The Truth About Teacher Pay

Total compensation exceeds private-sector pay by about 52 percent

Compensation to public school teachers overcharges the American public by more than $120 billion a year, according to a joint study by two of the country’s largest public policy research institutes.

One of the two big teachers unions, the American Federation of Teachers (AFT), defensively says the implication that teachers are overpaid “defies common sense.” AFT even derisively asks, “If teachers are so overpaid then why aren’t more ‘1 percenters’ banging down the doors to enter the teaching profession?”

The large and complex study of compensation of public school teachers said, “No one doubts the significance of high-quality teachers in 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.”

The study was conducted by Jason Richwine, PhD, senior policy analyst in the Center for Data Analysis at the Heritage Foundation, and Andrew G. Biggs, PhD, resident scholar at the American Enterprise Institute for Public Policy Research. Their research was scholarly and meticulous, even if jarring to the teachers unions.

The study said, “Overall, public school teacher compensation exceeds private levels by approximately 52 percent.” During the recent recession and state and local budget crunch, the study pointed out, some teachers were laid off. It was not the ugly, mass firing Obama has groused about, however.

“Employment in education by local government declined by 2.9 percent between September 2008 and July 2011, according to BLS [Bureau of Labor Statistics] data. Nevertheless, these job losses occurred [when] overall private-sector employment declined 4.4 percent,” the study said.

The Senate blocked part of Obama’s jobs plans that would have needlessly spent $30 billion to keep and hire teachers in October. Democrat Senate Majority Leader Harry Reid blasted Republicans, who voted down the bill.

"Republicans unanimously blocked a bill that would have kept 400,000 teachers in the classroom," Reid whined in one of the Democrats’ frequent false spins.

Do teachers get paid fairly? Standard analyses compare teachers’ salaries to the pay of similarly educated and experienced private-sector workers, plus contributions toward fringe benefits. “These simple comparisons would indicate that public school teachers are under compensated,” the study authors say. But “teacher skills lag behind those of other workers with similar ‘paper’ qualifications.”

The wage gap disappears when measured by “cognitive ability rather than years of education.” Public school teachers get more pay than private school teachers. People who switch from “non-teaching jobs to teaching jobs” receive a wage increase of about 9 percent. On the other hand, teachers who change to non-teaching jobs, “see their wages decrease by roughly 3 percent--the opposite of what one would expect if teachers were indeed underpaid."

Moreover, the study said, “generous fringe benefits for public school teachers often go unrecognized." Pension programs are “significantly more generous." But this is hidden by "private-sector accounting practices."

“Most teachers accrue generous retiree health benefits.” But it is excluded from BLS benefits data. “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, which the study calculated into the value of overall compensation. So, total compensation was calculated to be “52 percent higher than fair market levels.”

An ironic aspect of teacher compensation involves union dues.

Teachers unions or professional associations operate in all 50 states. Teachers have hundreds of dollars deducted from their pay. This fact should tend to reduce compensation. But it doesn’t overall.

Union dues money is regularly channeled to use as political donations. Even though these dollars cut the total compensation of teachers, their overall compensation tops the pay of most private sector workers.

It is not surprising that when “paycheck protection” laws force unions to get teachers’ permission before using their money for political purposes, teachers nearly always say “no.”

When given the opportunity to opt out of pay going for political donations, in Utah, for instance, only 6.8 percent of teachers went along with such contributions; in Washington State only 6 percent. That’s why unions fight tooth and nail against “payroll protection.”

The largest teachers union, the National Education Association (NEA), has used much of its $337 million in dues it forcibly collects yearly as support to left-wing groups such as ACORN and the Congressional Black Caucus Foundation.

Kim Anderson, advocacy director for NEA, representing about three million members, said she questions the reliability of the Heritage-AEI research. “Does AEI honestly purport that paying teachers even less will help raise the quality of teaching in American schools?”

The Heritage and AEI scholars wrote that there are two major ways to account for skill differences between teachers and non-teachers. One is to look at occupations with similar skill requirements as teaching. The Manhattan Institute recently reported public school teachers earn an hourly salary 11 percent higher than professional specialty and technical worker, and 36 percent higher than white collar workers generally.

At the federal level, the government hires and promotes employees who have less experience and education than private sector workers in similar occupations. The authors’ preferred data set for worker-to-worker comparisons was the Census Bureau’s Current Population Survey (CPS).

Teacher advocates claim that pensions are modest. In Illinois, pension funding has been especially controversial. The state’s retirement system has pointed to an average pension of $43,000. But that’s not an average for teachers retiring today. Current figures show retirees between 55 and 59 can look forward to average benefits of $55,893.

The Heritage-AEI study concludes that fundamental reform of teacher compensation “would scrap the existing rewards for education and experience--and instead pay market rates to teachers who are measurably effective.”

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