South-Western College Publishing - Economics  
You Pay for Average, You Get Average
Subject Change in wages of teachers cause fewer bright students to become teachers.
Topic Labor Markets; Income Inequality
Key Words

Wage Compression, Income Distribution

News Story

Many parents and employers perceive that public school teachers aren't as smart as they used to be. Recent research both refutes and supports that perception.

Using aptitude test scores as measures of teacher "quality," researchers at the University of Maryland show that test scores have remained remarkably stable over the last 40 years, although the average teacher's test score is slightly below the average college graduate's score. However, the best high school graduates - those in the top 10% of test scores - are now far less likely to become teachers as before. "Whereas close to 20% of females in the top decile [ten percent] in 1964 chose teaching as a profession, only 3.7% of females in the top decile in 1992 chose teaching." Since teaching as a field remains a female domain (the proportion of female public school teachers has remained fairly stable at 75% over the last 40 years, and women are twice as likely to attend college as they were 40 years ago), the chance of getting a really bright teacher has fallen.
Other researchers have wondered why fewer really bright individuals pursue teaching. They look at two phenomena to explain these results - changes in the ratio of male-to-female wages, and the role of teacher unions. Since the ratio of male to female wages has fallen (e.g., wages have become more equal between the genders), women may be more likely to work in other professions. Likewise, men may be more willing to become teachers.

Unionization would have the effect of compressing wages; the average would rise, but the difference between the highest and lowest wages would fall. These researchers find that wage compression accounts for about 80% of the change in teacher composition. While in the 1960s a bright teacher would command about a 50% premium over other teachers and earn about the same as other teachers today, someone who was below average in aptitude test scores would earn abut 28% less than the average teacher in the 1960s, and about the average pay now. Wages have been compressed together, causing the brightest teachers to leave. As the author writes, "…we get what we pay for: average quality for average wages."

(Updated May, 2004)

Questions
1.

What has happened to the opportunity cost of being a teacher for women? How do you see this reflected in the summary?

2. The authors agree that aptitude test scores of teachers isn't a perfect measure of quality. What other measures would you suggest instead of test scores?
3. 3. As bright women leave the market for teachers, what should happen to the wages of teachers? Use a graph of supply and demand in the market for teachers to illustrate your answer. Is this answer consistent with the wage compression theory? Why or why not?
4. 4. Go to http://www.bls.gov/ces/home.htm and click on "Get Detailed CES Statistics." Click on Create Customized Tables (one screen), and enter the following data in the respective text windows: Average Hourly Earnings of Production Workers, Education and Health Services, and Nursing Care Facilities. Click on Get Data. What has happened to the wages for nursing home workers, also a traditionally female occupation? Use a graph of supply and demand to explain why wages have changed the way they have.
Source Virginia Postrel. "Getting the Most out of the Nation's Teachers." The New York Times. 25 March 2004..

Return to the Labor Markets Index

©1998-2004  South-Western.  All Rights Reserved   webmaster  |  DISCLAIMER