Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
It seems to me that education today is not very well oriented, because it does not talk about investments, trading and similar things, and this is a very serious problem.
Moreover, students get a lot of unnecessary tasks that only slow down their development.
I will explain by my own example. When I need to write a capstone project, I do not do it myself, but seek help from the service PapersOwl, because I understand that they will do everything quickly and efficiently, and I can save take your time and spend it on topical market research, trading and investing and it will definitely be more rewarding for me.
After the Super Committee: “Massive” Education Cuts? Think Again:
The “super committee’s” failure to reach an agreement to reduce federal spending is supposed to trigger automatic spending cuts—some of which could decrease funding for the Department of Education beginning in 2013. This has the education unions and Secretary Arne Duncan up in arms.
Randi Weingarten, president of the American Federation of Teachers, stated that this decrease in funding represents “drastic across-the-board cuts to vital programs” resulting in “massive reductions to education programs.”
“Massive”? Let’s put this in perspective. The total cuts, if enacted—which some suggest is doubtful—would represent a 7.8 percent decrease in funding for the Department of Education, equaling about $3.5 billion. Considering how much money has been pumped into the department’s budget over the last several years, this is a comparatively small amount. In the last decade, education spending has increased by 57 percent, adjusting for inflation. On top of this, the President infused the Department’s budget with nearly $100 billion in 2009 as part of the stimulus act, and just last summer, Democrats in Congress threw them another $10 billion through the “edujobs” bill.
Federal per-pupil K–12 spending has more than doubled since 1970. Today, the Department of Education’s discretionary budget is the third largest of all federal agencies, ranking only behind the Department of Defense and the Department of Health and Human Services.
Yet all of this spending on the roughly 150 “vital” federally funded education programs has little to show in the way of improved student achievement. Despite ever-increasing education spending, the latest National Assessment of Educational Progress report confirms that student achievement continues the same nearly flatline trend Americans have seen for decades.
Taxpayers across the nation are demanding that the federal government take the financial steps necessary to put our nation back on a wise economic course. After years of failed education programs supported by the taxpayer’s dime, citizens—adults and children alike—deserve better.
Instead of continuing to pour money into unsuccessful Washington programs, systemic reform is needed. Proposals set forth by the House Education & the Workforce Committee attempt to achieve this goal by not only cutting ineffective education programs but also by giving state leaders flexibility to use education dollars as their states deem best. Along similar lines, the A–PLUS Act, proposed by Senator Jim DeMint (R–SC) and Representative Rob Bishop (R–UT), would provide states flexibility to opt out of federal programs outlined in No Child Left Behind. Instead, states would be able to create their own plans for student achievement.
More federal dollars are not the answer to improving education, as history shows. Allowing states to use their dollars more effectively is key to promoting policies tailored to the needs of individual students.
Rachel Sheffield, December 5, 2011 at 4:00 pm
http://blog.heritage.org/2011/12/05/after-the-super-committee-%E2%80%9Cmassive%E2%80%9D-education-cuts-think-again/
Assessing the Compensation of Public-School Teachers:
Executive Summary
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. 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.
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.
Assessing the Compensation of Public-School Teachers
The compensation of public-school teachers is a perennial issue in American public policy, as the need to balance budgets collides with the desire to recruit and retain quality teachers. Since the operation of public schools is typically the largest local government expenditure, decisions about education funding often dominate local elections. Teachers’ unions or professional associations operate in all 50 states, and they support local candidates who do political battle with opponents concerned about rising property taxes. In 13 states, teachers are allowed to strike to secure a more favorable contract—an option unavailable to police and firefighters—which raises the political stakes considerably.[1]
Pensions and other teacher benefits are often funded at the state level, leading to periodic clashes between teachers’ unions and state governments over budget priorities. The recent recession has reduced tax receipts and forced states to make painful decisions about spending cuts or tax increases, further amplifying these conflicts.
