Teachers out-earn private-sector employees

We can already hear the anguished, angry protests of the National Education Association and American Federation of Teachers. But our headline captures the essence of an important new study being released today by Jason Richwine of the Heritage Foundation’s Center for Data Analysis and American Enterprise Institute’s Andrew Biggs.

Richwine and Biggs found that when public school teachers and private-sector workers are compared objectively on the basis of cognitive skills, rather than years of service or educational attainment, the educators enjoy higher compensation — contrary to the claims of union officials in public debate and in negotiations with school boards. This is seen most dramatically when workers switch from nonteaching jobs to teaching jobs; such a move typically results in a wage increase of approximately 9 percent.

“Teachers who change to nonteaching jobs, on the other hand, see their wages decrease by roughly 3 percent. This is the opposite of what one would expect if teachers were underpaid,” Richwine and Biggs said.

The biggest factor in the compensation advantage enjoyed by public school teachers is not wages, however, but rather fringe benefits, which typically are substantially more generous than those paid to private-sector workers in comparable positions. Public school teacher pension programs routinely offer higher benefits, thanks to the traditional calculation that lower salaries would be partially offset by more generous retirement packages.

Also significant here is the provision by public school pension programs of paid or low-cost health insurance programs for retirees. Richwine and Biggs found the presence of retiree health benefits adds about 10 percent to the total value of public school teacher compensation. As much as another 8.6 percent is added when the value of public school teacher job security is added to the comparison.

Nationally, this disparity in compensation means that while comparisons based solely on salary often do find a disadvantageous wage gap for public school teachers, the bottom line changes dramatically when benefits are considered.

“More generous fringe benefits for public school teachers, including greater job security, make total compensation
52 percent greater than fair market levels, equivalent to more than $120 billion overcharged to taxpayers each year. Teacher compensation could therefore be reduced with only minor effects on recruitment and retention,” Richwine and Biggs conclude.

No doubt trying to anticipate the objections from critics in the public education community, Richwine and Biggs argue that “no one doubts the significance of high-quality teachers to the school system and to the economy in general, but even the most important public workers should be paid at a level commensurate with their skills — no more, no less.”

That’s an entirely reasonable position to take, but don’t be surprised in the weeks ahead to hear teachers union advocates rejecting it absolutely, even as they direct a hail of bitter and uncompromising assaults on the scholarship and motivations of Richwine and Biggs.

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