It's a romantic figure: the teacher who spends thirty or forty or sixty years patiently shepherding children through the tricky process of learning to read, or speak French, or do long division. The whole public school system is set up to reinforce this ideal. The pay system rewards seniority, the tenure system protects it, and the pension system exacerbates all of this, as former NYC schools chancellor Joel Klein points out in our pages this month:
Finally, coming on top of these other senseless policies is the remarkable way that benefits and seniority drive overall teacher compensation. It's possible for a teacher in New York City to retire at 55 and draw down an annual pension of more than $60,000, plus lifetime health benefits for herself and her family. The pension is not subject to New York State or local taxes and goes up with cost-of-living increases. The huge value of this lifetime stream of benefits is rarely mentioned when we talk about teachers' compensation, but the teachers are well aware of it and act rationally in response to it. What we end up with is both a form of lock-in for employees and an enormous long-term financial exposure for the taxpayers.
The impact of the lock-in shapes the entire compensation system, because the "big" money comes only after a certain number of years--in New York City, for example, many teachers get their full pension after working 25 years, and a far smaller pension if they work for only 24 years. As a result of backloaded policies like this, after 10 years fewer than 1 percent of teachers leave the system, and after 15 years only about 0.1 percent leave. Many have candidly told me they are burned out, but they can't afford to leave until their pension fully vests. So they go through the motions until they can retire with the total package.
Aggravating the perverse incentive of the benefit lock-in is the nature of almost all pay increases in public education, which are either automatic if you stay another year or so, or take 30 college credits; or across-the-board percentage raises--for example, 10 percent over three years, meaning that every veteran teacher making $80,000 gets an $8,000 increase, while every beginning teacher making $40,000 gets a $4,000 increase.
None of these pay increases makes sense. Why pay someone more for simply working another year or for taking a few courses? Starting last year, Mayor Bloomberg refused to give teachers in New York a raise, because he was facing budget cuts. But the overall pay for teachers still went up nearly 3.5 percent automatically, simply for longevity and college credits. (According to a Department of Education internal analysis, the average NYC teacher works fewer than seven hours a day for 185 days and costs the city $110,000--$71,000 in salary, $23,000 in pensions, and $16,000 in health and other benefits.) And why give all teachers making $80,000, or more, a 10 percent raise? They're not going to leave, since they're close to vesting their lifetime pensions. By contrast, increasing starting salaries by $8,000 (rather than $4,000) would help attract and retain better new teachers. But because of seniority, we can't do it that way.
But what about turnover costs, I hear you cry? Isn't turnover expensive?
Sure. It's also really expensive in the private sector. And yet you see, to a first approximation, exactly no firms voluntarily setting things up so that their labor force is like the Hotel California: workers can check out any time they want, but they can never leave.
Well, as noted, turnover has costs. But--at the risk of pointing out the glaringly obvious--lack of turnover also has cost. It tends to create a culture which is insular and extraordinarily resistant to innovation, one which has a growing tendency over time to prioritize the desires of insiders over other constituencies such as customers, taxpayers, or shareholders. (And to be clear, I am talking just as much about the military and companies as I am about schools--this is not a phenomenon that requires, say, powerful public sector unions.)
Moreover, in any high stress job, burnout is going to be a serious problem, and I think we can all agree that--especially in the neediest school districts!--teaching is a high stress job. The literature I'm familiar with says that burnout is a fairly major issue, and while it's most prevalent among new teachers--who may come in with unrealistic expectations and lack of experience in managing long-term stressors--it can happen at any age. At least the young teachers tend to leave (up to 50% of them in the first five years, by some estimates, though that's probably inflated by the overlap between people who want to spend a lot of time around young children, and people who want to be stay-at-home Moms.)
As Klein points out, by the time they've been in for ten years, most teachers don't leave until they can collect that pension--and that includes the ones who've burnt out.
But the lock-in problem is not limited to people entering and exiting the industry; it also applies to people who want to enter and exit school districts. An excellent teacher whose spouse got transferred from New York to Massachusetts suddenly finds themselves at the bottom of the seniority/salary ladder once again, and the pension credits that they spent so much time accumulating are, if not worthless, at least considerably devalued.
Why would we want a school system where essentially everyone over the age of thirty is a lifer, locked into a single district? It's bad for labor mobility; it's bad for the natural cross-fertilization of ideas that helps other professions advance; and it's not so great for teachers unless they're so incompetent that they couldn't get a job anywhere else. The whole system where we get people to work at artificially low pay in the early years, in exchange for an outsized payoff that they can only collect by staying in the same system for most of their life, doesn't seem destined to promote excellence.
Why shouldn't people be able to teach for ten years, then decide that they can't handle it any more and do something else? Why shouldn't people have a generous 401(k) match that they can take with them if they want or need to switch school districts? How are we going to attract high quality teachers by promising them a big payoff thirty years in the future--but only if they lash themselves to a single organization for that entire period, come what may?
I know what some of you are thinking: but if the system weren't set up this way, people would just fire old, expensive teachers! But I'm proposing repeal of the entire Faustian bargain where teachers get systemic bumps merely for aging in place: pay younger teachers more, and make the raises less generous, so everyone gets the same pay for doing the same job. (For the first five years, I think there's some argument for teachers working at a discount. But teacher effectiveness seems to plateau after five years*.) The system should neither punish longevity, nor reward it. And if that were true, principals would have no incentive to fire teachers by age group rather than performance.
Don't get me wrong--I can get as romantic as anyone about professionals who lovingly dedicate a lifetime of excellence to a single institution. And I don't want to discourage those people from staying in the classroom as long as they can push their walker up to the front of the class. But neither should we discourage people who are willing to put in fifteen great years, and then quit--or move to Massachusetts.
Firms do work hard to keep their turnover costs low, with tricks like "not enraging their workforce". But they don't work hard to keep them at zero, for good reason. The thing that people who worry about turnover costs tend to forget is that at the margin, the workers you lose to turnover are the people who don't want to be there. Absent special conditions--like heavily back-loaded pensions--the people who leave are disproportionately going to be the people who are no longer sufficiently invested in their job, or your institution, to perform well. Now, of course, if the reason they don't want to be there is some easily-avoided misery that you are inflicting upon them, it is a very good idea to identify, and stop, that negative influence.
But often what overwhelms them is a necessary component of the job--the endless stress of sales calls, the tedium of walking a police beat . . . or the shrilling of 25 fourth graders seven hours a day. If that is what is making them miserable, then it's better for everyone that they should go, and not lose thereby. Minimizing your turnover costs is a very fine strategy if all you care about is ensuring that there is a butt in the seat at the head of the classroom. But if you are trying to foster excellence in the workplace, it should not be the priority around which you structure compensation.
* Yes, yes, that's only if you accept standardized tests as some sort of accurate measurement. Sadly, standardized tests are the only way we have to get, erm, a standard measurement, and no one's offered any very compelling alternative causation that would make teacher quality as measured by these tests rise for the first five years--and then stop--for reasons completely uncorrelated with whatever intangible variables the anti-testitarians believe constitute "actual" teaching performance.