One of the more prominent battles over teacher compensation has occurred in New Jersey, where Governor Chris Christie has required teachers and other public workers to increase their health care contribution from 0 percent to 1.5 percent of salary.[2] Reforms proposed by Wisconsin Governor Scott Walker, which led to Democratic lawmakers fleeing the state to deny the legislature a quorum, reduced teachers’ benefits and limited their ability to bargain collectively. Florida recently required state employees to contribute 3 percent of their salary to their pension plan, which had been funded exclusively by taxpayers. Florida teachers filed a lawsuit in response.[3]
Much of the debate over teacher compensation is couched as a question about how much the government can afford at the present time—that is, how much is it able to pay teachers? Reformers argue that reductions in wages and benefits for teachers are a budgetary necessity, while teachers argue that savings should be found elsewhere. But a different question is often ignored in the education debate, one that is independent of any government’s current fiscal situation: How much should teachers be paid?
No one doubts the significance of high-quality teachers to the school system and to the economy in general, but even the most important public workers should be paid at a level commensurate with their skills—no more, no less. Ideally, if a teacher’s skills are worth $X in the private marketplace, that teacher should be paid $X by the government. This system would ensure that the public gets qualified and competent teachers without overpaying for the privilege. How close is the United States to that ideal? There is much dispute about how to measure teachers’ skills and the total compensation they receive for them.
This report is a comprehensive assessment of salaries, benefits, and job security for public-school teachers, intended to resolve disputes over whether teachers as a group are “overpaid” or “underpaid.” We find that public-school teachers receive compensation about 52 percent higher than their skills would otherwise garner in the private sector, and we discuss the implications of this fact for education policy in general.
Salaries
We begin by introducing the human capital model of wages, using it to compare teacher and non-teacher salaries with adjustments for skill differences between the two groups. We then show how the standard analysis focused on formal educational attainment can be misleading in the case of teachers, whose years of education may not be as valuable in the marketplace as for workers in other occupations. We also compare public-school-teacher salaries to private-school-teacher salaries, and we conclude by examining how the average teacher’s wage changes when he or she leaves the profession.
Initial Wage Analysis. Public-school teachers receive higher wages than the average worker, but it would be simplistic to conclude that one group is overpaid relative to another group based only on average salaries. Because groups may have different characteristics that affect their productivity, proper comparisons require controlling for worker skills.
Comparing Jobs versus Comparing Workers. There are two major ways that researchers attempt to account for skill differences between teachers and non-teachers. One is to identify occupations that have similar skill requirements as teaching, and to then examine average salaries in those occupations as reported by the Bureau of Labor Statistics (BLS). For example, Jay Greene and Marcus Winters of the Manhattan Institute recently reported that public-school teachers nationwide earn an hourly salary 11 percent higher than other “professional specialty and technical workers,” and 36 percent higher than white-collar workers in general.[4] The major strength of this approach is that it uses compensation data as reported by employers, which is generally more reliable than surveys of individual employees.
Use of the BLS occupational wage data has a number of drawbacks, however. First, the choice of occupations to compare with teaching is subjective. Even systematic methods of identifying comparable occupations rely on assumptions about job characteristics that are hard to verify. Second, occupational comparisons cannot fully account for differences in earnings-related worker characteristics, such as race, gender, marital status, and experience, which may be distributed differently among seemingly comparable occupations. At the federal level, at least, it has been shown that the government hires and promotes employees who have less experience and education than private-sector workers in similar occupations.[5]
In contrast, the “human capital” model focuses on the education, experience, and other skills that employees bring to a job. In this view, if two jobs are comparable in terms of other factors, such as risk and work conditions, the human capital that employees bring to their jobs should account for differences in their compensation. The Congressional Budget Office (CBO) has deemed the human capital approach “the dominant theory of wage determination in the field of economics.”[6]
Our preferred dataset for making worker-to-worker comparisons is the Annual Social and Economic Supplement of the Census Bureau’s Current Population Survey (CPS). The CPS is one of the best datasets for analyzing salaries because of its large sample size and rich set of control variables. It has the drawback of relying on self-reports rather than employer data from the BLS, but it allows us to control for a much larger set of human capital traits.[7]
Summer Vacation. It is well known that public-school teachers have shorter average work years than most other job holders. A teacher who receives a given salary for nine months of work is clearly better compensated than someone who earns the same salary for a full year’s work.
