Having good teachers is the single most important controllable factor in student achievement. This should come as no surprise to anyone who has had the privilege of learning from an exceptional teacher — or, for that matter, has suffered through a terrible one. Rigorous research shows that the difference between having consistently good teachers and just OK teachers can be enormous, resulting in an entire year’s worth of additional learning by high school graduation.
The bad news is that U.S. schools are not up to par, neither in comparison to our own expectations and history, nor to other countries. The good news is that teacher quality isn’t dependent on the forces of nature or divine intervention. It is firmly under our control. As an economist who has spent the last few years gathering the latest research and data, I offer a simple proposal in my new book, Profit of Education. We have to start treating teaching as a profession, and not as an act of sainthood.
In concrete terms, I argue that we should boost teacher pay significantly, and allocate that raise disproportionately to teachers who do the best job of increasing student achievement. This will simultaneously attract more of the best and brightest into the teaching profession, and once they are there will give them the motivation and support they need to do what’s best for their students. As I describe in detail in Profit, we can do this ways that incentivize whole schools to work together and that doesn’t disadvantage low-achieving students. My estimate is that we can increase average student achievement by the equivalent of a whole extra year of learning.
Perhaps unsurprisingly, given my background, the principles that underpin the Profit proposal are drawn from studying the broader economy. The way to build a great organization — whether private, public, or not-for-profit — is to recruit and retain great people. That means paying them a competitive wage, and expecting good work in return. The idea that we’re going to get millions of great teachers any other way is unrealistic. At best, it’s naïve; at worst, it’s disingenuous and shows that we don’t really value preparing our nations’ kids for the future when it requires us to put our money where our mouths are.
No one argues that people will work at Microsoft simply for the prestige. Players don’t sign with the Yankees because they like the fashionable pinstripes. If we want better people in the teaching profession, we need to pay them more. For a long time now, we’ve treated the labor market for teachers as if it were organized around altruism instead of pay. Teachers are terribly underpaid. They earn 30 percent less than the average college graduate, or about the same amount as a college-educated retail supervisor. This wasn’t always the case. Teacher salaries have steadily lost ground to other professions over the past 50 years, and our education system has suffered as a result.
Some try to justify teachers’ non-competitive salaries by pointing to their superior benefits packages, or the fact that they only work nine months out of the year. A hard look at the data says these explanations are way overstated. The average teacher works almost as many hours per year as other professionals, and the extra value of the benefits package is not that high, especially for a young person just entering the job market.
But the bottom line is that the proof is in the pudding: Teacher salaries as they currently stand are not getting the job done. No one wastes time arguing about what a "fair" salary would be for an aerospace engineer or a heart surgeon. In the private sector, employers understand that you get what you pay for.
That’s not meant to denigrate today’s teachers. Data on student achievement reveals that many, many teachers — not just a few superheroes — do great work. The profession attracts more than its fair share of individuals who are talented and choose to stay despite the meager financial rewards. But relying on selfless devotion is not a winning strategy for building a first-class system.
Tying pay to outcomes and offering real rewards to those who do good work, on the other hand, is a winning strategy. In the model I propose, the teacher salary pool would increase by 40 percent. Base pay for all teachers would go up, but much of the increase would go into higher pay for successful individuals or groups within a school. No longer would raises be based on seniority. Teachers’ paychecks would also be affected by how well others around them perform — a market-based way of encouraging cooperation and bringing peer pressure to bear on under-performing teachers.
A lot of education reformers want to focus on merit pay alone. That won’t work. Recent studies suggest the effects of merit pay on student achievement are likely to be small in our current environment of substandard teacher compensation. Merit pay pilot projects that have offered tiny bonuses in return for extraordinary achievement haven’t gotten far. Not surprisingly, people won’t switch careers or revamp an entire curriculum for crumbs. Merit pay will only work if the carrot is big and juicy, and treats teachers like skilled professionals.
What evidence do we have that this approach will work? Besides common sense and the experience of every market-driven company in the world, we also have data from the education world that supports this case. To select one recent example, a study of 190,000 students in 28 industrialized countries showed that higher teacher salaries were a statistically significant predictor of higher test scores. For example, U.S. teachers make about 1.14 times U.S. per capita GDP. In Finland, a world leader in educational outcomes, teachers make 1.49 times per capita GDP. Finnish students end up about two years ahead of American students.
The cost of raising the teacher salary pool by 40 percent is large: my estimate is about $90 billion annually. But we’d be getting an additional year of education achievement for every student, which raises each graduate’s earnings by about 10 percent. In the long run, spending $90 billion a year would raise GDP by $800 to $900 billion — a return of nine dollars in America’s gross domestic product for every dollar invested. Taxes generated by increased productivity would not only pay for the program, but they also would make a sizable dent in our national debt. Another way to look at this sum is that it is about two-thirds of the cost of the wars in Iraq and Afghanistan.
Any way you slice it, paying teachers more and rewarding them for success is a profitable proposition. We should do it because it’s a good investment for us as a nation, but also because it’s the right thing to do for our kids. Everyone wants to give the next generation a leg up. The trick is to find the best investment and then put our money where our mouths are. Higher — and smarter — teacher pay is the answer.
