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News from EPI Teacher weekly wage penalty reached a record high in 2018

Teachers were paid 21.4 percent less in weekly wages than similar college graduates in 2018—after accounting for education, experience, and other factors known to affect earnings—according to a new analysis by EPI Distinguished Fellow Lawrence Mishel and EPI Research Associate and University of California economist Sylvia Allegretto.

Although teachers enjoy better benefits packages than similar workers, those benefits only mitigate part of the 21.4 percent wage penalty. In terms of total compensation (wages plus benefits) teachers earned 13.1 percent less than similar college graduates in 2018, just slightly less than the record high 13.3 percent compensation penalty in 2017.

“It’s no surprise that the states that have seen teachers strike and walk out over the past year are the states that have some of the highest teacher wage penalties,” said Mishel. “While teacher pay is only part of the story, it is an important element. If we are going to have excellent schools, we must make sure that teachers are paid for their work.”

The average weekly wages of public school teachers (adjusted for inflation) decreased $21 from 1996 to 2018, from $1,216 to $1,195. In contrast, weekly wages of all other college graduates rose by $323, from $1,454 to $1,777 over this period. As such, the regression-adjusted, or relative, teacher weekly wage penalty has grown considerably since the mid-1990s. The relative teacher wage disadvantage was 5.3 percent in 1993 and grew to 12.0 percent in 2004, before reaching a record 21.4 percent in 2018.

“There is a growing consensus that the United States faces an unprecedented shortage of teachers,” said Allegretto. “More and more teachers are leaving the profession, and fewer college students are choosing a career in teaching.” The teacher wage penalty is a large reason why. We must undo the teacher wage penalty and begin to pay teachers competitive salaries.”

In this edition of their analysis, Allegretto and Mishel introduce new regression-adjusted estimates of the teacher weekly wage penalty by state for the 2014–18 period. The weekly wage penalty ranges from -0.2 percent in Wyoming to -32.6 percent in Arizona. Four of the seven states with the largest teacher weekly wage penalties—Arizona, North Carolina, Oklahoma, and Colorado—were the site of teacher protests in 2018, which helped draw national attention to the erosion of teacher pay. Teachers in these states earned at least 26 percent less than comparable college graduates in their state.

Allegretto and Mishel provide an appendix presenting a comprehensive discussion of the data and methods used in their estimation of the teacher compensation penalty, both the weekly wage estimates and the analysis of benefits to compute the adjustments required to estimate the compensation penalty. The issues covered include the use of the Current Population Survey, including: the choice of sample: the inconsistencies created by the 1994 redesign and changes in measurement of education in 1992; the exclusion of observations with imputed wage data; and adjusting for the growth of observations with topcoded weekly wages. Allegretto and Mishel explain the improvements in sample selection and regression specification introduced in the new report and assess the impact of these choices on the level and trend of the estimated teacher weekly wage. The appendix also provides details on the measurement of benefits and the method for computing the “benefit advantage” used to adjust the weekly wage penalty to obtain the compensation (wages and benefits) penalty.

One important issue addressed in the appendix is how the methodology addresses the fact that teachers are typically contracted to work only a nine-month year. By examining differences between teachers and other college graduates in weekly wages for weeks worked, Mishel and Allegretto avoid any controversies over teachers having the “summer off.”

This paper was released in conjunction with the Center on Wage and Employment Dynamics (CWED), a project of the Institute for Research on Labor and Employment (IRLE) at UC Berkeley. IRLE connects world-class research with policy to improve workers’ lives, communities, and society.