The Role Of States In Teacher Pay Gaps

We recently published a research brief looking at gaps in pay between teachers and comparable non-teacher professionals. These gaps are sometimes called “teaching penalties.” The brief draws on data from the School Finance Indicators Database (SFID), a collection of school finance and resource allocation measures published by the Shanker Institute and the Rutgers Graduate School of Education. 

The first part of the brief presents our estimates of teaching penalties, by state, for young (age 25) and veteran (age 55) teachers. We find that the gaps between teachers and similar non-teacher professionals range between 5-10 percent in states like Pennsylvania and Montana to 35-40 percent in Arizona, Oklahoma and Colorado (the latter three are all states in which there were recent major teacher strikes). To be clear, these estimates do not include benefits, although our rough calculations (discussed in the brief) suggest that the inclusion of benefits would not come close to closing these gaps in most states.

Our primary focus, however, is on the relationship between these teaching penalties and states’ school finance systems. 

Specifically, we find a significant relationship between the size of the penalties and adjusted state K-12 spending. In other words, states that spend more exhibit smaller gaps. We find a similar relationship between the penalties and states’ fiscal effort, which measures how much of their total “economic capacity” they spend on K-12 education – i.e., states that put forth more “effort” tend to have smaller gaps.

On the one hand, these findings are not surprising. A large proportion of state education spending goes to teachers’ salaries. So, teachers will tend to be better-paid in states that spend more, and will therefore earn wages that are more competitive with those of their non-teacher counterparts. Moreover, to be clear, we do not take any position on how additional funds to improve teacher pay, if allocated, should be distributed (e.g., across the board versus targeted raises).

On the other hand, our results illustrate a few important ideas underlying the eternal debates about the adequacy of teacher pay, debates that have gained new momentum in the wake of a recent proposal from a Democratic presidential candidate to supplement teacher pay with federal funds.

First, and most obviously, raising teacher pay to a more competitive level will require greater resources from some states than from others. Our results indicate that teacher/non-teacher pay gaps are substantial in virtually all states, but the magnitude of the problem varies considerably by state.

Second, policy matters in school finance when it comes to improving teacher pay. Teaching penalties vary between states for a variety of reasons, some of which may be peripheral to education policy – e.g., the composition of non-teacher workforces, collective bargaining laws, etc. But it is no accident that higher-effort, higher-spending states tend to have smaller teaching penalties. 

Third, and perhaps most importantly, what we’re showing here, put simply, is that some states are constrained in how much they can pay their teachers, whereas others seem to underpay teachers by choice – i.e., by refusing to raise sufficient revenue to properly fund their school systems. 

Mississippi, for example, exhibits a large teaching penalty – teachers in that state earn wages that are 23-27 percent lower than their non-teacher counterparts', depending on age. But that’s principally because Mississippi’s economy (economic capacity) is small, and despite their relatively high fiscal effort, they have trouble raising a lot of revenue. Put differently, Mississippi devotes a relatively large share of its economy to K-12 education, but its economy is so small that spending falls short.

By contrast, there are a number of other states, such as Arizona, Colorado and North Carolina, in which teaching penalties are among the largest in the nation, not because of a lack of economic capacity, but rather because these states put forth relatively low effort. That is, revenue – and therefore teachers’ salaries – is low due in part to deliberate policy choices.

From this perspective, regardless of how any federal efforts to improve teacher pay are distributed within states, we strongly recommend that they are designed to incentivize improvement in states’ funding systems. 

For instance, priority should be given to helping states like Mississippi, which is putting forth effort but falling short due to economic constraints. When it comes to low-effort states, however, federal funds should be partially contingent on improvements to finance policy in these states. 

Low teacher pay – and insufficient education funding, in general – are due to state-level choices and the ultimate focus should therefore be on state-level reform. The federal government should not be subsidizing states that can help themselves but have refused to do so. 

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