Weekend Economics Puzzle 3, Are Teachers Underpaid?


With the possible exception of prostitution, teaching is the only profession that has had absolutely no advance in productivity, in the 2400 years since Socrates taught the youth of Athens.”
- Richard Vedder, in a lecture discussing the performance of the US economy.

I was astonished after watching the ABC documentary, ‘Stupid in America: How Lack of Choice Cheats Our Kids Out of Good Education’- especially the flow chart showing the processes needed to fire a union teacher (hat tip: Thinking on the Margin). That being said we come to the third paradox of our series;

Entertainers and sports stars earn million dollar annual incomes while the very best teachers earn considerably less. Were a survey to be taken almost all people will agree that ‘education is more important than entertainment’. Are then teachers underpaid?

If one were to look at the data, teachers does not appear to be underpaid;

"Consider data from the National Compensation Survey of the Bureau of Labor Statistics, which computes hourly earnings per worker. The average hourly wage for all workers in the category “professional specialty” was $27.49 in 2000. Meanwhile, elementary-school teachers earned $28.79 per hour; secondary-school teachers earned $29.14 per hour; and special-education teachers earned $29.97 per hour. The average earnings for all three categories of teachers exceeded the average for all professional workers. Indeed, the average hourly wage for teachers even topped that of the highest-paid major category of workers, those whose jobs are described as “executive, administrative, and managerial.” Teachers earned more per hour than architects, civil engineers, mechanical engineers, statisticians, biological and life scientists, atmospheric and space scientists, registered nurses, physical therapists, university-level foreign-language teachers, librarians, technical writers, musicians, artists, and editors and reporters. Note that a majority of these occupations requires as much or even more educational training as does K–12 teaching"

I don’t know anything about the American high school education. I think the US had come a long way (as of 1900 only 3 percent of Americans had graduated from high school) and in higher education the US has no match in the world; seventeen of the top 20 universities are American indeed, so are 35 of the top 50. American universities currently employ 70% of the world's Nobel prize-winners. They produce about 30% of the world's output of articles on science and engineering, according to a survey conducted in 2001, and 44% of the most frequently cited articles.

The point about the ‘underpaid teacher’ is that are teachers being paid what they are worth to the society? Everybody have met great teachers and lousy ones and I’ve often wondered whether there would be any way that great teachers could be better compensated and not in effect be subsidizing the stupid ones.

Related Links:

- They're Not Stupid—They're Lazy

- Testing Student Learning- Evaluating Teaching Effectiveness (an online book on the issue at Hoover)

- Why Quality Matters in Education, Eric A. Hanushek (this edition of F&D is focused on the role of education in economic development)

- Other interesting articles from Hanushek; The Economics of Education Quality, Measuring Investment in Education, The Market for Teacher Quality, Interpreting Recent Research on Schooling in Developing Countries

- US Education Statistics- A summary

- The Education Podcast Network

- The Racial Gap in Education and Making the Grade (podcasts from Hoover Institute)

- Educating by the Numbers (webcasts)

- The Education Myth, Alison Wolf

- The Economics of Knowledge: Why Education is Key to Europe’s Success

- Attracting, Developing and Retaining Effective Teachers

- Measuring Student Knowledge and Skills: The PISA 2000 Experience (a statistical brief from OECD)

- Low Pay, Low Quality

- To Catch a Cheat, Steven Levitt and Brian Jacob (Education Next is interesting journal on education from Hoover)

- My favoruite blogs on education; Joannejacobs, Crankyprofessor, Number 2 Pencil and Eduwonk


Do the hourly compensation data take into account "off the clock" hours worked, i.e. hours worked at home grading papers, etc.?

Would it be a sign of the market's failure if a job that has few performance based requirements (i.e. compensation is based on seniority and firing for non-performance is difficult) did not pay less than a job where compensation was performance based and where firing was a real posibility for employees that did not do a good job?

Were a survey to be taken almost all people will agree that 'water is more important than diamonds'. Is then water underpriced?

The demand for inputs like labour is a derived demand, in that value of the output produced determines the demand for teachers in this case. There is no effective mechanism to value the individual student learning and the individual teacher contribution. Teachers also play an important role in instilling values in the young that society values. When all things considered they may not be getting what they are worth for the society.

What is the average pay when calculating benefits such as pension and health care costs. If that data is imputed, their overall pay is dramatically higher. Who in the private sector has such a cadillac health & benefits plan like teachers? Furthermore, when you add in the 8 weeks summer vacation, their annual pay is very fair relative to their job duties. Teaching isn't easy, but what professional job is? Salaried workers often put in more than 40 hours per week 52 weeks per year.

California’s K-12 Public Schools;How Are They Doing?
a link to a Rand publication;
might be of some interest

If the laws of supply and demand hold.
To move to the 2nd grade a pupil has supposedly mastered the first grade material. Mastery denotes understanding at a level high enough to explain the underlying concepts of the material, to in fact, to be able to teach the material. In theory, any high school student should be able to teach 1st-8th grade. Hence the supply of teachers is huge. Only through artificially constraining the supply can prices go up, which is what unions attempt.

"A new pay-for-performance program for Florida's teachers will tie raises and bonuses directly to pupils' standardized-test scores beginning next year, marking the first time a state has so closely linked the wages of individual school personnel to their students' exam results"
via http://thecaseforsmallgovernment.blogspot.com/2006/03/public-schools-and-accountability.html


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This page contains a single entry by Paul published on March 18, 2006 10:19 PM.

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