But just how lengthy summer vacations really are, and to what extent they benefit teachers, are major points of contention among education researchers. Some analysts have tried to avoid the issue by using weekly salaries reported in the CPS during the school year. Theoretically, this allows them to compare teacher and non-teacher earnings per week of paid work, without regard to summer vacation. In many cases, however, weekly salaries in the CPS are simply annual salaries divided by 52 weeks.[8] Using weekly salaries without further adjustment for summer vacation will upwardly bias teacher compensation.
We treated teachers as full-year workers for the purposes of comparing salaries. We first compared the annual CPS salaries of teachers and non-teachers without taking actual time worked during the year into account. The salary variable that we used included only salaries that teachers received from their primary job, thereby excluding earnings from a potential second job taken during summer vacations. We then included the value of summer vacation in the benefits section, showing how different estimates of paid leave affected overall compensation.
Method and Results. A representative sample of about 100,000 American households participate in the CPS supplement each year. Because a much smaller number of respondents are teachers, we combined the past 10 years of CPS data, from 2001 through 2010. This enlarged the sample size by an order of magnitude and gave our results greater precision.
We limited the analysis to respondents who worked full-time jobs in either the private sector or in the state and local sector as teachers. (All federal and non-teacher public workers were excluded.) Private workers were included only if they were employed for all 52 weeks in the past year, while teachers were included who reported working 35 weeks or more.[9] These parameters allowed us to treat both teachers and non-teachers as full-year workers, with paid leave for each group to be added in the benefits section.
We employed ordinary least squares regression, with the log of annual earnings as the outcome variable and the following control variables: usual hours worked per week, experience,[10] experience-squared, years of education, firm size (six categories), immigration status, state of residence, race, gender, marital status, and year indicators to account for inflation. We also included interaction terms: experience x education, experience-squared x education, marital status x gender, and gender x race.
The explanatory variable most relevant for our purposes is one that indicates whether someone is a public-school teacher.[11] By including a teacher indicator variable in the regression, we were able determine how the average public-school teacher’s salary compares to the salary of a private worker with the same earnings-related characteristics.
Linear regression analysis can tell us how a one-unit change in a particular worker characteristic affects wages when all other characteristics are held constant. For example, Table 1 indicates that an extra year of education is associated with an 11.8 percent increase in the average worker’s wages, assuming other characteristics stay the same. As the table shows, the effect on wages of teaching in public school, all else being equal, is -19.3 percent. In other words, public-school teachers receive salaries that are 19.3 percent lower than non-teachers who have the same observable skills.
We should be careful not to draw strong conclusions about the wages of a single occupation from a regression such as this one. Unobserved ability differences and work conditions could still influence the observed wage gap. If we added an indicator for architects to the regression, for example, we would find that architects receive a wage premium over similarly-skilled workers. Yet few people would immediately conclude that architects are “overpaid.” In the next several sections, we explore to what degree work conditions and unobserved ability differences may be affecting the observed teacher wage penalty. We place particular emphasis on the fact that years of education is not a good measure of teacher quality, either within the teaching population or in comparing teachers to members of other professions.
Problems with Education as a Measure of Teacher Quality. In standard wage regressions, such as the one we have presented, education is measured either as years of schooling or as level of degree obtained. The implicit assumption is that education’s effect on future earnings is consistent across fields of study—a degree in French literature is treated as equivalent to a degree in engineering or biochemistry. While that may seem like a serious limitation on salary comparisons in general, it is usually not an issue when members of each group work in a wide variety of occupations requiring diverse educational backgrounds. Differences in educational quality at any given educational level tend to average out in heterogeneous groups.
