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November 1, 2011

Public Schools Pay Teachers 50% Above Market, Heritage Analysis Finds

Washington, D.C., Nov. 1, 2011 -- Far from being underpaid, the typical public-school teacher makes out very well indeed, according to a new report from The Heritage Foundation’s Center for Data Analysis.

Assessing the Compensation of Public-School Teachers concludes that, while some may well be underpaid, the typical public school teacher makes about $1.52 for every dollar made by a private-sector employee with similar skills.

Co-authored by Heritage Senior Policy Analyst Jason Richwine and Andrew G. Biggs, a resident scholar at the American Enterprise Institute, the 26-page report concludes that salaries for public-school teachers generally are comparable to those paid to similarly skilled workers in the private sector. However, the generous fringe benefits offered by public schools raise teacher compensation 52 percent above the going market rate.

That’s the equivalent of a $120 billion overpayment charged to taxpayers each year.

“Teacher compensation could be reduced with only minor effects on recruitment and retention,” the authors suggest. “Alternatively, teachers who are more effective at raising student achievement might be hired at comparable cost.”

Comparing scores on cognitive tests, Richwine and Biggs note that those with education degrees generally lag behind those of other workers with similar “paper” qualifications. The much-vaunted “wage gap” between teachers and non-teachers disappears when both groups are matched on objective measures of cognitive ability.

The researchers also found that, on average, those who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent. By contrast, teachers who change to non-teaching jobs see their wages decrease by roughly 3 percent.

Previous comparisons of teacher compensation also fail to factor in some of the most generous fringe benefits offered public-school teachers. In addition to gold-plated retirement plans, the study notes that most teachers accrue generous retiree health benefits, worth an extra 10 percent of wages. The researchers also factored teachers' relatively high job security into the equation.

“While union contracts help secure overcompensation for the average teacher, they may still leave the most valuable teachers underpaid,” Richwine and Biggs write. “School administrators need to be able to hire and fire teachers as needed, basing personnel decisions on rigorous value-added evaluations and setting pay based on prevailing market rates."

Richwine and Biggs were scheduled to discuss their report at 3 p.m. today at AEI.

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