Teachers are Actually Overcompensated and Should be Brought in Line with Private Sector

The WSJ ran an article reporting on a report done by Briggs and Richwine that shows teachers are actually overcompensated by 52% more than what they could earn in the private sector when taking into account their salaries, fringe benefits, and job security.  


First, let's consider salary, the item teachers whine about the most.

Education is widely regarded by researchers and college students alike as one of the easiest fields of study, and one that features substantially higher average grades than most other college majors. On objective tests of cognitive ability such as the SAT, ACT, GRE (Graduate Record Examination) and Armed Forces Qualification Test, teachers score only around the 40th percentile of college graduates. If we compare teachers and non-teachers with similar AFQT scores, the teacher salary penalty disappears.

Next, let's talk about health insurance, their valuable pension and all the time off they get.

Data on employee benefits from the Bureau of Labor Statistics (BLS), for example, do not include retiree health coverage, which for teachers is worth about an additional 10% of their salaries. Because of differing accounting rules between the public and private sectors, BLS data also make teachers' defined-benefit pensions appear only slightly more generous than the typical 401(k) plan found in the private sector. 

In reality, a teacher who retired after 30 years of service with an annual salary of $40,000 might receive guaranteed annual pension benefits of about $20,330. Under a typical private 401(k) plan, a guaranteed annual benefit might be only around $4,450 (assuming the money is invested in U.S. Treasurys and the employee buys an annuity).

BLS data on paid leave for teachers count vacation days only during the school year, omitting summer and long holiday breaks. A valid pay comparison should include this extra time off, in which teachers can enjoy longer vacations or earn additional income.

Properly counted, a typical public school teacher with a salary of $51,000 would receive another $51,480 in present or future fringe benefits. A worker in private business with the same salary would receive around $22,185 in fringe benefits.

 Finally, is job security.

Finally, despite recent layoffs, teachers still have greater job security than workers in private businesses. While employment in education declined by 2.9% between September 2008 and July 2011, according to BLS data, overall private-sector employment declined by 4.4%. Moreover, from 2005 through 2010 the unemployment rate for public school teachers averaged 2.1%, versus 4.1% for private school teachers and 3.8% for occupations that some consider comparable, such as computer programmers and insurance underwriters. 

Job security protects against the loss of compensation suffered by the unemployed, and it also protects a position in which total wages and benefits are on average above market levels. This job security is surely valuable.

These are things I have always known about the teaching profession and commented on in various Missoulian LTE and Liberal blogs.    I have no sympathy for teachers complaining about their career choice and how underpaid and unappreciated they are. 


Teachers are, in fact, overcompensated and should be willing to take a 52% cut in pay in benefits to bring them down to what people of similar education and ability are making in the private sector. Heck I would suggest even a 42% cut to show that we appreciate them 10% more than people in the private sector.