La idea

The final piece of this analysis compares the typical benefits packages in public

education to those available in the private sector. The evidence presented here comes from the U.S. Bureau of Labor Statistics (BLS) and from analyses of survey data conducted by the Economic Policy Institute (EPI) and the Employee Benefits Research Institute (EBRI). Those sources can be used to compare benefits in Washington with benefits in the rest of the country and to compare benefits by occupation. Unfortunately, given the limitations in the data, it is not possible to reliably compare benefits by occupation within the state of Washington.

Fortunately, the evidence suggests that the benefit patterns for the state of Washington mirror those of the nation as a whole. For example, Figure 22 compares Washington’s share of wage and salary workers with retirement benefits, by sector, with the national average. As the figure shows, the share of public sector workers in Washington with employer-based retirement plans—73 percent—is very close to the national average of 72 percent. The shares of private- sector workers with retirement benefits are also very similar (42 percent for Washington and 40 percent for the nation as a whole). In both the state and the nation, employees who work full time are more likely to have retirement benefits than the average worker.

Figure 22: Share of Wage and Salary Workers with Employer-Based Retirement Plans, 2010

Source: Employee Benefits Research Institute, 2010.

Figure 23 compares the Washington share of workers with employer provided health insurance, using data from two separate studies of the Current Population Survey, one by EBRI covering the period from 2007-2009, and another from EBRI covering the period from 2008- 2009. Both studies indicate that the share of Washington workers with health insurance is very similar to the national average.

0% 20% 40% 60% 80% 100%

Washington National Average

Public Sector Private Sector Full-Time, Full Year

Figure 22: Share of Workers Age 18-64 with Employer-Provided Health Insurance

Source: Economic Policy Institute, 2010, and Employee Benefits Research Institute, 2011.

Figure 24 compares total health insurance premiums. Again, Washington is very similar to the national average. The average total health insurance premium per enrolled employee for a family plan in Washington ($11,423) is virtually identical to the national average ($11,381). The average total health insurance premium per enrolled employee in a single plan is also nearly the same in Washington as in the nation as a whole.

Figure 24: Average Total Health Insurance Premium per Enrolled Employee, 2006

Source: Economic Policy Institute 2009.

0% 20% 40% 60% 80% Washington National Average EBRI: 2007‐2009 EPI: 2008‐2009 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Washington National Average Single Plan Family Plan

Figure 25 illustrates the national average shares of wage and salary workers with an employer-based retirement plan, by occupation. As the figure illustrates, across a variety of occupations, public sector workers are more likely to have employer-provided retirement plans than are private sector workers. For example, the share of workers with retirement plans among service occupations is 66 percent for public sector workers, and 18 percent for private-sector workers. Even in professional and managerial occupations, the share of private sector workers with retirement benefits is much lower than the share of public sector workers with retirement benefits.

Figure 25: U.S. Wage and Salary Workers with Employer-Provided Retirement Plans, 2010

Source: Employee Benefits Research Institute 2011

Figure 26 uses data from the BLS National Compensation Survey to compare the national average shares of private sector workers with retirement benefits to the shares of state and local government employees with retirement and benefits.27 The data come from a survey of

employers rather than employees and are from 2011 rather than 2010, but they tell a similar tale. The share of private sector employees with retirement benefits is well below 100 percent and well below the shares of state and local government employees, even for workers in professional and managerial occupations.

0% 20% 40% 60% 80% 100% Management, Business and Financial Professional and Related Service Office and Admin. Support Installation, Maintenance and Repair Transportation

Figure 25: U.S. Shares of State and Local Government Workers and Private Sector Workers with Employer-Provided Retirement and Health Care Benefits, 2011

Source: Bureau of Labor Statistics, National Compensation Survey, March 2011.

Figure 25 also indicates the share of private sector employees with health care benefits and the share of state and local government workers with health care benefits. As the figure illustrates, private sector workers are systematically more likely to have health care benefits than to have retirement benefits, whereas public sector workers are more likely to have retirement benefits than to have health care benefits. As a result, the benefits gap between the public and private sectors is smaller for health care benefits than it is for retirement benefits. Nevertheless, public sector workers are generally more likely to have health care benefits than private sector workers, although the gap between public and private sector managers is negligible.