However, a problem exists when comparing the salaries of a single occupational group to the salaries of comparably educated workers in the general population. A large proportion of teachers have bachelor’s or master’s degrees in education. One study estimated that 72 percent of elementary school teachers and almost half of secondary school teachers were education majors.[12] In addition, more than two out of three teachers received their highest degree (typically a master’s) in an education-related field.[13] Because fields of study for teachers are considerably less diverse than for the general population, relying solely on differences in educational quantity (years of schooling) may mask important differences in educational quality between teachers and non-teachers. In other words, the standard education variable may not be an accurate measure of teacher skill.
Consider the two main ways in which education is related to worker productivity. First, education indicates basic knowledge and experience. Someone who has attended medical school, for example, will usually be better at diagnosing diseases than someone who has only a bachelor’s degree. For teachers, however, there is little evidence that advanced degrees improve performance at all. Carefully constructed value-added models tend to show that teacher effectiveness varies considerably, but “resume characteristics” such as years of schooling, certifications, and experience beyond the first few years of teaching show little to no relationship to student achievement.[14]
A second way that education usually reflects productivity is that educational success can be a proxy for certain personality traits—perseverance and intelligence, for example—that are difficult to measure directly. Employers are often impressed with a job applicant who has completed years of challenging academic work, even if the specific field of study is not directly relevant to the job. This is sometimes referred to as the “sheepskin effect,” where holding a degree signals skills or attributes distinct from those acquired while obtaining the degree.
Elementary school teachers typically possess a degree in elementary or early childhood education. Secondary school teachers, being more specialized, usually major in an academic field or in how to teach a particular field, such as “Math for School Teachers.”[15]
Do these education degrees earned by teachers carry a strong sheepskin effect, as other degrees do? It is unlikely. Given the relative lack of rigor of education courses, many teachers have not faced as demanding a college curriculum as other graduates. More than 50 years ago scholars were already noting the low grading standards in university education departments. The Journal of Higher Education reported in 1960 that 32 percent of students in education courses received “A” grades, compared to just 16 percent in business courses.[16]
A half century later, the situation is little changed. Economist Kevin Rask collected data on course grades at a Northeastern liberal arts college from 5,000 students who graduated between 2001 and 2009.[17] Out of the 20 academic departments included in Rask’s data, education awarded the highest grades.
Although Rask’s data come from only one college, his results are consistent with a larger study of three state universities in the Midwest.[18] Economist Corey Koedel recently analyzed grade point averages (GPAs) at Indiana University, the University of Missouri, and Miami University of Ohio. He found that education majors had substantially higher GPAs than students majoring in the hard sciences, social sciences, or the humanities. Education majors at Indiana University, for example, had an average GPA of 3.65, while math, science, and economics students averaged 2.88.
These results could mean that education majors are the brightest and hardest-working college students. However, as the following sections show, it is more likely that education courses are simply easier than, say, chemistry and math classes, which feature stricter grading.
Koedel suggests that grading standards are so low in the education field that distinguishing student performance in education classes has become difficult to impossible. He links his findings to evidence that student effort decreases as grading standards decrease, implying that education majors learn less than other students as a consequence. If so, holding a degree in education should signal less knowledge than a degree in an alternate subject.
Aside from the motivation and perseverance that earning a degree may imply, succeeding in college also suggests that a person possesses a certain raw intelligence useful for many different tasks. However, years of education is a poor proxy for cognitive ability when comparing teachers to non-teachers. Although teachers as a group score above the national average on intelligence tests, their scores fall below the average for other college graduates. This implies that, to the extent that cognitive ability affects earnings independently of education, ordinary wage regressions may overestimate teacher earnings relative to those of other professions.
Although the College Board is reluctant to say exactly what the SAT measures, it is essentially an IQ test.[19] In 2010, the College Board asked students taking the SAT about their intended college major. Students who indicated that education was their intended major earned a combined math and verbal score of 967, about 0.31 standard deviations below the average of 1,017, meaning the 38th percentile in a standard normal distribution.[20] In contrast, students intending to major in engineering had average combined SAT scores of 1,118. In a standard wage regression, however, individuals with bachelor’s degrees in education and engineering are assumed to possess the same human capital and should earn the same wages, all else being equal.
