Analyzing Public School Teacher Pay: Not That Bad, It Seems

Andrew Biggs and Jason Richwine have released a new study on public school teacher pay — and while it may shock those who subscribe to the common thought that public school teachers are desperately underpaid, it certainly proves to be interesting reading.

The study finds, as predicted, that 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), writes Andrew Biggs at The American.

"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."

They then compared salaries while controlling for scores on the Armed Forces Qualification Test, an objective measure of cognitive ability. And, interestingly, when they do, the teacher salary gap seems to disappear.

And while a typical teacher will receive pension and retiree health benefits several times larger than what she would likely receive in a private sector job. This difference isn't reflected in BLS benefits data. Why? Well, for one reason – public sector pensions use aggressive accounting rules that understate the true cost of benefits.

In the report, Biggs and Richwine, have arrived at a more accurate figure by accessing state data on retiree health plans and adjusting pension figures to account for different accounting rules.

Public school teachers also 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, writes Biggs.

They calculate that job security is worth about an extra 9 percent of pay.

To sum up, the study finds that 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, they estimate that public school teachers receive total compensation roughly 50 percent higher than they would likely receive in private sector jobs, writes Biggs.

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