Table 12 compares the findings from two different studies of health insurance coverage for workers age 18-64. As the table illustrates, both studies indicate that private sector workers are less likely to have employer-provided health insurance than their public sector counterparts. The EBRI study (Fronstin 2011) compares the private sector and the public sector directly, and finds that public sector workers are more than 20 percentage points more likely than private sector workers to receive employer-provided health insurance. The EPI study (Gould 2010)

0% 20% 40% 60% 80% 100%

All  Workers Full‐time Part‐time Management,

Business and Financial Professional and Related Protective Service Office and Admin. Support Private Sector Retirement Benefits State and Local Government Retirement Benefits Private Sector Health Care Benefits State and Local Health Care Benefits

compares private sector workers to all workers and finds that private sector workers are nearly 15 percentage points less likely to be insured through their employer. The two studies also explored the link between educational attainment and health insurance status. Both found that college graduates are much more likely to have employer-provided health insurance than are high school graduates, and that a significant fraction of the workers with college degrees do not have employer-provided health insurance. Finally, the EBRI study also reported on the

frequency of employer-provided health insurance coverage by occupation. The EBRI study also found that workers in professional and managerial occupations were more likely to receive employer-provided health insurance than were workers in more traditionally blue-collar occupations, and that a significant fraction of the workers in professional and managerial occupations do not have employer-provided health benefits.

Table 12: U.S. Workers Age 18-64 in 2009 with Employer-Provided Health Insurance

EBRI EPI

Private Sector Workers 51.6% 53.6%

Public Sector Workers 73.0%

All Workers 68.1% By Educational Attainment High School 48.4% 61.3% College 80.2% Bachelor's Degree 63.9% Advanced Degree 71.4% By Occupation

Managerial and Professional 65.4%

Service 32.4%

Office and Admin. Support 49.6%

Installation, Maintenance and Repair 46.1%

Transportation 52.9%

Source: Economic Policy Institute 2010. and Employee Benefits Research Institute 2011.

Intriguingly, while coverage rates differ from one occupation to the next, evidence from the 2011 National Compensation Survey suggests that there is little difference in health

insurance premiums across occupations, but substantial difference in premiums across sectors. As Figure 26 illustrates, the average, private-sector monthly employer premium for medical care benefits in 2011 ranged from $329 for workers in protective service to $366 for workers in professional occupations. Employer premiums in the public sector were systematically higher than employer premiums in the private sector, but very similar from one public-sector occupation to the next. The average, public-sector monthly employer premium for medical care benefits in 2011 ranged from $433 for workers in natural resources, construction and maintenance

Figure 26: Average Monthly Employer Premium for Medical Care Benefits by sector, for Single Coverage, 2011

Source: Bureau of Labor Statistics, National Compensation Survey, March 2011.

Thus, the nationwide evidence on employer-provided benefits suggests that public sector workers are more likely than their private sector counterparts to receive retirement or health care benefits. And when workers receive health care benefits, public sector employers pay higher premiums than private sector employers, on average.

Because retirement plan and health insurance coverage patterns in Washington appear very similar to those for the nation as a whole, it is reasonable to believe that these patterns also exist in Washington. As such, one can only conclude that teachers in Washington are more likely to receive retirement and health insurance benefits than comparable private sector employees. As a matter of policy, all of the full-time teachers in Washington participate in the retirement plan and have access to health insurance benefits.

Furthermore, school district spending on health insurance premiums in Washington seems particularly generous by national standards. On average, private employers pay $366 and state and local governments pay $445 per month for single-coverage medical benefits for their professional employees In Washington, the state provides $745 per FTE for health benefits, or more than double the national average for private sector, single-coverage premiums and two- thirds again the national average for public sector, single-coverage premiums (Sonntag 2011). Some districts participate in the medical insurance plan offered by the Washington State Health Care Authority’s Public Employees Benefits Board, which charges an employer base rate of $850 per month for single coverage, or nearly double the national average for public sector premiums.28 $0 $100 $200 $300 $400 $500 Management, Business and Financial Professional and Related Protective Service Office and Admin. Support Natural Resources, Construction and… Production, transportation and material… Full‐time Part‐time All Workers State and Local Government Private Sector

