The economics of teacher salaries

One of my friends who is a teacher posted this the other day. I assume as it's school holidays, she's sick of being told how much teachers get paid for the little work they do, and all the holidays they get. Lucky buggers right?
Well the answer is actually yes.

Teachers are over paid as new graduates compared to other similarly qualified graduates in other industries. Teachers on average start on about $48,000 dollars in NZ, where as the average for other graduates outside of medicine is under $40,000. From there teachers get 2 almost guaranteed pay rises each year, one on their anniversary of employment of the contractually agreed pay rise. And the other being the step increase for moving up the salary progression scale.

Nominally this second increase is for performance and ability, but in practice every teacher gets it. Education and proper performance appraisals don't go together, it's more a tick the box process. Within a couple of years teachers are all on over $50,000 with regular guaranteed pay increases. The salary scale steps being the biggest increse. This is just base salary without management units, or any other allowances teachers can get, even as new teachers. The base pay scale tops out around $75,000, but as I said hardly any teacher will be paid the base salary. This relatively flat pay scale is one of the major issues I have with the education sector.
To me the starting pay is far too high, and should be at least $10,000 less, and top in class, as opposed to HOD's principals etc, should be paid well over $100,000 a year.

This could all be achieved for roughly the same staffing budget as it is now, but will never happen with the current strong union movement. This could be achieved because there are a lot of teachers at the bottom of the pay pyramid, with fewer at the top.
It's this big bottom group of teachers on relatively high rates of graduate pay that cost most of the staffing budget. Teachers also tend to only stay in teaching for short periods of time, with a majority teaching for less than 10 years, including their 2 years as provisionally registered teachers, while they complete their on job training on reduced hours. This makes the effective starting salary much higher, almost on par with doctors.

Before anyone accuses me of being anti teachers, I should let you know my wife is a teacher, my dad was a teacher, and I grew up with a lot of family friends as teachers. So in arguing for lower teacher starting salaries, I'm arguing against my self interest, as my wife only started teaching less than 5 years ago. Meaning as a household we would have been significantly less well off had my style pay scale been in place for teachers when my wife first started.
I also actually really admire teachers for being able to stand kids all day every day. I couldn't do it.

But enough about how I would pay teachers, back to the original article and it's failed economic basis. Even though the article itself is American, the same principles apply in NZ, just our minimum wage, and babysitting rates are higher.

Fully qualified teachers teach for 20 hours a week, with 5 hours for class preparation/marking/down time. The number of students in each class varies by year level, roughly following a bell shaped curve, with less in new entrant classes, more in mid and senior primary through intermediate, and junior secondary, with progressively less through senior secondary.

But let's for argument sake say there's 30 students in each class. Then lets pay graduate teachers at an hourly rate similar to other graduates, of $18.27 an hour ($38,000/52/40) for the hours they work. And lets be generous and pay newly graduated teachers for the 4 hours less than other teachers, recognising they are still getting up to speed, just like all graduates. So that's 25 hours per week, for 40 weeks a year, that they're paid to be teaching. And before I hear teachers scream about the amount of prep work they do each year before school starts, and during the year. Most other jobs have that too. I can assure you HR doesn't end when you clock out at the end of the day. You're always thinking about something that's going on. Even when I worked in a library, I still thought about work after I had gone home for the night, and often took work home with me.

So carrying out that calculation we can work out graduate teachers should earn $18,270 pa. Far far less than the $48,000 they're currently paid. But then again I'm not sure anyone would teach for that little money. Being paid at minimum wage would be $14,500 pa. And I'm positive no one would work for that.

This is where the article falls down on economics. It falls into the simple trap of thinking that every unit of production(student) brings the same price. This is a common mistake made by many people with little understanding of economics. But in reality it's not how it works. The costs of teaching one child is no more than teaching 30, other than a slight marginal increase costs for materials such as books and photocopying. Thus the price received by the teacher has to reflect this reality. A parent may be happy to pay $20 a day to have their child educated, but a teacher couldn't charge every parent this, because they can't devote exactly the same amount of time to the 30th student as to the first. If there's only one student they get all of the teachers attention for the entire day, and the teacher can tailor their teaching to the students needs. With 30 students this is impossible, you have to teach to the average. Thus parents are prepared to pay less for each child, depending on how many children are in the class. This amount will be different for each parent, some parents will want individual education, others will be happy with a hundred students per class. Different teachers will likewise have differing levels of class size comfort. Some will limit theirs to 15 students, others will be happy teaching 100.

It's these reasons why teachers are paid salary, rather than piecemeal rates per child. And why teachers wouldn't be paid as much as they think, and this article suggests if they were paid on a per child basis.