Wednesday, August 24, 2016

"The Relative Erosion of Teacher Pay": Key Findings from Sylvia A. Allegretto and Lawrence Mishel

“…The compensation issues affecting the worsening teacher shortage concern relative teacher pay—that is, teacher pay compared with the pay of other career opportunities for potential and current teachers. For over a decade, starting with How Does Teacher Pay Compare (Allegretto, Corcoran, and Mishel 2004), we have studied the long-term trends in teacher pay. We followed this up with The Teaching Penalty, published in 2008 using 2006 data, and have updated our findings occasionally in other papers. Our body of work has documented the relative erosion of teacher pay. In 1960, female teachers enjoyed a wage premium compared with other college graduates. By the early 1980s, the teacher premium became a penalty, and the female teacher pay gap post-1996 has widened considerably.

“Here we extend our analysis through 2015 and update our work on both wages and total compensation (wages plus benefits). (Note that throughout this report, ‘pay’ is used as a generic term to refer to wages or compensation.) With this update, we continue to document trends in relative teacher pay and sound the alarm regarding the long-run growth in the wage and compensation penalty (also referred to in this report as a wage or compensation ‘gap’)—the percent by which public school teachers are paid less than comparable workers. Specifically:

“Average weekly wages (inflation adjusted) of public-sector teachers decreased $30 per week from 1996 to 2015, from $1,122 to $1,092 (in 2015 dollars). In contrast, weekly wages of all college graduates rose from $1,292 to $1,416 over this period.

“For all public-sector teachers, the relative wage gap (regression adjusted for education, experience, and other factors) has grown substantially since the mid-1990s: It was ‑1.8 percent in 1994 and grew to a record ‑17.0 percent in 2015.

“The relative wage gap for female teachers went from a premium in 1960 to a large and growing wage penalty in the 2000s. Female teachers earned 14.7 percent more in weekly wages than comparable female workers in 1960. In 2015, we estimate a ‑13.9 percent wage gap for female teachers.

“The wage penalty for male teachers is much larger. The male teacher wage gap was -22.1 percent in 1979 and improved to ‑15.0 percent in the mid-1990s, but worsened in the late 1990s into the early 2000s. It stood at ‑24.5 percent in 2015.

“While relative teacher wage gaps have widened, some of the difference may be attributed to a tradeoff between pay and benefits. Non-wage benefits as a share of total compensation in 2015 were more important for teachers (26.6 percent) than for other professionals (21.6 percent). The total teacher compensation penalty was a record-high 11.1 percent in 2015 (composed of a 17.0 percent wage penalty plus a 5.9 percent benefit advantage). The bottom line is that the teacher compensation penalty grew by 11 percentage points from 1994 to 2015.

“The erosion of relative teacher wages has fallen more heavily on experienced teachers than on entry-level teachers. The relative wage of the most experienced teachers has steadily deteriorated—from a 1.9 percent advantage in 1996 to a 17.8 percent penalty in 2015.

“Collective bargaining helps to abate the teacher wage gap. In 2015, teachers not represented by a union had a ‑25.5 percent wage gap—and the gap was 6 percentage points smaller for unionized teachers...

“The opportunity cost of becoming a teacher and remaining in the profession becomes more and more important as relative teacher pay falls further behind that of other professions. The large negative wage gap for male teachers likely is a key reason why the gender mix of teachers has not changed much over time. That women, once a somewhat captive labor pool for the teaching profession, have many more opportunities outside the profession today than in the past means that growing wage and compensation differentials will make it all the more difficult to recruit and retain high-quality teachers. Moreover, the ever-increasing costs of higher education and burdensome student loans are also a barrier to the teaching profession in light of a widening pay gap.

“The recent trends we document represent only a small part of a much larger long-run decline in the relative pay of teachers. U.S. decennial Census data show that the wage gap between female public school teachers and comparably educated women—for whom the labor market dramatically changed over 1960–2000—grew by nearly 28 percentage points, from a relative wage advantage of 14.7 percent in 1960 to a disadvantage of 13.2 percent in 2000. Among all (male and female) public school teachers, the relative wage disadvantage grew almost 20 percentage points over 1960–2000 (Allegretto, Corcoran, and Mishel 2008, 7). Our results show that the teacher wage penalty grew an additional 7.0 and 9.6 percentage points, respectively, for all and female teachers since 2000.15

“Improvements in the non-wage benefits of primary and secondary school teachers partially offset the worsening wage disparities: The weekly total compensation (wages plus benefits) disadvantage facing teachers in 2015 was about 11 percent, or roughly 6 percentage points less than the 17 percent weekly wage disadvantage estimated for that year. It is good news that teachers are able to bargain a total compensation package—as it seems they may have forgone wage increases for benefits recently. But, as we’ve documented, teacher wages have been stagnant since the mid-1990s. This makes the wage gap, on its own, critically important, as it is only earnings that help to make ends meet regarding pecuniary expenses such as rents, food, and paying off student loans…

“If the policy goal is to improve the quality of the entire teaching workforce, then raising the level of teacher compensation, including wages, is critical to recruiting and retaining higher-quality teachers. Policies that solely focus on changing the composition of current compensation (e.g., merit or pay-for-performance schemes) without actually increasing compensation levels are unlikely to be effective. Simply put, improving overall teacher quality requires correcting the teacher compensation disadvantage” (Think Teachers Aren’t Paid Enough? It’s Worse Than You Think by Valerie Strauss (Washington Post, August 16)). 

About the authors:

Sylvia A. Allegretto is a labor economist and chair of the Center on Wage and Employment Dynamics, which is housed at the Institute for Research on Labor and Employment at the University of California, Berkeley. She is also a research associate of the Economic Policy Institute and is co-author of many EPI publications, including past editions of The State of Working America, How Does Teacher Pay Compare?, and The Teaching Penalty: Teacher Pay Losing Ground. She has a Ph.D. in economics from the University of Colorado at Boulder.

Lawrence Mishel, a nationally recognized economist, has been president of the Economic Policy Institute since 2002. Prior to that he was EPI’s first research director (starting in 1987) and later became vice president. He is the co-author of all 12 editions of The State of Working America. He holds a Ph.D. in economics from the University of Wisconsin at Madison, and his articles have appeared in a variety of academic and non-academic journals. His areas of research are labor economics, wage and income distribution, industrial relations, productivity growth, and the economics of education.

— The authors thank Saika Belal and Jessica Schieder for their valuable contributions to this report. 

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