Teachers’ Pay

A recent post from the NYTimes economics blog Economix discusses an aspect of teachers’ pay in the context of the Chicago teachers’ strike:

Here’s one particularly striking figure from the report, showing the ratio of teacher salaries to the earnings of other workers who went to college:

Source: Organization for Economic Cooperation and Development.Source: Organization for Economic Cooperation and Development.

The United States spends a lot of money on education; including both public and private spending, America spends 7.3 percent of its gross domestic product on all levels of education combined. That’s above the average for the O.E.C.D., where the share is 6.2 percent.

The annual spending per student by educational institutions of all levels is also higher in the United States than it is in any other developed country.

Despite the considerable amount of money channeled into education here, teaching jobs in the United States are not as well paid as they are abroad, at least when you consider the other opportunities available to teachers in each country.

In most rich countries, teachers earn less, on average, than other workers who have college degrees. But the gap is much wider in the United States than in most of the rest of the developed world.

The statistic used above is a calculation of (average earnings for full-time middle school teachers)/(average earnings for college-educated workers similarly employed).  The explanation in the article is that across countries, the US ranks on the low end of the scale when examining these ratios, and that this demonstrates teachers are relatively underpaid when compared to their similarly-educated similarly-employes fellow citizens.

Yet, when examining a ratio, it’s important to keep in mind that its size can be a result of effects of both numerator and denominator. While someone supportive of the view that teachers are underpaid may suggest that the above data supports their claim, the result from the graph above may very well be the effect of the denominator in the ratio. It is plausible, though I have not checked the data myself, that college-educated full-time full-year workers in the United States make more on average than comparable workers overseas. If this were true, then the comparison across countries is uneven, since there would be large differences in the figure to which teachers’ pay is being weighed: average college-educated full-time full-year workers’ pay.

It might be the case that this strengthens the argument for a weak level of teachers’ pay, given the opportunities they have to earn higher salaries elsewhere in the US. The article does mention the high opportunity cost of pursuing a job in education. But it may be such that high average earning rates by college graduates in the US make it much more difficult for American teachers’ pay to “keep up” with those other jobs, bringing about a ratio lower than in other developed countries.

I think it is the goal of the article to suggest that teachers’ pay is low not in absolute terms, but in precisely these relative terms. However, the cross-country comparison of the size of this gap in earnings gets much more murky unless the reader really breaks down the data at hand.

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