Conclusions

This report examines the relative compensation of Washington educators using three different lenses. The first lens compares estimates of the prevailing salaries for educators with estimates of the prevailing salaries for non-educators. This comparison provides a useful measure of the relative competitiveness of educator salaries, and supports four key findings:

1. The salaries most Washington teachers actually receive (i.e. their total final salaries) meet or exceed the salaries received by comparable non-teachers in their communities. On average, teachers in Washington earn 91 percent of the annual salary for the average college graduate, despite working a substantially shorter year. Only 30 school districts, which serve only 4 percent of the school children in Washington, pay total teacher salaries below the average 10-month salary for a typical college graduate.

2. In contrast, the teacher salaries funded by the state through the school finance formula (i.e. their base salaries) are not competitive in most major metropolitan areas. Although base salaries are competitive in some parts of the state, less than one quarter of the school children in Washington attend a school district where base teacher salaries equal or exceed the 10-month salary for a typical college graduate. The base salary for an average teacher in the Seattle metropolitan area is only 71 percent of the average salary for a college graduate.

3. As a general rule, non-teaching school district employees receive salaries that are competitive with or well above those received by their counterparts outside of the education sector. The only major exceptions are the instructional aides. Teacher aides earn substantially less than the typical high school graduate throughout the state.

4. The non-teaching salaries funded by the state are generally not competitive. In the Seattle and Kennewick metropolitan areas, for example, the salary allocation for school district administrators represents less than 63 percent of the prevailing salary for comparable managers, on average.

The second lens compares base teacher salaries in Washington with base teacher salaries in other states. The best available evidence, which comes from the NCES’ Schools and Staffing Survey of 2007-08, suggests that base teacher salaries in Washington are low by national

standards. After adjustments for regional differences in labor cost, only Colorado, North Dakota, Iowa and Washington DC had base salaries for starting teachers that were lower than those in Washington. Cost-adjusted base salaries for mid-career teachers were also near the bottom of the national distribution. Because base salaries in Washington have risen more slowly than salaries in other occupations since 2007-08, it is unlikely that Washington’s position relative to other states has improved substantially over the last few years.

The third and final lens examines the extent to which the benefits teachers receive in the state of Washington are competitive with private-sector benefits. Here, the evidence is clear. Teachers in Washington are more likely to receive retirement and health insurance benefits than comparable private sector employees, and school districts pay more for teacher benefits than comparable employers pay for non-teacher benefits.

Thus, the evidence suggests that teacher base salaries are generally not competitive with teacher base salaries in other states or with comparable non-teacher salaries in metropolitan Washington. On the other hand, total salaries are competitive in most of the state, and the fringe benefits appear unusually generous. As such, the total compensation packages offered by Washington school districts appear sufficient to attract and retain a high quality workforce.

Acknowledgements

Endnotes

1

See Appendix Table A.1

2

For more on the estimation of the NCES CWI, see Taylor and Fowler (2006).

3

Details on the OES survey come from Bureau of Labor Statistics (2003).

4

The local wage level is a weighted average of the local predicted wages by occupation, where the weights are each occupation’s share of total employment among the national sample of college graduates in the census database. Thus, occupations that are held only rarely by college graduates are given little weight in the construction of the OES wage levels, while occupations that employ college graduates intensively are given greater weight. See Taylor and Fowler (2006) for details.

5

Appendix Table A.3 presents the index values for all years since 2005.

6

Nearly 82 percent of the Census respondents with college degrees in 1999 reported working 52 weeks per year. Appendix Table A.2 of this report lists the 460 occupations used in the analysis, and each occupation’s weight in the construction of the national average salary.

7

See Appendix Table A.4.

8

Appendix Table A.5 presents the index values for all years since 2005. Note that due to data revisions, the index values for 2005 do match those presented in Taylor (2008).

9

More than 78 percent of the employed Census respondents with a high school diploma in 1999 reported working 52 weeks per year. Appendix Table A.2 of this report lists the 460 occupations used in the analysis, and each occupation’s weight in the construction of the national average salary for high school graduates.

