Monday, January 25, 2010
Standard Article by Brett Narloch
Issue: Budget & Spending
On January 6th, the interim Education Committee met in Bismarck. According to minutes from the meeting, one of the topics discussed was teacher compensation. North Dakota Education Association (NDEA) representative Josh Askvig testified that the average base salary for starting teachers in North Dakota is $26,383. According to Askvig, the NDEA's position is that teachers should start with a base salary of $40,000. The NDEA would, no doubt, support legislative action concerning minimum wages for new teachers.
For the sake of this article, let's assume that teachers work 185 days, which is more than the state average of 181.6. Let's also assume that teachers work 9 hours per day (8:00am - 5pm). Using this formula, teachers work 1,665 hours per year, which means that teachers would start earning $24 per hour if their minimum base salary was $40,000.
According to the US Bureau of Labor Statistics, the average hourly wage in North Dakota was $16.90 in 2008. The average annual wage in North Dakota in 2008 was $35,150. So, the NDEA is asking for a minimum starting wage for teachers that is $4,850 more than the average salary earned by the average North Dakotan who also works roughly 400 more hours.
But aren't teachers more valuable than the average worker? Perhaps in the minds of some people. But in the real world, wages are determined by many factors and are subject to market forces. How are wages set in a free market? It's pretty simple, really.
Wages are typically set high enough to prevent teachers from seeking other employment and not any higher. If teachers can earn more money doing something else, then they are free to do so. And many do. If they choose to remain teachers, then it must be viewed as a decision based on values other than monetary (i.e. they like to teach, they feel obligated to teach, etc...). But those other personal decisions should not automatically mean they should be compensated more.
If the NDEA believes that wages are too low, then it should also conclude that there are too many teachers that want to work in the North Dakota market. Teachers right out of college have the option of teaching anywhere in the country. And many leave North Dakota in search of higher wages. If there were fewer teachers, wages would increase as there would be more schools trying to recruit fewer teachers. After that increase, more teachers would reenter the teaching profession and more college students would become teachers. Then wages would fall back down due to an increased supply. The market always finds an equilibrium at the lowest wage level that prevents too many teachers from leaving the profession. Right now, in North Dakota, that wage for new teachers is under $30,000 per year.
The other element involved in this situation is the amount of revenue school districts receive. If citizens of school districts are truly displeased at how low teacher compensation is for new teachers, they would support increased property taxes or state taxes to better compensate them. With property owners seemingly displeased about how high property taxes are, they are unlikely to support such tax increases to support a generous minimum wage for new teachers. Especially since teachers in North Dakota do quite well. According to Sunshine on Schools, the highest paid teacher in more than half of North Dakota school districts receives more than $60,000 in annual compensation.
Perhaps local governments could reprioritize their spending to free up more money for new teacher salaries, but the market for new teacher wages is based on factors of supply and demand. The will doesn't exist to shift more spending into new teacher compensation, or it would be happening.
If the NDEA wants new teachers to have disposable income, they should seek alternative ways to achieve that. They could advocate merit-based teacher compensation, where new teachers have opportunities to earn money currently earmarked for more senior teachers. They could focus on nominal dollar salary increases instead of across-the-board percentage increases for all teachers. After all, a teacher earning $80,000 receives a bigger raise than a teacher earning $27,000 on a percentage basis.
The NDEA might also want to focus on ideas that reduce the need for students in university teaching programs to take out loans to pay for college; thus, increasing disposable income for new teachers. They should read Going Broke by Degree, a book written by NDPC economic policy fellow Richard Vedder, Ph.D., which examines the reasons why college tuition is so high. Among other things, he suggests modifying tenure, increasing teaching loads, paring administrative staff, and cutting non-educational programs (read: "Higher Education and North Dakota's Economic Future").
Setting a $24 per hour minimum wage for teachers simply because they are teachers distorts the wage market by placing arbitrary value to their work. Indeed, a study conducted by the progressive Center for American Progress found that base salaries for teachers at private schools is lower than public schools. So while the NDEA wants starting teacher pay dramatically increased, market evidence suggests that it is already too high.
Before the legislature takes the $40,000 minimum wage for new teachers idea seriously, they should first reflect on why starting teacher salaries are at their current levels and then continue to let the market dictate the value of teacher productivity.
