The Irascible ProfessorSM
Irreverent Commentary on the State of Education in America Today

by Dr. Mark H. Shapiro

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Commentary of the Day - June 2, 2000: Will Privatization Lead to Fair Pay for Teachers?

In an op-ed piece in the Orange County edition of today's Los Angeles Times (June 4, 2000) Bruce Crawford of Fountain Valley, California argues that teachers will receive fair pay for their services only when education is privatized.  According to Crawford, only customers operating in a free market can determine the value of a product or service, and since most teachers work for government there is no way to properly value their services.  Crawford argues that customers, via the market, establish wages that are fair.  Thus, if teachers want to be paid fair wages they should push for privatization of the education system.

While this sounds good, unfortunately market economies are far more complex than Crawford describes.  Certainly, the cost of labor is included in the goods and services that customers purchase.  However, labor costs usually constitute only a part of the total cost of goods and services.  When this is the case the relationship between the perceived value of goods and services by customers may have only a tenuous relationship between prices paid and wages paid.  For example, the wages paid to refinery workers are not closely tied to the prices customers are willing to pay for a gallon of gasoline.  The price of a gallon of gasoline is determined  mostly by the supply and demand for crude oil on the world market, while the wages paid to refinery workers are determined to a large extent by other factors such as the overall labor market in a given area, union contracts, etc.  Likewise at the other end of the scale, the salaries of CEO's of major corporations are influenced hardly at all by the value that customers are willing to put on the products or services provided by these corporations.  These salaries are determined the compensation committees of corporate boards mostly by comparison with what other CEO's in a given industry or industrial sector make.

Thus, the IP finds it a bit strange that Crawford dismisses out-of-hand the notion that fair compensation for teachers might be arrived at by comparing salaries across the different school districts in a region.  While this may not be the most ideal way to set teacher salaries, it certainly gives school boards some idea of what range of salaries taxpayers in a given region are willing to support.  In fact without the use of such comparisons it would be difficult for many public sector workers to obtain reasonable compensation for their services.  Although salary comparisons alone do not provide all the information needed to set fair wages for teachers, they certainly are a factor to be considered.

The IP is more than willing to grant that in a market economy wages and salaries, for the most part, bear some relationship to the value added to goods or services by the workers who receive those salaries.  However, that does not always mean that wages and salaries are always fairly set by the market.  If that were true there would be no differences in salary scales for men and women for comparable work.  Yet we know that such differences are widespread in the private sector.

Indeed, value added should be a significant component in the determination of teacher salaries.  We now have quite good information in a macroeconomic sense of the value of education both to the individual who receives the education and to the economy as a whole.  That information also should be considered when the average teacher salaries are determined.  Unfortunately, it almost never is part of the equation.

Many have argued that the salaries for individual teachers should be adjusted from the average to reflect the educational level, skill and effectiveness of the individual teacher.  Again, the IP agrees that such factors are reasonable to take into account provided that those adjustments are made objectively and that they focus on the "value added" by the individual teacher.

Returning to Crawford's original contention that only the "customers" of a private education system can be in a position to fairly value the teachers' contributions, we have to ask who would be the customers of such a system.  Would they be only the parents, or would the customers include the employers who hire the graduates of such a system?  If the employers are included, how would they be charged for value received?  Although arguments can be made on both sides of the private versus public education debate, one of the clear advantages of the public system is that all who receive value from the system ultimately contribute to its upkeep.

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© 2000 Dr. Mark H. Shapiro - All rights reserved.