In yesterday’s “Room for Debate” feature, The New York Times asks whether public-school teacher compensation should be increased. The answer we give, based on our recent report, is that teachers already receive more compensation than comparably skilled private-sector workers.
If the current compensation bonus has yet to increase the quality of the teacher workforce, it is not clear how an additional raise would produce better results. Public school districts should focus on maximizing the value of their existing resources rather than spending even more money inefficiently.
But why is there such a mismatch between the skills teachers possess and the compensation they are offered? In an efficient labor market, we would expect higher pay to increase the quality of the applicant pool, leading to a more skilled workforce. But the public sector is anything but efficient.
Vanderbilt University economist Dale Ballou has produced compelling evidence of this inefficiency. Writing in the Quarterly Journal of Economics, Ballou concluded that “important indicators of a strong academic background and cognitive ability do little to improve the prospects of an applicant for a public school teaching position.” Many of the best teaching applicants—those who graduate from more competitive colleges, earn higher GPAs, or hold degrees in specialized areas such as math or science—are turned down in favor of less qualified candidates who took the traditional route of majoring in education. The problem is likely due to some combination of restrictive hiring rules and principals’ preference for teachers who have training similar to their own.
The ideal compensation system would reward the best teachers with higher pay, while discouraging the least effective teachers from staying in the profession. But absent fundamental reforms to the ways teachers are hired, promoted, and—if necessary—fired, across-the-board increases in teacher pay will provide little benefit, despite the high cost.