South-Western College Publishing - Economics  
Teachers Work for Peanuts, Not Apples
Subject Comparative statics
Topic Labor Markets
Key Words Pay, salary, recruiting and retaining
News Story

The pay of teachers is lagging behind the pay of other college-educated professionals. At the beginning of their careers, teachers are paid nearly $8,000 less, and as much as nearly $24,000 less by the age of 50. The average shortfall is over $14,000, nationally and across all ages and levels of education. The greatest shortfall was for teachers between 44 and 50 with Master's degrees: they were paid $43,313 a year compared to $75,824 for other professionals. The gap worsened between 1994 and 1998, the salary of teachers with Master's degrees rising by only $200 while that of other professionals increased $17,505.

These figures explain why school districts have difficulty recruiting and retaining good teachers. As a result, some states allow teachers to be hired without passing basic skills tests and without passing tests in the subjects that they teach. The President of the National Educational Association stated that if schools were supposed to adopt efficient business practices, they should also recognize the relevance of supply and demand, implying that they should increase salaries.

(Updated March 1, 2000)

1. Draw a labor market diagram showing the supply and demand curves and the wage and employment equilibria for teachers and for other professionals. Make sure you show the relative magnitudes of salaries and employment levels realistically.
  a) Why might the supply of labor to teaching be relatively high? Refer to the determinants of the supply of labor.
  b) Why might the demand for labor in teaching be relatively low? Refer to the determinants of the demand for labor.
2. Why might the gap between the pay of teachers and other professionals have increased over the period from 1994 to 1998? Think about the factors that might have caused the demand and supply curves to have shifted.
3. If teachers' pay were increased, and there was a concurrent increase in teacher quality, which curve would shift? Why?
Source Jacques Steinberg, "Salary Gap Still Plaguing Teachers," The New York Times, January 13, 2000.

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