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Blue Model Blues
Why Don’t Teachers Make More Money?

A new report from the Economic Policy Institute, a liberal think tank, seems to vindicate all of the standard blue model assumptions about what ails our education system: Teachers aren’t paid enough, and the solution is to spend more on K-12 and strengthen teachers’ unions. From the abstract:

The teacher pay penalty is bigger than ever. In 2015, public school teachers’ weekly wages were 17.0 percent lower than those of comparable workers—compared with just 1.8 percent lower in 1994. This erosion of relative teacher wages has fallen more heavily on experienced teachers than on entry-level teachers. Importantly, collective bargaining can help to abate this teacher wage penalty.

The authors note that the pay penalty shrinks to 11 percent when pensions and other benefits are included. Nonetheless, the message is clear: Fiscal hawks are selling teachers and students short by cutting funding and breaking up unions, teachers’ best tool for achieving higher pay. Most of the coverage of the findings in the mainstream media has been typically uncritical.

It’s possible to quibble with the findings in the report—other researchers, using different methodologies, have disputed the notion that teachers face a pay penalty. But let’s assume the EPI data are correct. Here are three other data points about education spending (from a Bellwether Education Partners paper we reported on in May) that the EPI study does not mention, but that might nonetheless have an impact on its not-so-subtle policy implications: First, per-pupil education spending has grown exponentially over the past several decades. Second, spending on teachers has remained constant as a share of overall education spending. Third, “without the need to pay down pension debts, the average American teacher could receive an immediate, permanent raise of 12 percent.”

In other words, if state and local governments (under intense pressure from unions) had not over-promised and under-funded their teacher pension funds for the past generation, about two-thirds of EPI’s reported salary gap could be wiped out overnight. It’s data like these that make skeptics cautious about giving more power to teachers’ unions and simply pumping more money into the existing system without changes to the way it is operated.

What is the best way to improve educational quality in the United States? There is good evidence that buried treasure can be found, even at our most underperforming schools, through relatively straightforward and inexpensive innovations. Tying teacher pay to performance, for one, has been shown to have a big positive impact on student performance—even though teachers fight such reforms tooth-and-nail. And a recent study found that an experimental IB program at Chicago’s public schools was a roaring success, dramatically increasing student graduation and college attendance rates.

Now, it may be that it is nonetheless good policy to hike education budgets even further to attract a better pool of teachers, as EPI suggests. But such a decision should be conditional on serious reforms of the way K-12 is operated: Increasing accountability, incentivizing innovation, and, most of all, bringing resource-draining pensions under control.

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  • Wayne Lusvardi

    I’m no pension actuary or economist, but we have switched from a intergenerational, sharing economy to an arbitrage economy when we decided to farm out low tech manufacturing. This created a bubble in stocks and commodities, including real estate, that puffs up pension systems’ future projections. If and when the Federal Reserve raises interest rates then pension systems returns will have to be based on industrial profits not on arbitrage and bubbles. The apparent reason pension systems are over promised and under funded is that they are betting on the arbitrage economy to make financial magic rather than depending on profits. Should public pension systems be based on this kind of gambling?

    • Strategic1

      you are confused.

      plans are underfunded because actuarial promises unfold over time and are based on forecasts so it is tempting (for politicians who expect to be long gone when the bills come due) to use rosy assumptions and spend tax money elsewhere on stuff constituents see here and now.

      there was no intergenerational “sharing” economy. it was an intergenerational theft economy in which yesterdays and todays retires got lots of free stuff and the opportunity to pass the bills onto someone else.