College graduates who take the Graduate Record Examination (GRE) also indicate their intended field of study when they sit for the test. During the past academic year, students who planned to study elementary or secondary education in graduate school scored 0.13 standard deviations below average on the GRE. If all education-related fields are counted—including special education, early childhood education, and curriculum development—the difference was 0.35 standard deviations.[21]
Not all education majors go on to become teachers, nor do all teachers major in education, but even active teachers exhibit low cognitive ability compared to other college graduates. A recent study examined scores on the ACT—an alternative to the SAT often used in the Midwest—of students who attended public colleges and universities in Missouri. Four-year graduates who became public-school teachers scored 0.23 standard deviations below four-year graduates who did not become teachers.[22]
More broadly, the National Longitudinal Survey of Youth (NLSY) includes scores on the Armed Forces Qualification Test (AFQT), a cognitive test battery similar to a full-scale IQ test.[23] Teacher scores on the AFQT lag behind other full-time workers with the same education levels by about 0.25 standard deviations.[24] These data indicate that, on average, teachers do not have the same cognitive skills as other college graduates.
As both a direct measure of acquired knowledge and an indirect measure of innate ability, teacher education does not compare well to education in other fields. The result is that years of education could be a highly misleading measure of teacher skill.
Wage Regression with IQ. Like the CPS, the NLSY is a rich dataset that includes the earnings-related variables needed to run wage regressions. Though its sample is small compared to the CPS, the NLSY provides the opportunity to test the hypothesis that education is a misleading measure of teacher skill. We constructed a salary model with all of the usual controls except for education, which we replaced with the AFQT score. If the teacher salary penalty remains large when an objective measure of cognitive ability is used in place of education, then we can reject our hypothesis.
As the name implies, the NLSY is a longitudinal survey that began interviewing young adults between the ages of 13 and 21 in 1979. Each successive wave tracked the growth and development of the original interviewees. In order to obtain the largest sample of NLSY teachers possible, we combined data from the 1990 through1994 waves. These years contain wage data modeled on the CPS collection procedure, and they come before dropouts from the sample became a large issue.
Using the log of wage-indexed hourly wages as the dependent variable, we ran regressions with and without education and AFQT as explanatory variables. All of the regressions used the following control variables: experience, experience-squared, establishment size (four categories), firm size (two categories), immigration status, region of residence, residence in a metropolitan area, race, gender, marital status, and an indicator variable for public-school teacher. We omitted state indicators, year indicators, and interaction terms because of the smaller sample size.
Table 2 shows how teacher salaries change depending on whether education or AFQT is included in the regression. The first row is the “standard” regression based on our CPS analysis in the previous section: Years of education are controlled for, but AFQT is not. The standard regression shows a teacher salary penalty of 12.6 percent.
The second row includes both education and AFQT in the same regression. The impact on teacher wages is small: The penalty decreases by less than two percentage points. The third row again includes AFQT but now omits education. With this specification, the change is dramatic: The teaching penalty is gone, replaced by a statistically insignificant premium.
How to interpret these results? On the one hand, the difference in IQ between teachers and other college graduates by itself has only a small effect on estimates of the teacher penalty. As the second row indicates, teachers with both the same education and AFQT score as other workers still receive 10.7 percent less in wages.
However, as we have shown, education is a misleading measure of teacher skills in several ways. In addition to the IQ difference between teachers and non-teachers, the education major is among the least challenging fields of study, and years of education subsequently have little to no effect on teacher quality. This suggests that eliminating education as a control variable and letting AFQT alone account for skills (as in the third row) may provide the most accurate wage estimates.
Replacing education with an objective measure of skills eliminates the observed teacher penalty, indicating that non-teachers with the same education as a typical teacher will likely have more applicable skills. We emphasize that a job is not necessarily less important or less challenging when the credentials for it are easier to obtain. Indeed, effective teachers are highly valuable to society and the economy.[25] Effective teaching does have skill requirements, including patience and empathy, which disqualify many people from the profession. Our point is that traditional skill measures do not allow for a fair salary comparison of teachers to non-teachers.
