal taxes.

New Jersey healthcare is a percentage of salary.  Single teachers at the $77,677 average would pay 2.8% of salary, which is $2175 per year.  Teachers with spouses and children pay larger percentages.  A teacher with a family making the average salary would pay 5.5%.

Even assuming a Florida teacher is buying a more comprehensive health insurance plan, they still pay less than a New Jersey teacher.  Thus, when we take healthcare costs into account, the take home pay difference shrinks further to $10,633.

Average Teacher Salary Take Home  After Taxes, Pension, Healthcare*

New Jersey:     $51,386

Florida :            $40,753

Property Taxes

New Jersey’s property taxes are the highest in the United States, both as a property tax rate (2.49% compared to a 0.92% national median) and in total dollars per household.  In calendar year 2021, $16.6 billion of NJ’s $31.4 billion in property taxes went to education, or 53%.  

How much anyone pays in property taxes depends on the value of his or her property and the single teacher I’m considering here might live in a small place; nonetheless, I will use each state’s average property tax amount.

According to the New Jersey Department of Community Affairs, the average NJ household actually pays $9,284 in property taxes, but according to Wallet Hub the amount is only $8,362.

Since Wallet Hub also has Florida data and I want to be consistent, I’ll use Wallet Hub’s amount even if it’s less.

Wallet Hub gives $8,362 for NJ’s average property tax burden.  It gives $1,914 for Florida.  

Average Teacher Salary After Taxes, Pension, Healthcare, Property Taxes* 

New Jersey:         $43,024

Florida:                 $38,839

So we have a difference now of $4,185.

FYI, Florida does NOT have a car tax.

And Union Dues? 

Authoritative data on all-in union dues in NJ and Florida are elusive because local unions do not consistently release what dues are.  Mike Antonucci of the Education Intelligence Report provides the data on state dues only and, for 2020-21 NJEA state dues are $979 per year, which is #1 in the US, versus only $240 per year for the Florida Education Association, which is #50 in the US.  For local dues Antonnucci says “Local dues vary across the nation from zero to a whole lot.”  Mike Lilley of the Sunlight Policy Center gives all-in teacher union dues in NJ as $1,470 a year.

However, Florida locals seem to charge more than New Jersey locals do, which brings dues closer, although NJ’s all-in dues are still higher.  When I could find dues for Florida unions, they were high in relation to salary, for instance, $978 for the Dade United Teachers to $600 for the Orange County (Orlando) teachers.

With the note of caution that I do not have exact amounts here, I will use $1400 for New Jersey teachers and $900 for Florida teachers, even though all-in dues in New Jersey are seemingly higher and Florida dues are essentially optional, as well as lower if a teacher wants to pay.

When we take everything out of those starting paychecks, the gap between Florida and New Jersey shrinks from $26,668 to about $3,500, or 26% to 9%, and that includes voluntary union dues by Florida teachers and enrollment in the higher coverage healthcare plan.

A difference between New Jersey and Florida is that Florida teachers would not be under as much compulsion to join the union since Florida has been a right-to-work state for decades and thus Florida teachers never had the membership rates that NJ’s teachers did.  It would be reasonable of me to say that union dues in Florida are $0.

Due to the 2017 Supreme Court case Janus vs. AFSCME, New Jersey’s public sector is effectively right-to-work, but membership remains high and teachers would face more pressure to join in New Jersey than in Florida.

Principals

Whereas New Jersey teachers still do make more than Florida teachers — even if it’s swallowed up by our higher cost of living — New Jersey principals’ take home pay is even closer to that of Florida principals because New Jersey principals have to pay higher federal taxes and are exposed to New Jersey’s 6.37% tax bracket.

According to the National Center for Education Statistics, in 2017-18 the average New Jersey principal earned $126,600 whereas the average Florida principal earned $94,600, a gap of $32,000 or 34%.

I used a $15,000 itemized deduction for New Jersey and a $7,500 itemized deduction for Florida.  I also chose the most expensive healthcare plan, based on Miami-Dade’s options.

A 34% salary gap shrinks to only 6%.

Average Principal Salary After Federal & State Income Taxes, FICA Taxes,  Pension, Healthcare, & Property Tax Costs*

New Jersey:    $71,458

Florida:            $67,467

Cost of Living, Cost of Childcare, Cost of College

The respected, disinterested Missouri Economic Research and Information Center (MERIC) ranks New Jersey’s Cost of Living as the 11th highest in the US and Florida’s as the 24th.  Please notice that there is almost no difference for healthcare — the fact that NJ teachers pay so much in healthcare is because they have chosen a very expensive plan.

