Surprise: Teachers Are Overpaid

Published November 22, 2011

A new study concluding public school teachers earn, on average, 152 percent of what comparable private employees do has enormous implications for today’s state deficits and public policy. The discrepancy means schools “overcharge” taxpayers approximately $120 billion each year, he Heritage Foundation-American Enterprise Institute study says. State budget deficits currently equal about $103 billion.

The authors come to their slightly shocking conclusion by accounting for several factors they say distorted previous evaluations of teacher compensation. Most comparisons pluck teachers from a basket of other white-collar professionals with similar education, experience, age, sex, and marital status. They generally calculate teachers receive 19 percent smaller salaries than similar workers, contributing to the widespread belief that teachers are underpaid (just ask Matt Damon).

What those other comparisons don’t account for, however, and this study does, are rampant teacher credential inflation and summer vacation. Nor do other comparisons acknowledge that public school teachers make about 9 percent more than private school teachers, on average, and get a 9 percent salary bump when taking a public school job and 3 percent salary cut when leaving public school teaching.

Factoring these in, the study finds teacher salaries are approximately equal those of similar workers.

The teacher pay premium comes from benefits. Again, most previous calculations did not incorporate many measures that distinguish public-sector benefits. These include retiree health benefits, which most private workers do not receive, accounting methods that understate the true value of public pensions, and the shorter work year teachers enjoy (including summer, Christmas, and spring breaks, none of which “count” as vacation time for teachers). Teacher benefits are, on average, 40 percent more generous than those for comparable private-sector workers.

One more myth-dispelling calculation remains: Teachers are half as likely to be unemployed as similar private-sector workers. This was true before the recession, and it’s still true. From September 2008 to July 2011, education employment declined 2.9 percent while private employment declined 4.4 percent, say Bureau of Labor Statistics data. This advantage is worth 9 percent of compensation, the authors calculate, given the costs of unemployment.

Why does this study matter? First, it challenges–and fairly–outsized anger directed at legislators in states such as Wisconsin, Ohio, and New Jersey for requiring teachers to contribute small percentages to their health and pension benefits. It deflates rhetoric from President Barack Obama and Education Secretary Arne Duncan that the nation must spend another $30 billion this year to “save teacher jobs” and, in the long term, significantly increase teacher pay.

It also pinpoints government control over education as a major reason teacher pay is so inflexible and out of touch with the U.S. workforce at large. School salary schedules largely reward inflated degrees and “butt in seat” time instead of educator excellence, filling high-need positions, improving the school culture, and meeting children’s learning needs. The current system overpays the average teacher while leaving the most valuable teachers underpaid and underused.

In addition to being a serious waste of taxpayer dollars when money is increasingly scarce, this is a waste of human capital, both for teachers and the students mismatched to them. Eliminating this vast inefficiency requires freedom from our current system of government schools–using public charter schools, vouchers, education tax credits, and the like–so teachers, administrators, parents, and students have the flexibility to pursue real, fitting, and fair options.

Joy Pullmann ([email protected]) is managing editor of School Reform News and an education research fellow at The Heartland Institute.