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Carolina Journal News Reports

National Average Goal Unique To Education Pay

Private sector relies on cost of living, other market factors

Jan. 6th, 2014
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Using Bureau of Labor Statistics data, CJ compared pay for several N.C. industry groups (top) and the spread between private sector and educator pay nationwide (bottom).

RALEIGH — Education leaders and some politicians for years have urged that pay for educators in North Carolina be at “the national average,” a goal used for no other employment sector in the state as a metric to gauge the appropriateness of pay.

In a recent news report, Rep. Rick Glazier, a Fayetteville Democrat, said he’d like to see teacher pay raised 5 percent a year until it approaches the national average. In the same report, Lt. Gov. Dan Forest, a Republican, suggested that, “North Carolina teachers should be the highest-paid in the country.”

Leaders who advocate paying teachers at the national average of their professions make no mention of the private sector, in which market forces and costs of living in the various states largely determine differences in prices, pay, and living costs across state borders. This explains why renting an apartment in Raleigh or Charlotte costs less than renting one in New York or Chicago.

This special, singular approach to educator pay versus pay in the private sector had its beginnings under Democratic former Gov. Jim Hunt, who revived his campaign in recent months — during a September address at UNC-Chapel Hill, and in an op-ed column published Jan. 5 in the News & Observer.

At the UNC-Chapel Hill address, Hunt recalled meeting a group of teachers who urged him to make raising teacher pay to the national average a key issue in his campaign.

They told him North Carolina had slipped to 44th in the nation and one place below South Carolina. “Well, I had a fit,” Hunt said. “I knew we’d done a lot of good things to improve education, but I had not kept my eyes closely enough on teacher pay.”

In his N&O op-ed, Hunt called on Gov. Pat McCrory and the General Assembly to have a single-minded goal of bringing teacher pay to the national average within four years. "Not talk about it, or vaguely promise it, but do it," Hunt wrote.

After winning the 1996 election, Hunt convinced the General Assembly to appropriate more than $1 billion to raise teacher pay to the national average. According to National Education Association numbers, North Carolina was at 96 percent of the national average when Hunt left office in 2001. Since then, using NEA numbers, North Carolina is now at 81.5 percent of the national average pay for teachers.

Using Bureau of Labor Statistics figures, Carolina Journal found that employees in the public-school sector in North Carolina (209,000 jobs, including everyone from janitors to superintendents) in 2012 were paid at 85.1 percent of the national average for their peers. Their counterparts in the private sector were paid at 87.5 percent of the national average for private-sector employees in 2012.

The BLS figures show the education sector has fallen behind the private sector in recent years, but not by much. If educators’ paychecks had averaged only 2.8 percent higher, or $990 in 2012, their salaries would have been in line with the state’s private-sector workers. The total cost to taxpayers would have been $207 million.

The NEA’s numbers, which include teachers only, show North Carolina’s average teacher pay currently is $45,947, or 81.5 percent of the national average of $56,383. That would rank the state near the bottom, followed only by Oklahoma, Mississippi, and South Dakota. Raising teacher pay to the NEA national average would cost taxpayers more than $1 billion.

If someone were to set a goal of raising North Carolina’s average private-sector pay ($43,040) to the national average ($49,200), it would take an additional $19.9 billion in pay to bring the state’s 3.2 million private sector employees up to that level.

Most comparisons of teacher pay rely on the annual rankings released by the NEA, but even the NEA and many other researchers concede that making teacher-compensation comparisons among states is difficult.

The federal government currently does not collect annual teacher salary or compensation data for each state. The National Center for Education Statistics in the Department of Education is developing a method to do so, but the results are several years away, said Stephen Cornman, director of that project for NCES.

Though NCES currently does not use BLS data to quantify public education pay in the states, Corman said that such a method is valid. “I agree with that approach as a comparison,” he told CJ.

North Carolina school districts have the option of providing annual supplements to K-12 teacher salaries, and, according to the N.C. Department of Public Instruction, all but eight of the state’s 115 local school districts do so. The remaining 107 districts provide supplements ranging from $100 in Mitchell County to $6,441 in Chapel Hill-Carrboro City Schools. Wake County offers $6,318, and Charlotte-Mecklenburg schools offer $6,376. Both the BLS and NEA data sets include annual supplements in their calculations of educator pay.

Other states

Using BLS data, CJ compared each state’s private-sector and public education average pay to the national average, resulting in a percentage for each, which may be thought of as an index. For instance, Texas had a private-sector index of 104.9 and a public education index of 89.8, meaning that Texas’ private sector is paid 4.9 percent above the national average of private sector pay, while public education employee pay is 10.2 percent below the national average of education employees.

The spread between the two indexes is -15.1. This means public education pay is 15.1 percentage points lower than one might expect if public education workers and private-sector workers had the same relationship to the national average for their respective sectors.

