Where Can You Make the Most Money? Educator Geoarbitrage.

OF COURSE, you are interested in maximizing your income as an educator. You know that making more money gives you options in life and on the path to financial independence! Welcome to the third post in the educator income series. Today, we’ll look at educator geoarbitrage. If you’re flexible on where you live or work, geoarbitrage can provide a significant advantage.

If you’ve already considered the career ladder and have your plans laid out for the Three Es, layering in location can multiply the impact. If you haven’t already read the previous posts in the series, check those links out.

For an quick overview of all the levers you can use to increase income, check out: Quick Guide: How To Make More Money As An Educator.

What is Geoarbitrage?

Geoarbitrage is changing location to maximize your financial advantages. Traditionally, the focus is primarily on lower cost-of-living. But income differences based on where you work matter too!

You may be able to increase your income by moving to a job in a new district, changing states, or teaching internationally.

You could also decrease your cost-of-living by changing your location. In the best case, you’ll do both.

Either way, you’ll be improving your financial position by making a location change.

To help you consider options, this post will explore:

• Educator pay by state
• Local geoarbitrage options
• International geoarbitrage (briefly)

Which State Will Pay Me the Most?

I can answer this for you! (sort of) To take a look at this, I analyzed average pay by state.

Let’s start by reviewing average teacher salary. I used the estimates of 2018 teacher pay from the Rankings of the States 2017 and Estimates of School Statistics 2018 NEA Research report. (Note: There were late-2018 labor actions in several states that do not yet show in the data.)

The opening map in this post is a gradient of average teacher pay from the report. Here is the data for all states and D.C.:

The national average teacher salary in 2018 was $60,483. Only 14 states had a higher averange than this. Delaware squeezed it out by $1!

Looking at average salary by state, you’ll also see:

• Average salary ranges from $43,107 (Mississippi) – $83,585 (New York). That’s a difference of more than $40,000 a year!
• The median average salary was Indiana with $54,846
• The top 5 states all had average salaries over $70,000/year

Just mapping by average salary didn’t provide enough visual variation, so I mapped the same data by quintiles. The red group represents the 20% of states with the lowest average pay, and dark green the highest. This provides a bit more visual differentiation:

This makes regional variations more clear. Perhaps not surprisingly, teacher pay is highest on the West coast and in the Northeast.

Interestingly, Washington state is an outlier in this data. However, Washington recently experienced significant labor action that resulted in salary increases not yet appearing in the data. Washington will likely rank higher in the future.

The southern and central parts of the country typically fall into the lower quintiles of average pay.

A few important caveats before we continue:

Salary is only one aspect of income. Health care contributions, leave provisions, and pension benefits contribute to a total compensation package. Review the total contract before making a decision.

Compensation varies within a state – sometimes by a lot! Again, review the specific contract.

Your individual placement on a salary schedule matters more than the average.

Teacher pay isn’t perfectly correlated with pay for other education positions.

Okay, caveats aside, this information can provide a useful starting point for anyone looking to maximize their income while working in education. Consider it a marker to guide your search, not an absolute guide.

But wait!

What about Cost of Living?!?

Looking at income without considering costs is a horrible way to make a financial decision! So, I did that for you too.

For this, I used the Third Quarter 2018 Cost of Living Survey from MERIC.

Here’s that map:

Just looking at a cost of living index isn’t all that useful either. It can tell you where it’s more expensive to live. California, New York and Hawaii lose badly there.

Let’s link average salary and cost-of-living. Next, I weighted the states average salary by the cost of living index. The result in map form:

That’s a very different (and more useful) picture!

For comparison, here are snapshots of the two maps side by side:

The salary range, when weighted by cost-of-living becomes $30,633 (Hawaii) to $69, 514 (Michigan.)

Michigan, Illinois, and Pennsylvania suddenly move to the top!

California and New York rank high in both versions, but drop from the top spots when cost-of-living is factored in.

Florida, Arizona, Utah, South Dakota, and West Virginia are in the bottom quintile in both. These are likely not good states for educators looking to maximize their income! (Note: West Virginia and Arizona had significant labor actions in 2018 that resulted in salary increases not yet reflected in data. So…maybe…?)

The big movers down once cost-of-living is factored in are Hawaii and Oregon, which both dropped from the top quintiles down to the lowest. Hawaii’s average teacher salary adjusted for cost of living is $30,633 – barely half of the average US teacher salary. That Hawaiian life really is spendy for an educator, but maybe the beaches balance it out?

Here is the full chart. You can use it to compare your current state to others in terms of average salary weighted by cost of living.

If you are able to move to a different state, you’ve got information to inform your search!

Let’s Get Local

As I mentioned before, state average salary is a very rough tool for those looking to maximize income. Salary can vary widely across a single state. Even those with a statewide pay schedule have local variation in income.

Or, perhaps, you don’t want to move across the country. Not a problem! Educators often have options for maximizing income by closely examining salary schedules within a region. In the region where I’ve spent most of my career, experienced teacher pay can vary by more than $10k in school districts right next to each other. For the same job!

This variation happens at all levels of the educator career ladder. Education assistant pay varies by $3/hour and principal pay by almost $15k/year. Explore options around you!

To get local, pull the salary schedules and any other compensation information you can find from the district websites for any district you are considering. In my previous post, the Three Es, I was able to do this for teachers in five random districts in under ten minutes.

Compare your current pay to what you would make in the district now and in five years. Is the variation significant enough to support a move?

Now is a good time to mention again – there are a variety of factors to include when analyzing total compensation. Salary is only one. Compare as many as you can. Pay particular attention to health care costs and any potential longevity bonuses. (In the future, should I write a post on comparing education contracts?)

It is also important to consider costs even locally. In many (but not all) cases, large metro areas will pay more than rural areas. These will typically come with much higher housing costs, though transportation costs may be lower.

Tip: Districts on the outer edges of metro areas are often the “sweet spot” for compensation. They have to pay wages competitive with the metro area to avoid constant talent drain, but may not have metro area costs. CJ in her Educator on FI/RE interview noticed and took advantage of this.

Whether you are narrowing your cross-country move options, or exploring local geoarbitrage, examining local pay variance can be a powerful strategy for maximizing your income!

Take It International

International teaching provides excellent geoarbitrage opportunities for those who are able to work outside the United States. There are typically two paths:

Trained educators who work at international schools teaching in their content area.

College degree holders interested in teaching English in another country

I have colleagues who have taken this path and seen either cost-of-living savings, income increases, or both. One school principal friend took on leadership of an international school. It came with a 50% increase in salary, a car, and no housing costs. He’s renting out his house in the United States and has more than doubled his annual savings.

If you are a teacher using international geoarbitrage, I’d love to connect with you about sharing more with my readers.

For now, I’ll point you to the recent Choose FI podcast. Two teachers, one on each of the paths, talk about their experience with international teaching. I found it informative and if you’re looking to make a big move it can provide a great starting point for you:

Summary of Educator Geoarbitrage Options

There you have it, three ways to use location to maximize your educator income:

• Change states : Here are the best states for teachers seeking financial independence.
• Change districts locally
• Teach internationally

For those willing and able to make a change, geoarbitrage can make a significant difference on your path to financial independence. You may be able to increase your income, decrease your spending, or BOTH.

If you haven’t tried the other posts in the Educator Income series, take a look at other options to increase your earning power:

• Quick Guide: How To Make More Money As An Educator.
• Educator Career Ladder
• The Three Es: Education, Experience, and Extra-Duty
• Educator Side Hustles

In combination, these can allow you to significantly increase your income!

Let me know what you think, or what other topics you’d like to explore. Leave a comment below, or contact me.