Public-School Teachers versus Private-School Teachers. A better assessment of teacher pay may come from changing the comparison group. Rather than compare public-school-teacher salaries with the salaries of all private workers, the salary comparison could compare teachers in the public sector with teachers in the private sector. This approach largely avoids the problems described in the previous section. We need not worry about how the value of education changes by occupation when everyone involved in the comparison is a teacher.
A teacher-to-teacher comparison also helps to eliminate intangible work-related factors from the analysis. If there are certain aspects of teaching that are particularly frustrating (or rewarding) relative to other occupations, a higher (or lower) salary for teachers may be required as a compensating differential. By limiting both the reference and comparison group to teachers, whatever salary differences we observe are less likely to be driven by these intangible factors.
Table 3 shows the results of a salary regression that was limited to elementary and secondary teachers. The data and model specification was the same as our earlier CPS analysis, except now the variable of interest is public school, which shows the salary premium associated with working for a public school rather than a private school. With all observable skills held constant, public-school teachers nationally earn 9.8 percent more in salaries than private-school teachers.
The change in relative salaries for public-school teachers is drastic—a 19.3 percent penalty when compared to private workers in general, as opposed to a 9.8 percent premium when compared to private-school teachers. The choice of comparison group obviously makes a substantial difference in the results, but which choice is preferable? We have already discussed the problems with using private workers as the comparison group, and how they may be mitigated by using private teachers. However, the use of private teachers as the comparison group has its own problems.
Public and private schools do not necessarily perform the same functions. While public schools must provide a general education to motivated and unmotivated students alike, private schools have more varied missions. Elite private schools often feature specialized curriculums directed at select groups of students. Consequently, the skills needed for private-school teaching may be somewhat different than the skills needed for teaching in a public school. The religious mission in particular of many private schools could also affect the attractiveness of teaching. For example, teachers in sectarian schools often consider their work to be part of their religious service, meaning they may accept below-market salaries.
If public schools ceased to exist, the demand for secular private schools with a standard curriculum would presumably increase, changing the private labor market for teachers. For this reason, the salaries of private-school teachers in general do not necessarily reflect the “true” labor market value of public-school teachers. To better estimate the true market value, we can restrict the comparison even further. By excluding private schools with religious missions or non-standard curriculums, the comparison of teacher salaries in the public and private sector becomes clearer.
Michael Podgursky, an economist at the University of Missouri–Columbia, has used the Department of Education’s School and Staffing Survey to perform that analysis.[26] After controlling for education, gender, region, and metro status, Podgursky found that public-school teachers earn higher salaries than teachers in non-sectarian and standard-curriculum private schools. The salary premium for public-school teachers ranged from 9 percent to 28 percent depending on teacher experience, with the least experienced receiving the highest premiums.
Salaries of Teachers Who Leave the Profession. Another method of comparison examines the salaries of teachers who leave the profession. If public-school teachers receive lower salaries than they could otherwise earn in the private market, we would expect a large portion of those who leave teaching to take new jobs that pay better.
Evidence from Georgia and Missouri, however, indicates this is not the case. According to state data from the 1990s, just 4 percent of Georgia elementary teachers who left their jobs for a non-education field were earning more than the minimum teaching wage a year after their exit. The same figure for exiting high school teachers was 5 percent.[27] In Missouri, women who quit teaching earned just 73 percent as much as their teaching wage in their new non-teaching jobs. Male teachers who quit saw no change in their average salaries.[28]
We can broaden the scope of these results using the Survey of Income and Program Participation (SIPP), along with a regression technique called “fixed effects.” The regression analyses we have presented so far have been cross-sectional, meaning they compare different workers with similar skills at a single point in time. In contrast, a fixed effects analysis follows the same workers over time as they switch into and out of the teaching profession.
The major benefit of this approach is that it automatically controls for differences in unobserved abilities—intelligence, motivation, empathy, etc.—because the individual teachers carry these attributes with them from job to job. If the same worker—not merely a worker with similar skills—is paid less in a non-teaching job, it is difficult to argue that he or she was underpaid as a teacher.
