I just returned from Spain and I’m still spinning from sticker shock. Okay, I can live with high prices, but the global decline in the value of the US dollar, along with the resulting poor exchange rate, meant goods and services in Spain were costing me 50% more than the already pricey sticker-price.
The exchange rate last week was $1.50 US to €1.00 Euro. This bumped an €8 burger up to $12 and a €70 hotel room up to $105.00. Get the picture? A coke and burger at McDonalds came to $10.50. Ouch! For a short trip to visit friends I could deal with the expense. The idea of living and teaching in Western Europe, however, didn’t make financial sense. Unless, of course, I was paid in Euros and at a figure I could live with.
Who’s to blame for the sinking US dollar? I’ll avoid that topic but will say schools that capitalize on the situation at their teachers’ expense are without conscience. Such schools require parents to pay tuitions in Euros, (a strong currency) while teachers’ contracts specify a salary based on the weakening US dollar. As the dollar becomes worth less and less against the Euro, these schools are spending fewer Euros to purchase the dollars needed to meet teachers’ salaries. This means bigger profits. Of course, teachers are suffering while school owners get rich. Remember, teachers need to purchase local currency with their dollars and their dollar is buying less of it.
The Euro is not the only currency rising against the dollar. In some parts of the world the dollar buys 50% less of the local currency than it did a year ago. Imagine your salary staying the same but your rent doubling along with food and gas; all because it takes more dollars to buy the local currency. Exchange rates have a profound impact on International Educators and failure to research the economic realities of a particular location can and will have devastating consequences on your financial well-being.
If direction and momentum are reliable indicators, the forecast for the future of the US dollar is poor. In January of ’09 it took $1.28 to purchase €1.00 Euro. By December of ‘09 it took $1.51. This may not seem like a big increase but consider that in January ‘09, $1000 bought €781, by December the same $1000 bought only €662. A more startling way to view the change is to see that the cost to buy €781 rose from $1000 to $1179.68. At one time the dollar was stronger than the Euro, but that’s just a sinking memory, now.
For Americans at home in the United States, the weakening of the dollar is having a very positive effect. As the dollar becomes worth less it makes our goods cheaper overseas. Cheaper goods mean stronger exports and stronger exports equal more jobs. Does the US government want to see the devaluating trend reversed? Probably not! So keep your eyes open, do the research and make sure you can afford to accept a job offer that comes your way.
Participate in Discussion Board for this Topic