New Study - Public School Teachers Are Overpaid by $120 Billion

I happened upon a very interesting live call-in show on C-SPAN's Washington Journal today.  It was an interview of Andrew Biggs, Resident Scholar of American Enterprise Institute.  He and Jason Richwine of the Heritage Foundation undertook a massive study titled, Assessing the Compensation of Public-School Teachers.  It can be found on both the Heritage and AEI websites.  You can also read the detailed report here.  The summary conclusions of the report from the AEI site are:  "We conclude that public-school teacher salaries are comparable to those paid to similarly skilled private sector workers, but that more generous fringe benefits for public-school teachers, including greater job security, make total compensation 52 percent greater than fair market levels, equivalent to more than $120 billion overcharged to taxpayers each year. Teacher compensation could therefore be reduced with only minor effects on recruitment and retention. Alternatively, teachers who are more effective at raising student achievement might be hired at comparable cost."

Here are the more detailed summary findings:

"First, formal educational attainment, such as a degree acquired or years of education completed, is not a good proxy for the earnings potential of school teachers. Public-school teachers earn less in wages on average than non-teachers with the same level of education, but teacher skills generally lag behind those of other workers with similar "paper" qualifications. We show that:

• The wage gap between teachers and non-teachers disappears when both groups are matched on an objective measure of cognitive ability rather than on years of education.

• Public-school teachers earn higher wages than private- school teachers, even when the comparison is limited to secular schools with standard curriculums.

• Workers who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent. Teachers who change to non-teaching jobs, on the other hand, see their wages decrease by roughly 3 percent. This is the opposite of what one would expect if teachers were underpaid.

Second, several of the most generous fringe benefits for public-school teachers often go unrecognized:

• Pension programs for public-school teachers are significantly more generous than the typical private sector retirement plan, but this generosity is hidden by public-sector accounting practices that allow lower employer contributions than a private-sector plan promising the same retirement benefits.

• Most teachers accrue generous retiree health benefits as they work, but retiree health care is excluded from Bureau of Labor Statistics benefits data and thus frequently overlooked. While rarely offered in the private sector, retiree health coverage for teachers is worth roughly an additional 10 percent of wages.

• Job security for teachers is considerably greater than in comparable professions. Using a model to calculate the welfare value of job security, we find that job security for typical teachers is worth about an extra 1 percent of wages, rising to 8.6 percent when considering that extra job security protects a premium paid in terms of salaries and benefits.

What I found so interesting in the C-SPAN show was the format.  The co-author of the report took calls from several teachers angerly questioning the results.  His answers defended their survey process while calmly addressing all the concerns.  He took each caller's questions seriously and was able to defend the study's results which did account for differences in teacher tenure, areas of the country, and union vs non-union.  He even politely responded to a published complaint from Secretary of Education Arne Duncan with detailed specifics and a strong conclusion that he did not read the study.  The bottom line conclusion is that public school teachers are overpaid.  However one can understand the teacher's complaints because a large portion of the valuation is because they do not work 12 months and their benefits package is significantly better than in the private sector; value which does not show up on the pay stub. 

When I came out of college it was well known that if you chose a career in government or teaching you would have to accept lower pay but you would not have to work as hard, you get much more time off, and you would have more benefits.  It seems that this is still the condition today.  The problem I have is that the education students are getting is not as good as it was when I went to school.  The global comparative results are unquestioned.  And yet the political call is to spend more on education, in other words, pay the teachers more.  But the arguments against this are also clear.  The union efforts have focused not on improving the quality of education but the benefits, protection, and happiness of the teachers.  You can also see multiple examples of better student performance at private and church schools where teacher pay is much less than in public schools.  So my conclusion is we as a society need to focus on student performance instead of teacher pay and the teacher pay system needs to be overhauled so the best get higher pay and the worst get lower pay or fired.  We need to have students attend year-round since they are not needed in the fields (as was the case 100 years ago) and most have part-time jobs who need to work.  I think both the student performance and teacher pay problems are a result of not having a market based economy.  History has shown consistently that higher results come from competition.  However, I am frankly not optimistic that these simple but effective solutions will be implemented because of politics.  So at least over the short term expect student performance to continue to lag behind global competitors and teachers to continue to demand (and receive) higher pay.

 

 

Comments

[Foxwood Online Marketing]

Good point Cat. In business there is the profit motive to keep the measurement criteria fresh and appropriate. Public schools have no such oversight mechanism and their unions' objective is to keep it that way. Unless and until the public gets fed up with overpaying teachers who deliver declining results, things will not get better.

[Cat]

I ideologically love the adage, "If you measure, it gets better," but I have witnessed the outcome - If you measure, it gets gamed.

High level administrators at a prestigious university agreed to be compensated with bonuses if they accomplished impressive goals, that they themselves suggested - worthy (but unfunded) goals that were severely scrutinized by the most senior administration and their analysts. The goals were almost invariably accomplished and all the high level administrators received all or nearly all their bonuses. What many failed to see was that these administrators diverted funds from mission-critical functions (mostly teaching functions, which affected students adversely) in order to insure the bonus-driven goals were achieved. No one could blame them.

The same is happening with measurements for K-12. Teachers are being rewarded for students passing achievement tests, so they are foregoing their curricula to merely teach what students will find on quantitative short-answer and multiple-guess standardized tests.

Where I do hold hope for education in general, is where learning is fundamentally reconfigured to more resemble the gifted programs of the 60's and 70's, wherein students all have laptops learn at an individualized pace through online groups like Khan Academy (http://www.khanacademy.org/), with teachers who are engaged in observing progress of a class of 25 or so, and assisting those who are "stuck". Students are encouraged to collaborate together instead of silently plug away. But again, measuring a teacher's observational and intermittent teaching skills, would be a daunting challenge - especially when it came to comparing one teacher's "performance" against another's, not to mention basing pay on such measures. I don't know if humans are smart enough for this.

[Foxwood Online Marketing]

Thanks Cat, well put. In the C-SPAN session Andrew Biggs made a comment I hadn't heard before. That is, you can't measure the effectiveness of the teacher by measuring the student's performance. A teacher could get a group that were under-motivated, or who had a string of poor teachers before coming to the classroom of a good teacher. However, I am convinced that there are appropriate criteria that could be developed to measure teacher performance. In business there are many difficult roles to measure, yet it is done. And a very experienced Operations Director once said, "If you measure it, it gets better."
I am certain if we leave it to government to measure teacher performance, it will not work. Actually this is an area where the unions could do much to bolster their position if they weren't focused on protecting poor performers.

[Cat]

Attempts at pay for teaching performance based on student outcomes has, so far, been riddled with corrupted teaching and testing practices that do not benefit students. The crux of this K-12 problem is the same as higher ed - how to measure. It's how to measure teaching quality, how to empirically and accurately measure student learning. Even if you think you can devise a valid measurement system, how do you translate performance measurements into an understandable accounting process that makes sense to teachers, evaluators (administrators), parents, AND STUDENTS - who are sick of seeing poor teachers rewarded because they've figured out how to "game" their systems. This is a HUGE and expensive problem in the US and it may be time to throw in the towel and start emulating education practices of countries who have nailed this. As Keef alludes, US stature in education at large has eroded badly over the last 50 years. Before digging heels to defend US education, consider what more we have to lose by continuing our poor teaching behaviors, yet expecting better outcomes. We as a country have already lost too much.