The SIPP is a longitudinal dataset that follows about 50,000 households over three to four years. During this period, many survey participants changed jobs, with some switching between teaching and non-teaching careers. To bolster the number of switchers into and out of teaching, we combined the 2001, 2004, and 2008 SIPP panels. We then examined the average percentage change in inflation-adjusted monthly wages experienced by workers who switch from a non-teaching job to a teaching job (group abbreviation: NT), a teaching job to a non-teaching job (TN), one teaching job to another teaching job (TT), and, as a control, a non-teaching job to another non-teaching job (NN).[29]
Of course, workers often change jobs because they have acquired new skills that justify a higher salary, and the fixed effects regression allows us to include controls for observable changes in age, education, marital status, region of residence, and residence in a metropolitan area. Worker characteristics that do not change over time, even those that are not directly observable, are automatically controlled for in this analysis.
Table 4 indicates that the control group that shifts from non-teaching jobs to other non-teaching jobs experiences a real wage increase of only 0.5 percent. Workers who switch from non-teaching to teaching receive a larger increase of 8.8 percent. Teachers who change to non-teaching jobs, on the other hand, see their wages decrease by 3.1 percent. In other words, the effect on wages of switching into or out of a teaching job is precisely the opposite of what one would expect if teachers were underpaid.
Given the small number of workers switching between teaching and non-teaching, these data should not be considered precise, but they at least cast strong doubt on the notion that teachers are underpaid in wages.
Why does the fixed-effects approach show a salary premium for teachers, while the earlier cross-sectional regression showed a penalty? The traditional controls in a cross-sectional regression do not adequately measure teacher skills. By following the same workers over time, fixed effects models capture worker characteristics that are not directly observable. Once those previously unmeasured characteristics enter the analysis, the large teacher wage penalty appears to become a small premium.
The Bottom Line on Teacher Salaries. The claim that public-school teachers endure a salary penalty is dubious. Although the “standard” wage regression suggests that teachers receive about 19 percent lower salaries than similarly skilled full-time workers, the regression is flawed. Important differences exist between teachers and workers in other occupations that are obscured by traditional control variables.
Years of education, in particular, is a misleading measure of teacher skill, both within the teaching profession and between teaching and non-teaching occupations. The field of education is less challenging than other academic concentrations, and teacher education has little measurable effect on classroom performance. Furthermore, teachers have significantly lower cognitive ability, on average, than non-teachers with the same level of education. Removing education from a wage regression and replacing it with a measure of raw cognitive ability appears to erase the teacher salary penalty. Clearly, the standard regression masks important facts about teacher skills.
Teacher-to-teacher comparisons avoid the problem of measuring skills across occupations. Public-school teachers receive significantly higher salaries than private-school teachers, even more than private teachers at secular general-education schools.
Finally, workers who switch from non-teaching to teaching jobs increase their wages on average, while workers who switch jobs in the other direction see their wages decrease. The totality of the evidence suggests that public-school teachers are not underpaid in wages by private-sector standards, and they may even be overpaid.
Benefits
Evaluating the level of benefits enjoyed by public-school teachers is more challenging than analyzing their salaries, for two main reasons. First, some benefits (such as pensions) are accrued during a person’s working life but not collected until retirement. For benefits that are delivered in the present, such as health coverage, paid leave, or taxes paid on a worker’s behalf, the employer’s contribution toward these benefits is a good measure of what employees actually receive. However, for pensions, retirement health benefits, and other deferred compensation, the current employer contribution is a poor indicator of the actual benefits to be received. The reason is that employers often disagree about what current contributions are needed to finance the same future benefit. To accurately calculate the value of deferred benefits, it is necessary to control both for how much the employer contributes and how that employer calculates the required contribution. We make this adjustment as needed.
A second challenge to measuring benefits is that no comprehensive dataset exists that would allow the kind of direct individual comparisons presented in the previous sections on salaries. Data must be pieced together from separate sources. Our starting point is the Employer Costs for Employee Compensation (ECEC) survey published by the Bureau of Labor Statistics, supplemented by additional data sources as needed.
