Tag Archives: Choice in Education

New study: total compensation of public school teachers is 52% greater than fair market value

Whenever advocates of greater spending on education try to argue that teachers are not paid enough, they always compare teachers to other workers to other workers in terms of years spent in college. On that view, a software engineer with 6 years of college (B.S. and M.S. in computer science) is the same as an English teacher with 6 years of “Education college” (B.Ed and M.Ed in education). But is the ability to write code to perform real-time commercial transactions in a distributed database environment really deserving of the same total compensation as teaching 6-year olds how to read Dr. Seuss books? Is the supply of each skill set the same? Is the demand for each skill set the same? What should the price of each kind of labor be?

Let’s see what this new study from the American Enterprise Institute says.

Excerpt:

The teaching profession is crucial to America’s society and economy, but public-school teachers should receive compensation that is neither higher nor lower than market rates. Do teachers currently receive the proper level of compensation? Standard analytical approaches to this question compare teacher salaries to the salaries of similarly educated and experienced private-sector workers, and then add the value of employer contributions toward fringe benefits. These simple comparisons would indicate that public-school teachers are undercompensated. However, comparing teachers to non-teachers presents special challenges not accounted for in the existing literature.

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.

Here’s what the study shows:

  • 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.
  • 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.

And they conclude:

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.

Well, maybe teachers are overpaid – but that would be OK if they were somehow super intelligent and productive.

Are teachers intelligent?

CBS Moneywatch explains what the research shows about teachers.

Excerpt:

Research over the years has indicated that education majors, who enter college with the lowest average SAT scores, leave with the highest grades.   Some of academic evidence documenting easy A’s for future teachers goes back more than 50 years!

The latest damning report on the ease of majoring in education comes from research at the University of Missouri, my alma mater.  The study, conducted by economist Cory Koedel shows that education majors receive “substantially higher” grades than students in every other department.

Koedel examined the grades earned by undergraduates during the 2007-2008 school year at three large state universities that include sizable education programs — University of Missouri, Miami (OH) University and Indiana University.  The researcher compared the grades earned by education majors with the grades earned by students in 12 other majors including biology, economics, English, history, philosophy, mathematics, chemistry, psychology and sociology.

Education majors enjoyed grade point averages that were .5 to .8 grade points higher than students in the other college majors. At the University of Missouri, for instance, the average education major has a 3.80 GPA versus 2.99 GPA (science, math, econ majors), 3.12 GPA (social science majors) and 3.16 GPA (humanities majors).

So it is easy for teachers with lower SAT scores to get much higher grades than other applicants to non-teaching programs with much higher SAT scores. It doesn’t sound like the smartest people go to teachers college. Nor does it sound as if they learn anything very challenging when they are there.

Are teachers doing a good job of teaching useful skills?

CNN sheds some light on how well teachers perform.

Excerpt:

Last week, the College Board dealt parents, teachers and the education world a serious blow. According to its latest test results, “SAT reading scores for the high school class of 2011 were the lowest on record, and combined reading and math scores fell to their lowest point since 1995.”

The reading scores, which stand at 497, are noticeably lower than just six years ago, when they stood at 508. And it’s just the second time in the last 20 years that reading scores have dropped so precipitously in a single year.

[…]The 2011 budget for the Department of Education is estimated to top $70 billion, while overall spending on public elementary and secondary education is about $600 billion a year. By comparison, in 1972, before the Department of Education even existed, SAT critical reading scores for college-bound seniors were above 525, more than 20 points higher than they are today, while today’s math scores are only slightly better than in 1972.

So, not only are these highly-paid teachers less intelligent (on average) than other college applicants, but they also fail to educate our children properly. And we are forced to pay them, through taxes, regardless of how they perform. Our children who are suffering from this failed monopoly.

Do teacher unions improve teacher quality?

And do you know who protects bad teachers from being fired, and prevents good teachers from being paid more?

This is why we need to abolish the federal Department of Education and teacher unions. Why are we paying these people ridiculous salaries and benefits to fail our children?

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