      • Wayne Lusvardi

        no you are the one who is confused

        what you are describing is not an economy but welfare

        you may have a point but I was talking about a sharing economy versus the current arbitrage economy

        go blame someone else – i took care of an elderly parent for 20 years who I could have put on Medicare (worked 3 jobs).

        i’m not collecting social security even though eligible

        I am taking care of a homeless brother on my dime

        buzz off

  • JR

    Because deferred pensions was a way for union leaders to their constituents, and for politicians to not have to raise taxes in the here and now. Like all Ponzi schemes, this one will eventually implode on itself as well. As it is currently doing in many smaller municipalities already. I’m no expert, but I think Chicago will be the first quote unquote major city to declare bankruptcy. I find it ironic that Chicago city government doesn’t use the services of University of Chicago, my alma mater. It has an OK to decent econ department, or so I’ve heard.

    • rheddles

      The University of Chicago. Where fun goes to die. And so do human beings.

    • Nevis07

      It basically is already imploding if you ask me. Promising more without any realistic way of paying for it in the future and taking from other services is the telltale sign. Of course, as you suggest an even when the buck can no longer be passed will make it very public – the question is will public pensions be identified as the problem or will other budgetary problems be identified. For example, Social Security, Medicare and Medicaid are all underfunded, but nobody is reforming age qualification despite the fact that people live longer – will the lack of additional federal tax revenue be blamed, or just unfunded public pledges of future monies?

    • f1b0nacc1

      When were you there? I spent some time at the university in the mid-70s, lived in Hitchcock Hall…

    • LarryD

      The canaries have already started to keel over. The list of cities that have gone bankrupt is only going to grow longer. California would declare bankruptcy, but for the fact that there is no mechanism for a state to do so. As the saying goes “what cannot continue, wont continue”, eventually even the state guarantee of union pensions will fail.

  • Pete

    Why don’t teachers make more money?

    Becasue they have 3 months off in te summer and many holidays during the school year. It’s almost part time work.

    • Episteme

      That’s an important factor not mentioned. Regardless of the difficulties at not being paid for part of the year, that is tied directly to not working part of the year (and therefore having a salary based on less overall work). The matter of additional holidays (which, coming during the school year itself, are technically subsumed into the pay scheme as if they were additional vacation days or the like) is part of the larger issue of compensation vs. salary. Beyond pensions, there are benefits such as health insurance, tenure, and numerous ‘educator’ allowances with affiliated groups that are actually limited only to government-employed union workers (I discovered this to my chagrin while employed as a Museum Educator setting up and running programs for academic groups; I wasn’t considered an ‘educator’ for most purposes and market-based benefits because I wasn’t a K-12 employee). It’s all part of the broader salary vs. compensation issue any employee sees in terms of breaking down pay vs. benefits, just one that is much more heavily skewed in the direction of benefits (including deferred benefits such as pensions that non-government employees no longer see).

  • f1b0nacc1

    A good deal of this is nonsense….arguing that a teacher with an Ed degree is comparable to a petroleum engineer (for instance) with a Masters at a similar level is something so ignorant that only a social scientist could even consider it an option.

  • FriendlyGoat

    1) Teachers are losing ground because society is valuing them and their contributions less and less. Negative talk has consequences.
    2) Teachers are losing ground because most lower-middle-class workers are losing ground and teaching is not an exception to the trend.

    • seattleoutcast

      The average California teacher’s yearly pension is greater than the salary I make in the private sector. Quit the BS about teachers being underpaid.

      • FriendlyGoat

        This is what I’m talking about in #2.

        • seattleoutcast

          I think the reason public education is under attack because the dismal failure of the system. The public school system is more about indoctrination than education. With students kept for 8 hours a day for 13 years, you would think that they would all be able to read and write. You would also think they would understand American civics. But they don’t. It is embarrassing. And that is why those running the public school system get so much negative criticism.

          WRM discusses the failure of the system time and again on his site. He offers many reasons for this. I don’t understand why you never mention his points when you discuss the public school system. Instead it is always the standard fare that public union officials put out: lack of money, negative talk, etc.

          • FriendlyGoat

            Public education has the pesky problem of being——public. That means it accepts all comers in whatever conditions they arrive. The saying “it’s a zoo” has relevance here——but we don’t just give up the principle that public means public.

  • Andrew Allison

    Pay for performance, period.

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