Tuesday, September 6, 2005

Competitive Pay for Teachers, Part II

This entry is half of the dialog going on an important blog called Ohio School Funding. I'm reproducing my side of the conversation here just because I spent a lot of time writing it and don't want to lose the train of thought. If the topic is of interest to you, I encourage you to go to Ohio School Funding and read both halves of the dialog, as well as discussion on many other points.
Thanks for the response and the continued stream of information you post. Any dialog about school funding is a good thing, and you have created a forum that encourages that dialog. I wish every voter was required to read you blog before entering the voting booth.

I think you and I are in agreement on almost everything concerning school funding, and I appreciate your tolerance when we may have different perspectives, as might be the case here.

Private schools: I have a friend who comes from the patrician old-money New England society. He attended Andover with Geo W Bush (as well as Yale). That's the kind of place I had in mind, not these charter schools that are popping up all over the place. In this part of the state, most of the charter schools are performing poorly. I fear they exist as a way to make some easy money, not to truly give kids and parents a superior education option.
Competitive salaries: In private industry, an employer has opposing motivations. On the one side, there is the desire to pay workers as little as possible. After all, any money spent on people is profit not realized. But on the other side, an employer knows that paying a dolt he can hire for a small amount makes much less sense than paying more for an employee who is competent and motivated.

Actual wages are set by a classic supply and demand dynamic. In the case of school systems, the administration creates the demand. They require some quantity of teachers with the appropriate credentials, experience and observed ability. They set the price they’re willing to pay for such teachers.

On the other side are the people who want to be employed as teachers. They look at the openings, and decide whether the jobs have the right characteristics, of which the pay scale is only one component (along with location, facilities, demographics, etc). As long as a match is found for every position, the school system doesn’t have to pay more. In other words, for the level of skill and performance required by the school system, the supply of teachers is large enough that salaries do not in general need to be raised to fill all open positions.

I think you and I are looking at two sides of the same coin. You’re saying that if school systems paid teachers more, they would get better teachers. I’m saying that if school systems really wanted better teachers, they would have to pay more. The administrators would raise their standards, and fewer candidates would qualify. With fewer candidates to go around, the schools would have to compete for them, causing salaries to go up.

Here is a report on the OEA website describing teacher salaries across the state.
As one might expect, the top performing school districts pay their teachers the most. My guess is that they have the highest hiring standards as well.

I once worked with a customer, a large New York financial institution, who had this policy: Each year, each manager was required to rank the department’s employees by overall performance. Then by the end of the year, the manager was expected to get rid of the bottom 10% and replace them with new, presumably better, employees. The idea was that the aggregate capability and performance of the organization constantly improved. One would think no one would want to work for such a firm, but the truth was that top performers enjoyed working there. It’s a joy to work with competent teammates and know that if you make the cut each year, you’re one of the best in the industry. Sort of the business version of the US Marine Corp (The Few, The Proud). This firm paid top salaries because they wanted to make sure that they attracted the best folks as replacements. It would be viewed as a bad thing to lose a top candidate to a competitor over salary.

What if school systems adopted a policy like this? Each year, 10% of the administrators and 10% of the teachers would be let go and replaced with better folks. What would be the basis for ranking? Is the psychological makeup of a good teacher incompatible with such a Darwinian system? I don’t know.

I think it’s really just supply and demand. The school system administrators, the school boards, and the public who hire them, set the standards low enough so that there is an abundance of supply of teachers willing to work for low wages. Fortunately, more often than not, we get more teacher than we pay for. But teachers get paid what they do because they’re willing to accept it.

My point is that the root of this is the ineffective and inefficient system we’ve set up to hold school systems accountable. A business that fails to meet the requirements of its customers can collapse in a hurry because the revenue can dry up very quickly. GM, for example, will be lucky to survive the decade, after generating record profits in the 90s. In a school system, the customers are required by law to keep buying the product regardless of performance and quality. It’s a big deal to change suppliers (school systems) in our communities. You are stuck with your public school system, or you have to come up with the money to attend a private school. Or you can move to another school system, which is not necessarily at all easy.

Vouchers create an immediate and meaningful vote for the buyer, which in turn makes the school system more responsive. It’s messy in the short term because of the issues of transportation etc. It’s always messy to convert from a state-run system to private enterprise. The British did it. The Russians are giving it a try, and even the Chinese are experimenting with a hybrid economic system.

We can’t be afraid to suffer short-term pain for the long term good. Shortsightedness is the enemy of building a better future for our country.

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