Are public school teachers underpaid?

US Census Bureau

Article Highlights

  • Are public school teachers overpaid? New research says yes

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  • Teacher overcompensation costs taxpayers $120 billion a year

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  • Inflated benefits push teacher pay ahead of private market

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Education Secretary Arne Duncan thinks public-school teachers are “desperately underpaid” and has called for doubling teacher salaries. In a new paper co-authored with Jason Richwine of the Heritage Foundation, I look into whether teachers really are desperately underpaid, or underpaid at all. Jason and I find that the conventional wisdom is far off the truth.

At first glance, public-school teachers definitely look underpaid. According to Census data, teachers receive salaries around 20 percent lower than similarly educated private-sector workers. The Bureau of Labor Statistics says teachers’ benefits are about the same as benefits in the private sector. But both the salary and benefits figures are dubious.

Most teachers have Bachelor’s or Master’s degrees in education, and most people with education degrees are teachers. Decades of research has shown that education is a less rigorous course of study than other majors: Teachers enter college with below-average SAT scores but receive much higher GPAs than other students. It may be that a degree in education simply does not reflect the same underlying skills and knowledge as a degree in, say, history or chemistry. When we compare salaries based on objective measures of cognitive ability — such as SAT, GRE, or IQ scores — the teacher salary penalty disappears.

If salaries are about even, benefits push teacher pay ahead.--Andrew Biggs

And the real world bears this out: Contrary to teachers' insistences that they could earn more outside of teaching, we show that the typical worker who moves from the private sector into teaching receives a salary increase, while the typical teacher who leaves for the private sector receives a pay cut.

If salaries are about even, benefits push teacher pay ahead. The BLS benefits data, which most pay studies rely on, has three shortcomings: It omits the value of retiree health coverage, which is uncommon for private workers but is worth about an extra 10 percent of pay for teachers; it understates the value of teachers’ defined-benefit pensions, which pay benefits several times higher than the typical private 401(k) plan; and it ignores teachers’ time off outside the normal school year, meaning that long summer vacations aren’t counted as a benefit. When we fix these problems, teacher benefits are worth about double the average private-sector level.

Finally, public-school teachers have much greater job security, with unemployment rates about half those of private-school teachers or other comparable private occupations. Job security protects against loss of income during unemployment and, even more importantly, protects a position in which benefits are much more generous than private-sector levels.

Overall, we estimate that public-school teachers receive total compensation roughly 50 percent higher than they would likely receive in the private sector. Does this mean that all school teachers are overpaid? No. But it does mean that across-the-board pay increases are hardly warranted. What is needed is pay flexibility, to reward the best teachers and dismiss the worst.

Andrew G. Biggs is a resident scholar at AEI

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About the Author

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

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