Joining Texas at the end of the scale of states where education employees fall well below private-sector employees were Colorado, Virginia, Kansas, and Washington, all with a negative spread greater than 10 points.
In the middle of the pack were 17 states where the spread was plus or minus 5 points. North Carolina is in this group, with a spread of –2.3 points.

On the high end, states where public education employees make much more compared to their national peers than private-sector workers to their peers, is Rhode Island, with a private-sector index of 90.7 and an education sector index of 129.9. This means Rhode Island’s 20,728 public education paychecks averaged in 2012 129.9 percent of the national average, a 39.2 point spread in favor of public education. Other states with significant spreads favoring the education workers were New Jersey, Maryland, Nevada, Michigan, Ohio, Pennsylvania, Montana, and Delaware.

Other N.C. sectors

Using this same methodology, CJ computed the index for other sectors of the North Carolina economy. All numbers are for the year 2012 and could be compared with the private sector’s average wages of 87.5 percent of the national average.

On the high end was the North Carolina public university system with an index of 106.1, meaning that the average paycheck for the 55,277 UNC system workers was 106.1 percent of the national average for workers at state-run universities and colleges.

In the private sector, CJ found that the average annual employment in newspaper publishing had fallen from 10,513 in 2002 to 5,896 in 2012, and the BLS index had fallen from 83.2 to 77.0 over the same time period, meaning newspaper employees in North Carolina in 2012 were paid only 77 percent of what newspaper employees nationally were paid.

The average annual employment in the state’s law offices was 23,239, and the most recent BLS index was 73.9 — meaning the average paycheck in the state’s law offices is 73.9 percent of the national average for law offices.

In the state’s goods-producing sector, with an average annual employment of 643,513, the BLS index was 85.4, or about two points below the private-sector index of 87.5.

The 173,649 jobs in wholesale trade had a BLS index of 92.1, and the 451,208 jobs in retail trade had a BLS index of 90.9, both above the private sector’s average of 87.5 percent of the national average.

Comparisons are difficult

CJ sought clarification from Glazier and Forest about their positions on teacher pay. CJ was unable to reach Glazier by press time.

Forest told CJ, “I have always said that we could set an aspirational goal of having the highest-performing/highest-paid teachers in America. The caveat is performance.” He said that “highest paid is conditional on several factors,” including total compensation, not just salary, and that data should be indexed for cost of living.

On the NEA website, under state affiliates, a section called “quick facts” lists the average teacher salary in North Carolina as $48,648. But NEA’s Rankings & Estimates publication lists average annual pay for North Carolina’s teachers as $45,947 for school year 2012-13.

That publication also notes that each state “has its own system of accounting and reporting,” so “it is not always possible to obtain completely comparable data for every state.”

The NEA’s methodology for ranking teacher pay, which shows North Carolina teachers much lower compared to the national average than the BLS numbers, has been criticized for reliability.

“Those rankings need to be taken with a grain of salt as the comparisons are not necessarily fair given the variability in definitions and reported data, as well as differences in cost-of-living across geographic areas,” concluded a report issued by the Education Research & Data Center for Washington state in 2007.

A 2006 study by the Florida Department of Education concluded that the data used in all national ranking studies was not reliable for comparison because states use different factors to calculate salaries.

The NCES, which doesn’t currently collect teacher pay data from each state, is developing a Teacher Compensation Survey to obtain the data. But the latest published data from the TCS is for the school year 2006-07, and only 17 states participated in the project.

NCES has conducted a more recent survey, but only 30 states participated, and the results have not been published, NCES project director Cornman told CJ.

He said there are significant challenges for anyone collecting teacher compensation data on a state-by-state basis. “There has to be consistent definitions to determine average pay levels,” he said. He said his center’s compensation research is “a work in progress to ensure the data quality on compensation and benefits.”

Cornman said a 2010 NCES study attempted to evaluate data gathered for the 2006-07 Teacher Compensation Survey and compare it to the NEA’s published salaries for the same year. But only 13 of the 17 states could be compared. The numbers in two states, Louisiana and Mississippi, were close, but for Kansas the TCS average was 9 percent higher than the NEA number, and in Oklahoma the TCS average was 8 percent lower than the NEA number.

The NCES publishes an annual “Digest of Education Statistics” that includes a table listing average teacher pay by state, but it lists the NEA as the source of that data, and CJ has confirmed that it is the same salary data published by the NEA.

The source of BLS data

The accuracy of BLS numbers is generally acknowledged by statisticians. The agency’s Quarterly Census of Employment and Wages program provides a quarterly count of employment and wages reported by employers to each state’s unemployment insurance program.

The methodology is uniform across the states, incorporating the actual amount of gross pay reported for each worker. It includes gross pay and should match the same gross pay reported to the Social Security Administration and the Internal Revenue Service. The data are available through the BLS website.

Data are available at the county, Metropolitan Statistical Area, state, and national levels by industry and ownership code. The ownership code is federal government, state government, local government, or private sector. Public schools are listed as code 611110 with a local government ownership code.

Don Carrington is executive editor of Carolina Journal.