MERIC does not use taxes, so New Jersey’s full cost of living is higher than 11th and Florida’s is lower than 24th.

New Jersey and Florida are relatively close in MERIC’s measures except for housing, where the average house in New Jersey costs $116,000 more than in Florida.

MERIC’s ratings are incomplete and do not include some costs associated with having children.  

For instance, New Jersey’s childcare is one of the most expensive in the United States, at $13,367 per child per year.  Florida’s childcare is one of the least expensive, at $7,186 per child per year.  

Depending on what school district a teacher lives in, a New Jersey teacher might be able take advantage of state-funded PreK for a three- or four-year old, which would offset the cost of living.   Florida offers state-funded PreK for all fours in all school districts, but it is not full-day.

For anyone who needs work done on their house, Florida is a lot cheaper too.  In 2021, New Jersey’s construction costs are $24.05 per hour, which is the eighth most in the US.  Florida’s are only $14 per hour, which is at the national average. (For additional corrobotation, see the cost for building new homes, where NJ’s homes are the fourth most per square foot and Florida’s are the sixth least.)

MERIC also does not include the cost of college, where Florida also beats New Jersey.  

Forbes ranks NJ’s cost of attendance at a four-year state school at $14,963, the fourth highest in the US. Forbes ranks the cost to attend a four-year school in Florida at the second lowest in the US, at $6,380.

All else being equal, a teacher who is a graduate of a Florida public college would have lower debt than the graduate of a New Jersey public college and an easier time affording college for their own children, if they have any who choose to attend college.

As for why New Jersey’s college is so expensive, partly it’s just New Jersey’s cost of living, partly because Florida colleges offer less, and partly because New Jersey underfunds public higher ed and Florida generously funds it.

As for why New Jersey, a high-tax state, underfunds public higher ed, remember, New Jersey’s K-12 Fiscal Effort is #1 in the US.  Less funding for public higher ed is a downside of that.

Teacher Salaries and the Cost of Living

The comparison I’ve done shows that New Jersey teachers are still better compensated than teachers in a very weak union state, but the net advantage is more like 10%, not 25%.   With the cost of living factored in, Florida teachers do better financially prior to retirement.

There are benefits to workers of strong unionization, but the benefits are exaggerated by unions.  The net personal benefits for certain categories of teachers — high performers, those who teach in-demand areas, and anyone destined for a shorter career — are even more ambiguous.

Since Covid hit in 2020 I’ve become more concerned with a teacher shortage. I think NJ teacher salaries need to be increased, particularly in high-demand areas, but due to progressive federal taxation, teachers wouldn’t keep all the benefits of higher salaries and salary increases.  At the $77,000 average pay, 14% would leak away in federal taxes.  Additionally, if salary increases came from property taxes (or, more accurately, diminished state tax rebates), New Jersey teachers would pay higher property taxes too.  

What New Jersey needs to do for teachers (and everyone) is to have a policy for middle-class housing affordability.  At present New Jersey has apartment set-aside programs for low-income persons that are downstream from Mt. Laurel decisions, but the middle-income people are left behind to fight it out amongst themselves.

New Jersey is running out of buildable land and is losing housing due to climate change.  The solution is simple: allow taller buildings so that developers have the space to include three and four bedroom apartments.  We also need to think about dumping requirements that buildings have two stairways so apartments can have more room for more living space.  Even Inclusionary Zoning has downsides because some projects don’t pencil-out and they offset the increase in market-rate housing.

Even if a single-family detached home remains the “American Dream,” not everyone wants it.  Some families may prefer the apartment lifestyle, but they are forced to buy a single-family detached home because there are zero market-rate family-sized apartments in existence.  Some affluent empty nesters may know their houses are too big and they may be sick of yardwork, but they have too much stuff to squeeze into a two-bedroom, and hence semi-reluctantly stay in big houses.  

In conclusion, teachers in New Jersey are better off than ones in Florida, but not by a huge amount.   A strategy to make the state more attractive for teachers should include higher salaries, more front-loaded compensation, and attempts to lower the cost of housing for middle-income people.

*For full compensation and cost break-downs, go here.