It's one thing to claim that nameless, faceless government bureaucrats are overpaid. It's quite another to argue, as Jason Richwine of the Heritage Foundation and I recently have, that public school teachers are overpaid by more than 50 percent. This is real money, costing state and local governments over $100 billion annually. Our study generated significant, sometimes hysterical, pushback. But our conclusions still stand, and deliver important lessons regarding education financing and reform.
The claim that teachers are underpaid rests on a single isolated fact: that on average, public school teachers receive salaries about 19 percent less than private sector workers with bachelor's or master's degrees. But it's really not that simple. Here are eight reasons why.
1. All bachelor's degrees aren't the same. No one's surprised when a physics or finance major earns more than the person who studied medieval poetry, even if both graduate from the same college. Likewise, Education is widely held to be a less rigorous course of study, attracting below-average students but awarding the highest average GPAs of any college major. Easy grading both discourages hard work and makes it tough for schools to separate the good prospective teachers from the not-so-good ones. Prospective teachers enter college with SAT scores around the 40th percentile-meaning that about 60 percent of test-takers received higher scores-so it shouldn't be surprising if teachers' salaries after graduation salaries are around the 40th percentile as well.
"Despite conventional wisdom, their salaries are fair and their fringe benefits far outclass private sector jobs."
2. That master's degree may not be worth much either. Many teachers have master's degrees but, as the Center for Educator Compensation Reform summarized the research, "The preponderance of evidence suggests that teachers who have completed graduate degrees are not significantly more effective at increasing student learning than those with no more than a bachelor's degree." In the private sector, you get paid more for a master's degree only if it signifies you'll be a more productive employee.
3. Teachers don't work unusually long hours. Teachers responded to our study by citing the long hours they work. But unlike studies that rely on teachers' shorter "contract hours," we used teachers' self-reported work hours - if they said they worked 60 hours, we assumed they did. But it's important to note that, based on these self-reported data as well as a detailed Bureau of Labor Statistics study, average public school teachers don't work unusually long hours - about 44 hours per week, the same as other college graduates.
4. Objective skills tests erase the teacher pay gap. Individuals' scores on standardized tests are good predictors of their future earnings, and research shows a correlation between teachers' test scores and student achievement. The National Longitudinal Survey of Youth follows individuals over time and includes a wide range of variables, including participants' scores on the Armed Forces Qualification Test, which tests math and reading ability. When we analyze salaries while controlling for AFQT scores rather than paper educational credentials, the teacher salary gaps disappears: teachers are paid right around what their AFQT scores would predict.
5. Non-cognitive skills don't make up the difference. Test scores don't capture every important job skill, such as communications, organizational and interpersonal abilities. But these skills have broad market applications, so if they're undervalued in teaching then teachers who shift to other jobs should receive a pay increase. But they don't: using data from the Survey of Income and Program Participation, we show that teachers moving to the private sector usually take a pay cut, while private workers who switch to teaching usually get a salary increase. This is the opposite of what the "underpaid teacher" theory would predict.
6. It's in the benefits. Teachers' salaries are about right, but their fringe benefits - in particular pensions, retiree health care and vacation time - are a lot more generous than the private sector, making their total benefits package worth roughly twice private levels. The average teacher makes around $55,000 in annual salary, but another $55,000 in present or future benefits.
7. They're not voting with their feet. Randi Weingarten, president of the American Federation of Teachers, asks: "If teachers are so overpaid, then why aren't more ‘1 percenters' banging down the doors to enter the teaching profession? Why do 50 percent of teachers leave the profession within three to five years...?" In fact, there's no shortage of people looking for teaching jobs. In 2000, for instance, colleges graduated almost 25 percent more Education majors than could find teaching jobs. Moreover, while many young teachers leave the profession, attrition rates drop more than half once teachers reach 10 years of service. Average public school teacher quit rates aren't dramatically different than other professions, and are only half those of private school teachers. These aren't signs that teaching jobs are considered undesirable.
8. Raising pay alone won't boost teacher quality. Economist Dale Ballou shows that better qualified teacher applicants - such as those from more competitive colleges, with higher GPAs, and specializing in subject areas such as math and science - are actually less likely to be hired than other applicants, probably because principals and superintendents are biased toward the traditional teacher education route. Ballou and Michael Podgursky show that raising pay without reforms would draw more applicants and keep older teachers from retiring, potentially lowering the quality of the teacher workforce.
Public school teachers are important and should be paid fairly. Despite conventional wisdom, their salaries are fair and their fringe benefits far outclass private sector jobs. And the overpayment of teachers isn't chicken-feed - it's a large portion of total education spending at a time when states and localities are strapped for cash. Once we acknowledge that underpaid teachers aren't the reason our education system performs poorly, we can start working on reforms that might actually put things right.
Andrew Biggs is a resident scholar at the American Enterprise Institute. He and Jason Richwine of the Heritage Foundation are the authors of a new paper, "Assessing the Compensation of Public School Teachers."