Today, my co-author Jason Richwine and I will be releasing a new study on public school teacher pay and holding an event at AEI. It’s interesting stuff that’s worth hearing about in person, but here’s the short story.
Salaries: Public school teachers receive lower salaries than similarly educated private sector workers; this leads many to conclude, as Education Secretary Arne Duncan did, that teachers are “desperately underpaid.” But these credentials-based comparisons are dicey when a single occupation (teacher) generally holds a single type of degree (bachelors or masters in education). Research we cite shows that education is, to put things bluntly, among the easiest college majors—teachers enter college with below-average SAT scores but earn far higher GPAs than people majoring in history, chemistry, or other subjects. That skews the numbers. Therefore, we compare salaries while controlling for scores on the Armed Forces Qualification Test, an objective measure of cognitive ability. And when we do, the supposed teacher salary gap disappears.
Vacation time: Bureau of Labor Statistics benefits data shows that teachers have only 60 percent as much vacation time as private sector workers. Huh? It turns out that BLS bases its teacher figures on a 185-day work year, which means that BLS counts only time off during the school year while ignoring summer and holiday vacations. We adjust teachers’ time off to make it comparable to private sector workers.
Retirement benefits: A typical teacher will receive pension and retiree health benefits several times larger than what she would likely receive in a private sector job. But this difference isn’t reflected in BLS benefits data, for two reasons. First, BLS excludes retiree health coverage, and second, public sector pensions use aggressive accounting rules that understate the true cost of benefits. By accessing state data on retiree health plans and adjusting pension figures to account for different accounting rules, we arrive at a more accurate figure.
Job security: Public school teachers have an unemployment rate around half that of private school teachers or a range of 16 comparable private sector occupations such as architects, news reporters, and editors. Job security insures against income loss during unemployment and becomes more valuable when the job you have—such as public school teaching—pays a premium in terms of combined salaries and benefits. We calculate that job security is worth about an extra 9 percent of pay.
Summing up: Teacher salaries are about comparable to the private sector, but teachers’ benefits are roughly twice as generous and their job security is significantly greater. Altogether, we estimate that public school teachers receive total compensation roughly 50 percent higher than they would likely receive in private sector jobs.