Aunt Becky and the Underpaid Teachers Myth

"...But if all that is true, why do private schools, even elite ones, pay teachers so little?....

Andrew Biggs, "Aunt Becky and the ‘Underpaid Teachers’ Myth," National Review, December 2, 2019, https://www.nationalreview.com/2019/12/public-schools-underpaid-teachers-myth/

"Aunt Becky and the ‘Underpaid Teachers’ Myth

According to the Economic Policy Institute (EPI) — a liberal think tank affiliated with teachers’ unions — public-school teachers earn, on average, 21.4 percent less than private-sector workers in other fields who have similar educational and demographic characteristics. According to EPI, by offering higher pay, public schools could attract and retain better teachers, leading to better test scores, higher graduation rates, and better jobs for the future. It’s a compelling argument, at least to the news media, who echo it in their coverage.

But if all that is true, why do private schools, even elite ones, pay teachers so little?

There’s plenty of money out there. As we have recently seen, private-school parents will spend outrageous sums to help their kids get ahead. Consider Full House actress Lori Loughlin, whose two daughters attended Marymount, an all-girls Catholic high school in Los Angeles that charges annual tuition of $37,000. As if to cement the point that money was no object when it came to her daughters’ education, Ms. Loughlin is currently under federal indictment for paying a $500,000 bribe to University of Southern California officials to admit her daughters, based on the fiction that they were collegiate-level rowers. Now Ms. Loughlin — like fellow actress Felicity Huffman and dozens of others indicted on similar charges — faces jail time.

But one thing private schools don’t throw money at is teacher salaries. The school that Loughlin’s daughters attended pays its teachers around $53,500 per year, 33 percent less than the $80,000 median annual salary of Los Angeles public-school teachers. (The EPI study is based on weekly wages, calculated in the case of teachers over the length of the school year rather than the entire calendar year.)

The same goes for the millions of other helicopter parents and tiger moms who pay private-school tuition in hopes of getting their child into First Choice University. If paying higher teacher salaries would buy their kids a better chance, why don’t they demand an increase? In 2011-12, the most recent year for which data are available, the median full-time teacher in a non-religious private school earned a base salary of $38,000, 24 percent less than the $50,000 base salary for the median non-charter public-school teacher. Parochial-school teachers earned even less, at just $35,000 per year.

On top of public-school teachers’ salary advantage, Bureau of Labor Statistics data indicate that public-school teachers receive more than twice as much in benefits as those in private schools, with private-school teachers getting less-generous health coverage and 401(k)-type retirement accounts rather than traditional pensions, whose rising costs are squeezing public-school districts nationwide.

The question is why parents with money to spend on education aren’t spending it on their children’s teachers. If higher teacher pay produced significantly better educational outcomes, private schools would pay teachers much more than public schools, rather than much less. These are the same parents who pay for tutors, after-school enrichment programs, and summer internships, but better-paid — and presumably better-qualified — teachers don’t seem to be a priority.

A common answer is that public schools must pay more to compensate teachers for having to work with lower-income and more-discipline-prone students. And that’s true to a point: According to a 2019 Fordham Institute survey, 13 percent of teachers in high-poverty public schools report being attacked by a student, versus only 4 percent in low-poverty public schools.

But this factor can’t account for the whole pay difference. For instance, a study by my AEI colleague Joe Antos and University of Chicago economist Sherwin Rosen found that in the 1960s, when racial prejudice was common, it took only about a 6 percent salary increase to induce a white male teacher to work in a predominantly black school. Another study by University of Washington economist Dan Goldhaber and his co-authors found that private schools with disproportionately low-income students paid teachers about 7 percent more than private schools with predominantly rich students. Unless we assume that public-school teachers really, really don’t like working with non-elite children — something that, thankfully, is almost certainly untrue — there must be another reason.

A better explanation for pay differences between public and private schools is that the much-touted 21 percent “wage penalty” is just plain wrong. As Jason Richwine and I have shown, the EPI pay-gap studies are technically flawed, producing absurd results for other occupations — such as that nurses and firefighters are highly overpaid, while telemarketers are underpaid. Moreover, of the hundreds of occupations that the EPI study compares with public-school teachers, it bizarrely excludes private-school teachers, conveniently shunting aside the occupation that is obviously most comparable.

But there’s a bigger story. For public-school teachers, large districts employing hundreds or thousands of teachers negotiate with a single teachers’ union, which itself may have secured a favorable position via political contributions and activism. This isn’t what you’d call a free and vibrant labor market.

Private schools, by contrast, operate in a much freer market. Parents paying an average of $28,000 out of pocket have every incentive to find schools with the best teachers. Private schools, which compete against one another to recruit both teachers and students, have every incentive to hire the best teachers possible without breaking the bank. Teachers, for their part, have every incentive to demand as high a salary as they can get. This is the kind of competitive market that we rely on for almost every good or service we purchase. And in that market, total compensation for teachers at even elite private schools is far lower than it is at public schools. Those facts should at least inform the teacher-pay debate.

Teacher quality is important. The best teachers deserve higher pay, as do those filling shortage-prone positions. That’s how the labor market works everywhere else. And yet there are limits: Truly elite private schools could double teacher pay and hire only Ph.D.s, but would that pay off in terms of higher test scores, graduation rates, or college admissions? The fact that even elite private schools pay less than public schools should tell us that the answer to that question is no. And we all should understand there is far more to fixing America’s quarter century of stagnant test scores than across-the-board teacher-pay increases.