What Economists Think About Democrats' New Education Proposals

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Democratic presidential candidates have been watching a historic wave of teacher strikes and protests sweeping the nation — and they want to give teachers a raise.

Kamala Harris wants to spend $315 billion over 10 years to increase the annual salary of an average teacher by $13,500. Joe Biden wants to triple spending on a federal program for low-income schools and use much of those funds for "competitive salaries." And Bernie Sanders wants to work with states to set a minimum $60,000 starting salary for the nation's teachers.

But there's something missing from these proposals, and it reveals a dramatic shift from a decade ago in how the Democratic Party wants to fix education.

A $60,000 minimum in context

By global standards, American teachers are well paid. According to OECD data, the starting salary of a typical American teacher in 2017 was about $40,000. That's ninth of the 36 countries on the list. A $60,000 minimum would push the U.S. to the No. 2 position, behind Luxembourg, which is way out ahead with a starting salary of more than $70,000.

How does teacher pay stack up domestically? According to the Bureau of Labor Statistics, the average K-12 teacher makes above $62,000, which is $10,000 more per year than the average of all occupations ($51,960). The benefits are usually better than average, too.

But maybe those aren't the right comparisons. When we ask, "How much should a teacher be paid?" what we're really asking is "How do we get great teachers to choose to be a teacher and not, say, a lawyer ($144,230) or an engineer ($99,230) or something else?" Teaching generally requires a college degree, sometimes more. That comes with debt. And there's a growing pay gap between teachers and other similarly educated professionals. Last year that gap hit a record.

Teachers make a lot of money ... for other people

Everyone can appreciate the value of a great teacher. But economists, being economists, have tried to quantify exactly how valuable they are. Eric Hanushek of Stanford's Hoover Institution, Barbara Biasi of Yale's School of Management, Jonah Rockoff of Columbia Business School, and John Friedman of Brown University have been leading researchers on this front, and we spoke with all of them.

"I think teachers are way underpaid," says Hanushek. "I think we ought to see a lot more six-digit salaries for the top teachers."

Many of the benefits teachers create are intangible: a lifetime love of literature or mentorship that guides a child onto a better life path. Yet some of the benefits are tangible. Hanushek went as far as estimating a dollar amount. He finds that an effective teacher, who is able to improve student test scores significantly, can increase the lifetime earnings of a class of 20 by $400,000 compared to what an average teacher would have been able to. Meanwhile, he finds, an ineffective teacher does the opposite and lowers student earning potential by a similar amount. Friedman and Rockoff, together with Harvard's Raj Chetty, have done a few studies with similar findings. They find above-average teachers deliver big income gains to their classrooms as well as a host of other social benefits, like lower teen pregnancy rates.

While being a good teacher means huge economic benefits for the people they teach and society at large, teachers don't get to fully share in all the benefits they create. In economic terms, that's a positive externality, and it's a big reason why we should pay them more.

"If you look at future incomes of students who have the top teachers, you see that there's a big bump that justifies very large salaries from the top teachers," Hanushek says.

The economists we spoke to generally believed that we should tie teacher pay to classroom performance and not simply implement across-the-board pay increases like a $60,000 minimum salary. This is the consensus position for economists. And there was a time, about a decade ago, when it looked to be the consensus of leading Democrats and Republicans as well. Not anymore. The proposals floated by Democrats on the campaign trail don't mention pay-for-performance.

The schoolyard fight over teacher pay

A decade ago, it was increasingly accepted that one of the ways to improve our educational system was to tie teacher pay to performance and make it easier to fire bad teachers. The die-hard reformer and union antagonist Michelle Rhee, then the chancellor of the D.C. public schools, was appearing on the cover of Time magazine. The documentary "Waiting For 'Superman'" was making waves. The Obama administration was challenging teachers unions to drop their opposition to merit pay and using its Race To The Top program to encourage states to adopt innovative ed policies loved and championed by economists. Not now.

"There's definitely been a turn against a set of ideas in education that we've been championing as effective," says economist John Friedman.

One problem with tying teacher pay to student performance is that performance is hard to measure. Randi Weingarten, the president of the American Federation of Teachers, has spent a lot of money and energy fighting this movement over the past two decades. The American Statistical Association and others have also questioned the reliability of models used for measuring teacher impact on student performance. Economists like Friedman, Rockoff, and Chetty have pushed back. They say test scores shouldn't be the only measure of a teacher's effectiveness, but they can say a lot about how well they perform in the classroom.

Weingarten, who has worked closely with Sen. Sanders, likes the idea of a $60,000 minimum teacher salary. "Making a middle class salary matters," she says. "It starts people thinking, 'I can go into teaching and pay my student loans. I can go into teaching and raise a family.' "

A recent working paper finds that during recessions, when private-sector jobs shrivel up, more talented candidates get into the teaching profession and make a significant improvement in student test scores. While it might not be the most targeted way to improve education, raising the floor of teacher pay could do the same thing in good times.

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