Overpaid Teachers Report from Heritage/AEI is Based on Bad Stats, Groundless Assumptions

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A recent report from the Heritage Foundation and American Enterprise Institute, Assessing the Compensation of Public School Teachers, claims public school teachers are paid 52 percent more than fair market rates. While attention-grabbing, this contention is based on a faulty assessment that relies on “an aggregation of spurious claims” to make its case, according to a labor market expert.

The Heritage/AEI report was authored by Jason Richwine and Andrew Biggs. It pits the wages and benefits of teachers against those of similarly educated and experienced private-sector workers and concludes that teachers are overpaid. But in his review of the report, professor Jeffrey H. Keefe, of Rutgers University’s School of Management and Labor Relations, finds that it rests on a series of flawed and one-sided assumptions and sloppy statistical analyses.

Using these assumptions, the authors stand normal conclusions on their head. While the straightforward evidence suggests that teachers are undercompensated by about 19 percent compared with their non-teacher peers in the workforce, the report concludes that they are instead overpaid by more than twice that percentage.

Central to the original report’s argument is the claim that teachers are less intelligent than other workers of comparable education and experience. The report bases this claim on the lower scores of teachers on the Armed Forces Qualifications Test (AFQT). Yet the AFQT is simply not an intelligence test. Further, the authors claim that AFQT scores alone can be used to compare teacher and non-teacher populations. But that conclusion relies on a data sample that’s too small to provide any meaningful long-term analyses or conclusions, Keefe points out.

In fact, “measured cognitive ability is correlated only weakly with wages and explains little of the variance in wages across individuals and time,” Keefe writes. That is, people aren’t generally paid based even on a valid IQ test; they tend to be paid based on factors such as their preparation, skills, reliability, knowledge, and experience. “The only reliable comparison in this report is its starting point: there is a 19 percent [compensation] penalty for teachers.”

Other statistical missteps in the report include its erroneous calculations for benefits costs, both during employment and after retirement, which lead the authors to contend that benefit costs for teachers amount to more than their salary costs, thus more than doubling teachers’ overall costs. Keefe’s review explains why this is “a claim that cannot be reasonably supported.”

The review, which is published by the National Education Policy Center, housed at the University of Colorado Boulder School of Education, also uncovers in the report a significant miscalculation that doubles the supposed monetary value embedded in the customary “summers off” work schedules of teachers. The report also asserts, notwithstanding recent widespread teacher layoffs, that teachers enjoy a substantial benefit of disproportionate job security, and the authors then proceed to pull, out of thin air, a monetized value of this asserted benefit.

Keefe warns that the study isn’t merely useless, but that it will lead to “headline-grabbing claims of dramatic overpayment of teachers” that, in turn, will result in ill-informed and harmful policy decisions that further undercut support for public education.

“Any discussion of teacher compensation should be based on high-quality evidence,” Keefe warns, adding that “this report does not advance that discussion.”

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