Average public school teacher is paid too much

Article Highlights

  • Average teacher receives 52% higher compensation than equivalent private-sector jobs

    Tweet This

  • Generous fringe benefits push teacher compensation ahead of private sector

    Tweet This

  • Recognizing that the average public school teacher is overcompensated is the first step toward meaningful pay reform

    Tweet This

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.

A full-career teacher can receive guaranteed pension benefits four times those of a private-sector worker with a 401(k) plan.

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.

Andrew G. Biggs is a resident scholar at AEI. Jason Richwine is a senior policy analyst at the Heritage Foundation

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

What's new on AEI

image The money in banking: Comparing salaries of bank and bank regulatory employees
image What Obama should say about China in Japan
image A key to college success: Involved dads
image China takes the fight to space
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Wednesday, April 23, 2014 | 12:00 p.m. – 1:30 p.m.
Graduation day: How dads’ involvement impacts higher education success

Join a diverse group of panelists — including sociologists, education experts, and students — for a discussion of how public policy and culture can help families lay a firmer foundation for their children’s educational success, and of how the effects of paternal involvement vary by socioeconomic background.

Event Registration is Closed
Thursday, April 24, 2014 | 12:00 p.m. – 1:30 p.m.
Getting it right: A better strategy to defeat al Qaeda

This event will coincide with the release of a new report by AEI’s Mary Habeck, which analyzes why current national security policy is failing to stop the advancement of al Qaeda and its affiliates and what the US can do to develop a successful strategy to defeat this enemy.

Friday, April 25, 2014 | 9:15 a.m. – 1:15 p.m.
Obamacare’s rocky start and uncertain future

During this event, experts with many different views on the ACA will offer their predictions for the future.   

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.