Are teachers underpaid?

For as long as I can remember, teachers have complained about their pay.  The recent statewide teachers’ strike in West Virginia and the threat of another in Oklahoma are the latest examples.  Whether teachers are indeed underpaid depends to a large extent on regional differences in the cost of living (“The Fight Over Teacher Salaries: A Look At The Numbers,” npr.com, Mar. 16).

Consider Indiana and California.  The average salary in the former is $50,715, while in the latter it is $72,842.  But when the cost of living is factored in, the two states’ salaries are within $100.  The Los Angeles Unified School District, where I taught for my entire 28-year career, has increased salaries over the last decade, with the maximum salary now $80,116.  But housing eats up a disproportionate portion of that.  For example, the rent for a typical one-bedroom apartment in West Los Angeles is $1,900.

Nevertheless, there are those who argue that teachers are not underpaid.   They say that total compensation amounts to about $1.50 for every $1 their skills could garner in a private sector job.  Put differently, a teacher earning $51,000 would receive another $51,480 in present or future fringe benefits.  In contrast, an employee in the private sector with the same salary would receive only about $22,185 in fringe benefits.  In short, salaries alone are a misleading gauge.  Fringe benefits and job security need to be taken into account.

Then there is the old argument that teachers teach fewer days and shorter hours than workers in the private sector.  They see teachers leaving school at 3:00 and assume that their day is over. They forget that teachers need to prepare lessons and correct papers even if they don’t do so on school grounds. Summer vacations are often spent taking classes or working a second job.

But I think the strongest rebuttal to the charge that teachers aren’t underpaid is the growing shortage.  If teaching is such a plum, then why aren’t more college graduates entering the field and making it a career?  In a real marketplace, supply and demand find a balance.  Somehow, that law doesn’t apply to teaching.

(To post a comment, click on the title of this blog.)

2 Replies to “Are teachers underpaid?”

  1. Public sector employees are usually underpaid and over-benefited relative to comparably-qualified private sector employees. This follows from the different factors influencing management’s decisions regarding pay and benefits in the public and private sectors.

    In the public sector, management has little personal incentive to pay more to hire more highly-qualified employees. A school superintendent will get in trouble if there are not enough teachers to cover all the classes or if the teachers abuse the students, but will not get in trouble if the teachers are mediocre or average rather than far above average. Conversely, the superintendent will get in trouble if increased teacher salaries cause tax rates to increase. The superintendent is very sensitive to cost but relatively insensitive to quality.

    In the private sector, management is, of course, always very sensitive to cost. However, for many/most private sector employers, management is also very sensitive to quality — at least with regard to some of the workforce. For the private sector employer, if a mediocre manager or employee screws up badly, the employer may lose an important account or incur large additional expenses adversely impacting the employer’s profitability. Conversely, if the outstanding employee does an exceptionally good job, the employer may make a financial killing. It follows that rational private sector managers will offer high pay, at least to those employees/managers whose quality is likely to make a difference to the employer’s profitability.

    Harder to explain why public sector employees are over-benefited relative to private sector employees. Certainly, part of the explanation is the ability of public sector employers to promise but not fund future benefits (pensions, retiree health insurance), knowing that, by the time the bill comes due, the employer officials who made the promises will have moved on or retired. For private employers, federal benefit-funding requirements and SEC disclosure requirements somewhat limit the employer officials’ ability to mortgage the employer’s future in this way. It’s also possible that the higher public sector benefits reflect the fact that, for many public sector employees, there are no or only very limited comparable private sector job opportunities available for the mid-career employee. In other words, the public sector jobs are often so specialized that a mid-career public sector employee’s skills/experience will not qualify the employee for a comparable-pay private sector job. Therefore, the public sector employer must offer that employee job security and good post-retirement benefits. By contrast, the mid-career private sector employee can usually find many comparable-pay private sector jobs, so the employee is not trapped in his/her current employment.

    Bottom line: You are correct. If teachers were overpaid, we would see the law school, med school and business school applicants (or lawyers, doctors and bankers) seeking teaching jobs — and we don’t.

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    1. LaborLawyer: You make a very important distinction between the public and private sector. As long as so many teachers continue to quit early in their careers, there’s a powerful incentive to maintain the present back-loaded pension plan. The only way it is going to change, short of a taxpayer revolt, is for schools to realize they can’t recruit and retain enough qualified teachers to fill their classrooms. That is starting to happen in STEM and special education. Yet tradition dies hard in education. Perhaps the answer is to offer teachers a choice between defined-benefit or defined-contribution pensions.

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