Average Public School Teacher Is Paid Too Much
Teaching is certainly challenging, but it is not uniquely so
November 9, 2011
The average teacher working in a public school today receives total compensation roughly 52 percent higher than what he or she would receive in private-sector employment. In that sense, the teacher is, indeed, "overpaid."
Teachers may appear underpaid because they receive lower salaries than the typical college graduate. However, prospective teachers are predominantly drawn from the bottom third of their college graduating class. Compared with those of college graduates with similar skills, teachers' average annual salaries of around $55,000 are about right.
It is generous fringe benefits that push total teacher compensation far ahead of private-sector levels. A full-career teacher can receive guaranteed pension benefits four times those of a private-sector worker with a 401(k) plan. Moreover, most teachers also receive retiree health benefits worth hundreds of thousands of dollars over the course of retirement. Teachers also enjoy 185- to 195-day work years, compared with 260 days for typical private-sector workers. Total fringe benefits for teachers are equal to 101 percent of their salaries, versus just 44 percent for workers in large private firms.
On top of that, school teachers are only half as likely to become unemployed as private-school teachers and workers in similar white-collar occupations. Economists since Adam Smith have agreed that extra job security has a monetary value, which we estimate to be around 9 percent of compensation.
In response to these data, critics often argue that teaching is an especially difficult job that justifies higher pay, citing long work hours and out-of-pocket expenses on classroom supplies. The problem with this argument is that many jobs are hard, and many jobs require sacrifices. Teaching is certainly challenging, but it is not uniquely so.
For example, when the Census Bureau asks Americans how many hours they work per week, teachers give virtually the same answer as non-teachers. And even if we assumed that non-teachers suffered zero out-of-pocket expenses, the "hundreds of dollars" spent by teachers on classroom supplies would have little effect on our analysis. After all, average teacher salaries and benefits total well over $100,000.
There is no reasonable means of adjusting the data or altering the assumptions to make the teacher compensation premium disappear. Recognizing that the average public school teacher receives excessive compensation is the first step toward meaningful pay reform.