Teacher Labor Supply
I spent this morning arguing with my internet friend Freddie DeBoer about education reform, and I thought it would be useful to elevate some parts of our disagreement to a blog post. His argument is: education reformers want to make teaching a worse job, so then how are we going to get more teachers? He argues we already face teacher shortages, and also don’t we care at all about teacher quality? Let me start by giving Freddie some credit where I can. He’s right that the labor supply impacts of education reform aren’t thought about enough by many education reformers. This is something I’ve written about before. However, he’s wrong to think that the status quo provides anywhere close to the best system that balances benefits of reforms against labor supply issues.
There are several ways to improve the labor supply of teachers while making reforms that many teachers would nevertheless oppose. First, is pension reform. Right now pensions are skewed so that teachers receive very few benefits until later in their careers, and then they receive massive benefits for a few years, and then they are strongly incentivized to retire early. A recent paper by Costrell and Podgursky reviews teacher pension rules in several states and provides some useful examples of how this works. For example, a teacher in Ohio who retires at age 55 receives a pension that is worth 55% of their total compensation over her career. In contrast, a teacher who retires at age 30 receives a pension worth 7% of their total compensation, which is less than they have paid into the system. The authors argue that the accrual spikes for teachers dwarf those seen in private sector pensions by an order of magnitude. Freddie sees reforms as increasing risks for teachers, but this system creates a huge amount of risk, “because an entering teacher often does not know in advance whether she will be a short timer, leaving the system with little pension wealth, or a career teacher receiving benefits that far outweigh the contributions”, as Costrell and Podgursky point it.
This suggests changing retirement benefits to accrue more smoothly over their career could improve labor supply. Indeed, since teachers receive such a large share of their compensation in retirement benefits, it’s likey that labor supply could be increased by reducing benefits and increasing salary. A recent paper on Illinois pensions found that teachers valued each $1 in marginal pension benefits at $0.20 suggesting that this could easily be done in a revenue neutral way that significantly increased the value of compensation to teachers.
However, it’s not just pension benefits that give the short end of the stick to young teachers. Jacob Vigdor has shown that teacher pay schedules heavily reward old teachers relative to young teachers. A flatter salary schedule would reward younger teachers sooner, which makes sense given that research has shown the benefits to experience peak at around five years, and given that this is standard in other professional occupations.
Another way to make teaching more desirable is to get rid of the pay bumps for graduate degrees. There is little evidence these advanced degrees make teachers more effective. A recent review of the literature from Sass and Harris argued that, with the exception of masters degrees for elementary math teachers, “recent research indicates either insignificant or in some cases even negative associations between possession of graduate degrees by a teacher and their students’ achievement in either math or reading”. Yet despite the lack of evidence here, the Center for American Progressestimates that in the 2007-2008 school year, we spent $14.8 billion on pay bumps for masters degrees. While defenders argue these work as important teacher retention tools, I suggest using these billions of dollars to raise pay across the board would be a more effective retention tool. This would also save teachers the cost of spending so much of their time and money getting advanced degrees, many of whom do so on weekends, evenings, and over the summers while employed full-time as teachers. This should be coupled with lowering other credentialing as well, which will also help increase the labor supply by allowing people who didn’t attend education schools to become teachers.
In addition, there is some evidence that more charter schools increase teacher pay. Those who defend teachers’ unions often cite the monopsony power of local school districts, so they should not be surprised by this finding. Kirabo Jackson found teacher pay went up from charter competition in North Carolina. Another study from Lori Taylor found that charter competition lead to higher wages for most teachers in Texas. While this isn’t a lot of research, it is suggestive and the theory is relatively plausible. If public schools are wasting money on excessive administration or other costs, this could incentivize them to cut costs and spend more on teacher salaries.
A couple more quick points before I finish. Freddie also complained that teachers aren’t respected and their jobs are miserable, but as I’ve already shown him respect for Teacher Labor Supply - Forbes: