Teacher Pay 1940–2000: Losing Ground, Losing Status
by Ed Hurley, NEA Research Division
more Education Statistics
An analysis of decennial Census data clearly shows that over the past 60 years the annual pay teachers receive has fallen sharply in relation to the annual pay of other workers with college degrees.1 The mid- to late 1990s, a period of vigorous national economic growth, was a particularly bad time for teacher pay relative to the pay of other occupations. Throughout the nation the average earnings of workers with at least four years of college are now over 50 percent higher than the average earnings of a teacher. At no other time since a college degree was required to teach has this wage gap been so wide. Two reasons stand out for the growing gap: 1) the erosion of job discrimination practices, which has allowed females greater access to such careers as doctor, lawyer, engineer, and business executive; and 2) periods of robust economic growth that bore financial rewards for most professional workers but bypassed the teaching profession.
The failure of school districts to significantly raise employee salaries to offset the increased pay available among alternative occupations has serious consequences in terms of their ability to place well-qualified teachers in classrooms. Many factors influence the choice of whether to become a teacher or to pursue another career. Likewise, many factors influence the choice of continuing as a teacher or leaving the profession. It is clear that one significant factor is the competitiveness of teachers' compensation. Ample research exists demonstrating that the supply of teachers responds strongly to the compensation of the teaching profession relative to that paid among competing occupations.2
Analysis of Census Data
This analysis uses data from the decennial Census of the years 1940—2000. Only full-time wage and salary workers are included in this analysis. The sample is limited to workers with at least a four-year college degree so the wage structure will be representative of those occupations in the economy that are alternatives to teaching. To maintain data consistency, both the earnings of K—12 private and public teachers are included in the average teacher earnings figure because, in the earlier decennial Census surveys, private and public teacher earnings were not separated. All earnings are age-adjusted to ensure that the average earnings comparisons are not tainted by the fact that the pay gap may have increased simply because the average age and experience of teachers dropped in relation to the average age and experience of non-teachers.
Often in teacher pay comparison studies the yearly salary of teachers is inflated to adjust for the fact that teacher pay is based on a contract year consisting generally of from 180 to 200 days. However, because the contract year for teachers has for the most part remained constant over the past 60 years, it is not necessary to even consider making this adjustment in order to make judgments on how relative teacher pay has changed.
Results of Teacher Pay Comparison Analysis
Charts A and B show teacher pay compared to the pay of non-teachers with at least four years of college. Because of the sharp differences in the male/female shares of employment in teaching and in the rest of the economy among workers with college educations, separate results are presented for males and females. Both charts illustrate the pay comparisons by providing the percentage difference non-teachers earn over teachers.
The results are eye-opening. There was a time when it — literally — paid to be a teacher. Unfortunately, that was 60 years ago. In 1940 the average male employee with four or more years of college who did not teach K—12 earned 3.6 percent less than the average K—12 male teacher. In the same year, the average female non-teacher with four or more years of college earned 15.8 percent less than the average female teacher. By 2000, the average female with four years of college made 16.4 percent more than the average female teacher and the average male with four years of college made a whopping 60.4 percent more than the average male teacher. When the average earnings of male and female teachers are combined and compared with the average pay of all non-teachers with at least four years of college, the difference is 53.5 percent in the year 2000. This actually understates the pay gap because a large proportion of teachers have master's degrees, making them more educated than their comparison group.3
Chart A: Male College-Educated Non-Teacher Pay Compared to Male Teacher Pay
|Year||% Non-Teachers Earn More (or Less) than Teachers|
Chart B: Female College-Educated Non-Teacher Pay Compared to Female Teacher Pay
|Year||% Non-Teachers Earn More (or Less) than Teachers|
The larger pay gap for men reflects not lower teacher salaries for men (since male and female teachers are paid from the same salary schedules), but the bigger opportunity cost for men relative to their non-teaching opportunities. As large numbers of war veterans obtained college degrees with the help of the GI Bill, the country's productivity soared after 1950, and the economy rewarded those male graduates with accelerating pay increases throughout the 1950s and '60s. Teacher pay rose somewhat during that period but didn't come close to keeping pace with the significant pay hikes experienced by the other predominantly male professions requiring a college degree. The pay advantage enjoyed by other professions over teaching leveled off a bit during the 1970s and 80s as the economy stagnated at times, as demand for skilled workers waned, and as the college degree diminished somewhat in terms of being a fruitful economic investment. Also, teachers received some welcome pay increases during the 1980s. The economy roared back after 1992, and the teacher/non-teacher wage gap rapidly expanded as a result of no real increase in teacher pay in combination with the strong wage gains that college-educated workers in non-teaching occupations have enjoyed, especially in the information- and technology-based industries.
Teaching has traditionally been a predominately female occupation. In fact, according to the Census data, a higher percentage of teachers were female in 2000 (75.8%) than in 1940 (68.0%). In the middle of the 20th century, women who wanted interesting, financially rewarding careers became teachers because most other job options included only domestic service, factory employment, and clerical work. School districts were in the fortunate position of being able to recruit from a "captive" pool of well-qualified females. According to Chart B, as recently as 1960 female teachers earned on average 12.7 percent more than college-educated females in other occupations. The 1960s represented a decade of profound social change, including some progress made toward eliminating job and wage discrimination against women and minorities. School districts began losing their "captive" pool of well-qualified females but failed to respond by adjusting salaries upward. By 1970, the wage advantage held by female teachers had shrunk to 3.1 percent. During the 1970s, female teachers slightly increased their wage advantage to 3.7 percent, but only because the demand for skilled workers in other occupations had shrunk. In the 1980s, more and more females began moving into the ranks of business, medicine, law, and technology and the wage advantage that female teachers had traditionally held disappeared. The 1990s was a period of no real gain in teacher salaries as well as both strong demand for workers with college degrees and more movement of females into higher-paying occupations. This resulted in a 16.4 percent pay disadvantage for teachers in the female labor market by the year 2000.
Again, this gap is understated because a large proportion of female teachers have master's degrees, making them more educated than their comparison group. A study by Peter Temin from MIT found that women with some graduate education now earn on average 40 percent more than female teachers with graduate education.4
The NEA Research Division once argued that teaching was "priced too low" and that "other employment for college-trained people offered greater financial rewards" resulting in "a substantial number of trained, qualified teachers drawn off yearly for other occupational pursuits."5 That argument was made in 1959. The economic status of teaching has further declined since that time and teaching is now "priced even lower." If the pay gap were to be the same in 2000 as it was in 1959, the average teacher salary would have to be about 13 percent higher. If the comparative pay position of teachers vis-à-vis other occupations requiring a college education were to be the same in 2000 as it was in 1940, the average teacher salary would have to be over 38 percent higher. The 1990s represents a decade with one of the steepest deteriorations in the comparative pay of teachers. The average teacher salary would have to be over 9 percent higher than it is in 2000 to equal the pay gap that existed only 10 years prior.
Public education during the past 60 years has failed to respond to changes in the labor markets that affect the supply of well-qualified teachers. The increased ability of women to enter into traditionally high-paying, male-dominated jobs has certainly been a positive development for the gender and for the country. On the other hand, the reluctance of school districts to raise salaries in reaction to this labor market development has negative implications for the country as fewer of the best and brightest college graduates are entering the teaching profession and those that do leave sooner.
Additionally, the demand for skilled workers has risen quite dramatically since 1940. This growth in demand drove up the price of skilled workers in every decade except the 1970s, when there was an unusual increase in the supply of college graduates. The 1990s especially was a time of escalating pay increases for professional workers, even though teacher pay stagnated. It seems ironic that the current shortage of well-qualified teachers is due in part to education's success in providing individuals with many of the skills that employers crave.
In order to prevent schools from becoming victims of their own success, the pay of teachers needs to be significantly increased to offset the large pay raises that were made available to other occupations requiring a college degree. Unfortunately, the failure of education to respond to the changes in the overall labor market may be due to structural deficiencies rather than to a lack of perception. The sources of funds for schools are growing more limited. Unless serious tax reform occurs that can provide the needed funds to raise teacher salaries, finding well-qualified people to teach children will prove more and more difficult.
1. The Census earnings data were extracted from public use files by Decision Demographics, Arlington VA.
2. See for example Manski, Charles F. 1987. "Academic Ability, Earnings, and the Decision to Become a Teacher: Evidence from the National Longitudinal Study of the High School Class of 1972." In D. A. Wise ed., Public Sector Payrolls (pp. 291—316). Chicago: University of Chicago Press; Rosen, Sherman, and F. Flyer. 1994. The New Economics of Teachers and Education. Chicago: University of Chicago, Department of Economics; Murnane, Richard J., and Randall J. Olsen. 1990. "The Effects of Salaries and Opportunity Costs on Length of Stay in Teaching: Evidence from North Carolina." Journal of Human Resources 25(1): 106—124.
3. The Census survey does not provide data by degree type but rather has categories with years of college education. For 2000, 43.3 percent of teachers replied that they had 5 or more years of college education while 34.4 percent of the college-educated non-teachers had 5 or more years of college education.
4. Temin, Peter. 2002. "Teacher Quality and the Future of America." National Bureau of Economic Research, Working Paper 8898 (p. 13), Cambridge, MA, at http://www.nber.org/papers/w8898.
5. National Education Association. April 1959. "Financial Incentives for Teachers." Research Bulletin (vol. 37).