10

Technically, the predicted salary for each labor market area is the population marginal mean for that market, assuming that the number of hours worked is 40, the number of weeks worked is 52 and the education, industry and occupation have the same frequency distribution as the subpopulation of Census respondents in that occupation.

11

This occupation-specific wage level is the population marginal mean for each location from an employment- weighted regression of average salaries on indicators for occupation and location. The regression coefficients are the same as those used in to generate the average wage growth for the CWI calculations. The only difference is the weights assigned to each occupation in the construction of the wage growth estimates.

12

ACM include the occupation “Trade and industrial teachers” in their list of comparable occupations. This occupation can be matched to two Census occupations—“post-secondary teachers”, and “other teachers and instructors” (Taylor 2008b). The occupation “other teachers and instructors” is deliberately excluded from the construction of the NCES CWI to ensure that the NCES CWI reflects regional variations in salary that are outside of school district control. Therefore, it is also not included here.

13

Appendix table A.6 reports each occupation’s weight in the construction of the salary predictions. The weights correspond to the frequencies with which Census respondent with a college degree held each occupation in 1999.

14

Appendix table A.6 reports each occupation’s weight in the construction of the salary predictions. The weights correspond to the frequencies with which Census respondent with a college degree held each occupation in 1999.

15

Again, the predicted salary for each labor market area is the population marginal mean for that market, assuming that the number of hours worked is 40, the number of weeks worked is 52 and education, industry and occupation have the same frequency distribution as the subpopulation of Census respondents in that occupational category.

16

For more on the use of hedonic wage models in education, see Chambers (1998), Goldhaber (1999), or Taylor (2010, 2008a and 2008b).

17

A teacher’s base salary is the sum of the salaries associated with all assignments with duty code ‘0’.

18

To calculate full-time-equivalent base salary, subtract any base salary associated with extracurricular or public activities (activity codes “28” and “91”) from total base salary, and then divide by base FTE (where base FTE is the total FTE with duty code “0” and activity codes not equal to “28” or “91”). Full-time-equivalent total salary equals full-time-equivalent base salary plus 100 percent of the difference between final and base salaries, excluding pay for extracurricular and public activities. Note that most teachers work full time and do not receive any pay from extracurricular and public activities. Therefore these adjustments affect less than 10 percent of the teachers under analysis. For teachers, full-time equivalent base salaries below the statutory minimum base salary ($34,048 in 2010- 11) or above $150,000 were treated as coding errors and set equal to missing. For all other certificated personnel, full-time-equivalent total salaries below $10,000 or above $250,000 were treated as coding errors and set equal to missing. In both cases, full-time-equivalent base salaries and full-time-equivalent total salaries were set equal to missing whenever classified FTE plus certified FTE was greater than 1.1 on the grounds that such FTE values must

represent a coding error of some sort and that full-time-equivalent salaries based on such FTE values would be misleading.

19

I calculated their hourly rate of pay as their total final salary (excluding pay for extracurricular and public activities), divided by their hours worked (excluding time spent on extracurricular and public activities). Hourly pay was coded as missing whenever classified FTE plus certified FTE was greater than 1.5, on the grounds that such values must represent a coding error of some sort and therefore that their hours worked are suspect. I also exclude as erroneous any records where the worker’s annualized salary was less than $10,000 or more than $150,000.

20

Specifically, this is a person holding a bachelor’s degree as the highest degree and whose total eligible credits reported on the S-275 report before January 1, 1992, were 135 or more (RCW 28A.150.410). See the S-275 Personnel Reporting Handbook.

21

I exclude any personnel records where classified FTE plus certified FTE was greater than 1.1 on the grounds that such values must represent a coding error of some sort.

22

See, for example, Education Weekly’s Teacher Pay-Parity Index.

http://www.edweek.org/ew/articles/2012/01/12/16execsum.h31.html?intc=EW-QC12-LFTNAV

23

Because there were many school buildings with only a single beginning teacher, the analysis of beginning teacher salaries does not include fixed effects for school buildings.

24

Because there were many school buildings with only a single math or science teacher, the analysis of math and science teacher salaries does not include fixed effects for school buildings. Appendix table A.10 lists the