ROSEN: Dre earns his pay

Published August 10, 2007 at midnight

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During the off-season, the Denver Broncos obtained Detroit Lions all-pro cornerback Dré Bly and signed him to a five-year, $33 million contract. Paired with all-pro Champ Bailey, the Broncos have one of the top defensive-back tandems in the NFL. As a Broncos fan, I'm delighted to have Bly on our squad. No, I haven't suddenly become a sportswriter. So, here's the political and economic connection.

Bly recently told a sportswriter that there was something "out of whack" in the contrast between teachers in this country making only $30,000 a year, while an NFL cornerback gets $6.6 million.

Bly's parents, not coincidentally, are both fifth-grade public school teachers who, we were told, have a combined 55 years on the job. I commend Bly for his dedication to his folks and I'm sure he means well, but there's nothing "out of whack" about this. Bly needn't feel guilty about his contract. The explanation for this pay disparity is perfectly reasonable and logical.

In the socialist economic system of the former Soviet Union, all-knowing bureaucrats dictated what people would be paid for the jobs they did and how much consumers would pay for the goods and services they provided. We know how that turned out.

In our market economy, we allow the forces of supply and demand to make these determinations.

There are 4 million K-12 teachers in the United States and a waiting list of people who aspire to these jobs when openings occur. There are tens of millions of people who have the ability to perform this work if they wanted to. The market-clearing price equilibrates supply and demand. School districts must pay that price to retain current employees and fill vacancies. If there were a shortage of qualified teachers, school districts would be forced to pay more. If there's no shortage, they don't have to.

Incidentally, schoolteachers typically make a lot more than $30,000 a year. In Jefferson County, Colorado's largest public school district, the salary schedule starts at $32,408 for a rookie and tops out at more than $78,000 for teachers with years of service comparable to Bly's parents. A mid-career teacher with 15 years on the job and a master's degree gets more than $68,000 in salary along with a gold-plated pension plan and generous fringe benefits that add about 25 percent. Since teachers work fewer than nine months a year, that's an annualized compensation package well over $100,000.

Dré Bly has exceptional and extremely rare talents. There are barely a hundred jobs in the country in his particular specialty and just a handful of people in the world who can perform at his level. His employer, the Denver Broncos, pays him handsomely because it expects him to generate revenues in excess of his pay.

By contrast, public school districts aren't net revenue producers; they consume tax dollars. Their budgets are constrained by what taxpayers are willing to pay, just as the Broncos budget is constrained by what their customers are willing to pay. For the same reasons, rock idols, movie stars, Bill Gates, J.K. Rowling, Katie Couric and Rush Limbaugh make megabucks while the president of the United States gets only $400,000.

If 4 million teachers were each paid $6.6 million a year, it would cost $26 trillion, twice the nation's total GDP. And why stop at teachers? If money were no object, it would be nice to pay cops, firefighters and soldiers more, too. Do the math; it's impractical.

Water is essential to sustain life. By contrast, diamonds are mostly a decorative affectation. But water is abundant and diamonds are rare. That's why diamonds cost more than water, one's personal values notwithstanding.

A market economy may be imperfect, but it beats all the alternatives. And that's the way the world works.

Mike Rosen's radio show airs daily from 9 a.m. to noon on 850 KOA. He can be reached by e-mail at mikerosen@850koa.com.

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