Home > Uncategorized > A Lesson in Economics 101: Teacher Pay Diminishes as Teacher Shortages Increase

A Lesson in Economics 101: Teacher Pay Diminishes as Teacher Shortages Increase

April 27, 2019

The Economic Policy Institute’s Sylvia Allegretto and Laurence Mishel just issued a report on teacher compensation that indicated the disparity between teacher’s wages and those of other college graduates just hit an all time high and appears to be widening. The result is unsurprising to anyone who took a basic economics course in high school or college:

The deepening teacher wage and compensation penalty over the recovery parallels a growing shortage of teachers. Every state headed into the 2017–2018 school year facing a teacher shortage (Strauss 2017). New research by García and Weiss (2019) indicates the persistence and magnitude of the teacher shortage nationwide:

The teacher shortage is real, large and growing, and worse than we thought. When indicators of teacher quality (certification, relevant training, experience, etc.) are taken into account, the shortage is even more acute than currently estimated, with high-poverty schools suffering the most from the shortage of credentialed teachers. (1)

And, as Ms. Allegretto and Mr. Mishel indicate, the states are not short of money:

Spending cuts over the recovery were not the result of weak state economies. Rather, many state legislatures and governors cut spending in order to finance tax cuts for the wealthy and corporations.

As corporate taxes diminish so do the revenues for public services and, again unsurprisingly, so does the quality of those services. Sadly, for children, education is no exception and so the quality and depth of the teaching pool is diminished.

Providing teachers with a decent middle-class living commensurate with other professionals with similar education is not simply a matter of fairness. Effective teachers are the most important school-based determinant of student educational performance.1 To promote children’s success in school, schools must retain credentialed teachers and ensure that teaching remains an attractive career option for college-bound students. Pay is an important component of retention and recruitment.

The report notes that teachers across the country are uniting and demanding higher pay, particularly in those states where the wage disparity is the highest. The report also examines the benefits teachers receive as compared to other college graduates and acknowledges that there is a favorable gap in that area. But even with that taken into consideration, the total compensation gap is wider now than it has been in any year since 1960!

In their concluding paragraphs, Allegretto and Mishel describe the compensation gap and its consequences, and note that any alternative compensation plans like performance pay will not solve the problem unless total compensation is increased:

It is good news that teachers are able to bargain for a total compensation package—though it seems they may have forgone wage increases for benefits recently: As we’ve documented, teacher wages have been stagnant since the mid-1990s; public school teacher weekly wages have not grown in the 22-year period from 1996 to 2018! This makes the wage penalty, on its own, critically important, as it is only wages that families can put toward making ends meet—only wages can pay for expenses such as rent, food, and student loan payments.

Raising the level of teacher compensation, including wages, is critical to recruiting and retaining teachers who have the qualifications associated with teacher effectiveness in the classroom. Policies that focus solely on changing the composition of current compensation (e.g., merit or pay-for-performance schemes) without actually increasing compensation levels are unlikely to be effective. Simply put, improving public education in this country—by preventing teacher turnover, strengthening retention of credentialed teachers, and attracting young people to the teaching profession—requires eliminating the teacher weekly wage and compensation penalty.

EPI’s research is thorough and even handed… and it’s results prove the laws of supply and demand. If you demean a profession, lower the compensation for that profession, and limit job security in that profession it is difficult to find employees.

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