The Economic Policy Institute recently released its annual study of public teacher compensation and, to almost no one’s surprise, the left-leaning organization once again concluded public educators are underpaid.

The Economic Policy Institute, or EPI, has been publishing its analysis on public teacher wages for several years, always with the same conclusion – teachers are underpaid relative to the compensation of similarly educated private employees.

The media, of course, repeatedly promotes this conclusion without question. The teachers-are-poorly-paid narrative plays well because it confirms implicit biases we’re been conditioned to believe for decades – no matter whether true or not.

EPI’s conclusions may be accurate in some states – we can’t question their analysis across all 50 states. But we most certainly can check their numbers for the state we live in thanks to the millions of teacher compensation records collected by Transparent California every year. 
 
The EPI analysis is based on U.S. Bureau of Labor Statistics Current Population Survey data. According to their methodology page, they conduct a survey of 60,000 households across the United States monthly. Given it is a telephone survey, this means the data is largely anecdotal and unverifiable. They also exclude “prekindergarten and kindergarten teachers, adult educators, and special education teachers,” with no explanation why.
 
The BLS data also “top-codes” higher earners. This means they only record weekly wages up to a defined threshold. That threshold is $2,884.61 a week, or $150,000 a year. Top-coding makes it hard to estimate measures of income inequality since the shape of the distribution of high incomes is blocked.

 
EPI says they estimate values above that, but this introduces the possibility that higher-earning employee wages are reported incorrectly. The EPI’s methodology uses a “weekly wage” method of calculation that is somewhat complex. This is supposed to compensate for the fact that teachers have “summers off,” so, according to the EPI, “annual earnings are an inappropriate guide for wage comparisons.”

In contrast, the Transparent California analysis is based on actual data direct from the pay records of each district, showing total annual compensation with no restrictions on data for high earners. Data sets are obtained using legal Public Records Act requests gathering data from the districts’[KD1] [TM2]  own computer systems.

 
In 2021 there were 252,550 certificated employees listed. With data collected from districts representing more than 97 percent of K-12 enrollment in the state, that contained an overwhelming sample size – “almost everyone.” 
 
Transparent California’s data only includes total compensation[KD3] [TM4] [TM5]  (including both pay and benefits) from the school district. No earnings from any other source are considered, which means we are truly measuring actual compensation paid by school districts. No earnings from other sources are included and nothing is being estimated. 
 
Using this data, in 2021 the median total pay of a full-time K-12 certificated group employee was $95,505, with a total compensation including cost of benefits of $124,449.
 
The mechanics of data collection combined with state regulations allowing schools to delay reporting until mid-summer mean that our 2022 collection is now in progress.

We have districts responsible for educating 53 percent of K-12 students, reporting data on 137,719 certificated employees so far, and in this we see median total pay in 2022 for full-time K-12 certificated group employees of $102,636, with total compensation $134,437.
 
For “comparable college graduate pay” we use the U.S. Census Bureau’s American Communities Survey “educational attainment” data in conjunction with the California Department of Education’s data on teacher education levels. The latter data set has not been updated since 2019, however we know from past data the mix does not shift dramatically year-to-year.

In 2019 51.57 percent of teachers had just a bachelor’s degree (plus the required additional year of training to be certificated), and 48.43 percent had more advanced degrees. 
 
If we weight the Census Bureau data to reflect this same mix of education as the teacher labor pool, for 2021 we see the median private employee with an education level equivalent to teachers made $88,435. In 2022 that number is $92,805. 
 
Using actual pay records to determine full-year compensation with no data excluded we see in 2021 the median certificated employee made about $7,000 a year more than they would have made in private industry with the same education. In 2022 so far that difference is almost $10,000 a year. 
 
The EPI’s claimed “teacher penalty” in compensation appears to be false, at least in California when using actual data as a source. Here we see much more of a “teacher premium.” 
 
Now we need to add to this the teacher “benefit advantage.” The EPI discusses this but comes up with an artificially low number here, also.
 
In our state certificated employees are members of the CalSTRS pension plan. The CalSTRS-required contributions in 2022 totaled 27.75 percent of employee pay (including district and state contributions, excluding any employee contributions). Neither employers nor employees pay into Social Security for teachers (who are also not covered by this program on retirement.) 
 
In private industry, an employee would receive a contribution from their employer of 6.2 percent of their pay to Social Security and up to 4 percent of pay as a “matching contribution” to a 401(k) retirement plan.

This means private employers contribute about 10.2 percent of the employee’s salary to their retirement. With 27.75 percent of a certificated employee’s pay being contributed to their retirement by their employer, that means they receive 17.55 percent more of their compensation in the form of retirement than private employees. For a teacher with a median pay of $102,636 that addition is worth $18,012 a year.
 
If a private employee received an additional $18,000 a year contribution to their 401(k) plan and placed that in long term investments with market-average returns for a 30-year career this benefit would be worth almost $3 million on retirement.
 
For a private employee to fund the same generous retirement plan and still take home spending money comparable to a certificated employee, they would have to make $102,636 +$ 18,012 = $120,648 per year. That’s about 30 percent greater than the actual comparable private employee pay of $92,805. 
 
For more details on the certificated employee retirement plan contributions, see the post “How Much are California K-12 Employees Really Paid – Benefits.”

Leaving out healthcare benefits but factoring all other compensation, so far in 2022 a full-time certificated employee in California makes about $27,000 a year MORE than comparable private employees.
 
The EPI does not show many details by state but does show they feel in California the “teacher weekly pay penalty” is -19.2 percent. Contrast that to actual results from real data that show teacher compensation of 30 percent above what comparable private employees make. 
  
Whether that 30 percent “teacher premium” is “too much, too little, or just right” is a decision for parents to make, particularly when we see labor unions agitating for higher pay and threatening strikes – literally holding the education of kids hostage to demands for more money for themselves.
 
Given the limitations in education funding, every dollar given to employees in the form of higher pay or benefits is a dollar that is no longer available to educate kids. That seems a serious issue that demands serious – and honest – analysis of the data and options first? 
 
Todd Maddison is the Research Director for Transparent California, and a parent activist working to improve K12 education in our state.