The ECEC dataset does not report benefits at the individual level; rather, benefits are reported on an aggregated basis by industry, firm size, profession, and other employer characteristics. The ECEC does list benefits specifically for public-school teachers, albeit at lower levels of detail than are available for the workforce as a whole.
For simplicity, benefits are reported as a percentage of wages. Table 5 shows the main benefit categories for public-school teachers in 2010. Total employer contributions toward benefits are reported as equal to 41.2 percent of teacher salaries. Subcategories include:
Paid leave (6.6 percent of wages)—paid vacation, holidays, and sick leave;
Insurance plans (16.1 percent)—health, disability, life, and other insurance protections;
Retirement and savings (11.1 percent)—defined-benefit pensions and defined-contribution pensions; and
Legally required benefits (7.4 percent)—employer taxes toward Social Security, Medicare, unemployment and workman’s compensation insurance, among others.
We compared teachers to workers in establishments of 100 or more employees.[30] The latter group receives benefits equal to 41.3 percent of salaries, making teacher benefits appear comparable. An alternate comparison group based on occupation would be “full time professionals, and related”—this group tends to receive lower average benefits than the private-sector 100+ category, making the comparison shown in this section relatively conservative.
Combining similar benefit levels with standard estimates of the teacher salary differential, which the prior section showed are flawed, one could easily conclude that public-school teachers are substantially undercompensated relative to private-sector workers. However, there are several important ways in which the BLS data understate the total fringe benefits paid to public-school teachers:
Public Schools Pay Teachers 50% Above Market, Heritage Analysis Finds:
Washington, D.C., Nov. 1, 2011 -- Far from being underpaid, the typical public-school teacher makes out very well indeed, according to a new report from The Heritage Foundation’s Center for Data Analysis.
“Assessing the Compensation of Public-School Teachers” concludes that, while some may well be underpaid, the typical public school teacher makes about $1.52 for every dollar made by a private-sector employee with similar skills.
Co-authored by Heritage Senior Policy Analyst Jason Richwine and Andrew G. Biggs, a resident scholar at the American Enterprise Institute, the 26-page report concludes that salaries for public-school teachers generally are comparable to those paid to similarly skilled workers in the private sector. However, the generous fringe benefits offered by public schools raise teacher compensation 52 percent above the going market rate.
That’s the equivalent of a $120 billion overpayment charged to taxpayers each year.
“Teacher compensation could be reduced with only minor effects on recruitment and retention,” the authors suggest. “Alternatively, teachers who are more effective at raising student achievement might be hired at comparable cost.”
Comparing scores on cognitive tests, Richwine and Biggs note that those with education degrees generally lag behind those of other workers with similar “paper” qualifications. The much-vaunted “wage gap” between teachers and non-teachers disappears when both groups are matched on objective measures of cognitive ability.
The researchers also found that, on average, those who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent. By contrast, teachers who change to non-teaching jobs see their wages decrease by roughly 3 percent.
Previous comparisons of teacher compensation also fail to factor in some of the most generous fringe benefits offered public-school teachers. In addition to gold-plated retirement plans, the study notes that most teachers accrue generous retiree health benefits, worth an extra 10 percent of wages. The researchers also factored teachers' relatively high job security into the equation.
“While union contracts help secure overcompensation for the average teacher, they may still leave the most valuable teachers underpaid,” Richwine and Biggs write. “School administrators need to be able to hire and fire teachers as needed, basing personnel decisions on rigorous value-added evaluations and setting pay based on prevailing market rates."
Richwine and Biggs were scheduled to discuss their report at 3 p.m. today at AEI.
November 1, 2011
http://www.heritage.org/Research/Reports/2011/10/Public-Schools-Pay-Teachers-50-Percent-Above-Market-Heritage-Analysis-Finds
Even in Liberal California, School Choice Gets Thumbs Up:
A new poll shows that in one of the most liberal of states–California–charter schools are impressing voters by a wide margin, particularly among Latino parents. The Los Angeles Times reports:
Sparta winning the Peloponnesian War set Greece back 500 years.....the Spartans added nothing to the culture.
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |