compensation

Contingent Faculty At U.S. Colleges And Universities

In a previous post, we discussed the prevalence of and trends in alternative employment arrangements, sometimes called “contingent work,” in the U.S. labor market. Contingent work is jobs with employment arrangements other than the “traditional” full-time model, including workers with temporary contracts, independent contractors, day laborers, and part-time employees.

Depending on how one defines this group of workers, who are a diverse group but tend to enjoy less job stability and lower compensation, they comprise anywhere between 10 and 40 percent of the U.S. workforce, and this share increased moderately between 2000 and 2010. Of course, how many contingents there are, and how this has changed over time, varies quite drastically by industry, as well as by occupation. For example, in 1990, around 28 percent of staffing services employees (sometimes called “temps”) worked in blue collar positions, while 42 percent had office jobs. By 2009, these proportions had reversed, with 41 percent of temps in blue collar jobs and 23 percent doing office work. This is a pretty striking change.

Another industry/occupation in which there has been significant short term change in the contingent work share is among faculty and instructors in higher education institutions.

Is There A Pension Crisis?

Our guest author today is David Cay Johnston, a distinguished visiting lecturer at the Syracuse University College of Law and a former Pulitzer prize-winning financial reporter at The New York Times. This article is adapted from his remarks to an ASI-sponsored conversation on the topic in March, which also included remarks from Chad Aldeman, Teresa Ghilarducci, and Dan Pedrotty. A video of this event can be found here.

So the question is whether there is a pension crisis. The answer is yes, absolutely. It’s just not the one that politicians always talk about.

Contrary to that you hear about on TV, in market economics, defined benefit pensions are the second most efficient way to provide for income in old age. The most effective way would be a national program that spreads risks to everyone. The least efficient way to do it is through defined contribution plans.

There is abundant evidence for this. Defined contribution plans work very well, but only as supplements for prosperous people such as me and my wife, who is a public charity CEO, they are not at all effective for most people. That’s be because defined contribution plans violate specialization, one of the most basic tenets of market economics as taught to us by Adam Smith, the man who first explained market economics.

Research And Policy On Paying Teachers For Advanced Degrees

There are three general factors that determine most public school teachers’ base salaries (which are usually laid out in a table called a salary schedule). The first is where they teach; districts vary widely in how much they pay. The second factor is experience. Salary schedules normally grant teachers “step raises” or “increments” each year they remain in the district, though these raises end at some point (when teachers reach the “top step”).

The third typical factor that determines teacher salary is their level of education. Usually, teachers receive a permanent raise for acquiring additional education beyond their bachelor’s degree. Most commonly, this means a master’s degree, which roughly half of teachers have earned (though most districts award raises for accumulating a certain number of credits towards a master’s and/or a Ph.D., and for getting a Ph.D.). The raise for receiving a master’s degree varies, but just to give an idea, it is, on average, about 10 percent over the base salary of bachelor’s-only teachers.

This practice of awarding raises for teachers who earn master’s degrees has come under tremendous fire in recent years. The basic argument is that these raises are expensive, but that having a master’s degree is not associated with test-based effectiveness (i.e., is not correlated with scores from value-added models of teachers’ estimated impact on their students’ testing performance). Many advocates argue that states and districts should simply cease giving teachers raises for advanced degrees, since, they say, it makes no sense to pay teachers for a credential that is not associated with higher performance. North Carolina, in fact, passed a law last year ending these raises, and there is talk of doing the same elsewhere.

Teacher Leadership As A School Improvement Strategy

Our guest author today is David B. Cohen, a National Board Certified high school English teacher in Palo Alto, CA, and the associate director of Accomplished California Teachers (ACT). His blog is at InterACT.

As we settle into 2013, I find myself increasingly optimistic about the future of the teaching profession. There are battles ahead, debates to be had and elections to be contested, but, as Sam Cooke sang, “A change is gonna come."

The change that I’m most excited about is the potential for a shift towards teacher leadership in schools and school systems. I’m not naive enough to believe it will be a linear or rapid shift, but I’m confident in the long-term growth of teacher leadership because it provides a common ground for stakeholders to achieve their goals, because it’s replicable and scalable, and because it’s working already.

Much of my understanding of school improvement comes from my teaching career - now approaching two decades in the classroom, mostly in public high schools. However, until six years ago, I hadn’t seen teachers putting forth a compelling argument about how we might begin to transform our profession. A key transition for me was reading a Teacher Solutions report from the Center for Teaching Quality (CTQ). That 2007 report, Performance-Pay for Teachers: Designing a System that Students Deserve, showed how the concept of performance pay could be modified and improved upon with better definitions of a variety of performance, and differentiated pay based on differentiated professional practice, rather than arbitrary test score targets. I ended up joining the CTQ Teacher Leaders Network the same year, and have had the opportunity ever since to learn from exceptional teachers from around the country.

Moving From Ideology To Evidence In The Debate About Public Sector Unions

Drawing on a half century of empirical evidence, as well as new data and analysis, a team of scholars has  challenged the substance of many of the attacks on public employees and their unions –urging political leaders and the research community to take this “transformational” moment in the divisive and ideologically driven debate over the role of government and the value of public services to deepen their commitment to evidence-based policy ideas.

These arguments were outlined in "The Great New Debate about Unionism and Collective Bargaining in U.S. State and Local  Governments," published by Cornell University’s ILR Review.  The authors – David Lewin (UCLA), Jeffrey Keefe (Rutgers), and Thomas Kochan (MIT) – point out that, with half a century of experience, there is now a wealth of data by which to evaluate public sector unionism and its effects.

In that context, the authors spell out the history, arguments and empirical findings on three key issues: 1) Are public employees overpaid?; 2) Do labor-management dispute resolution procedures, which are part of many state and local government collective bargaining laws, enhance or hinder effective governance?; 3) Have unions and managers in the public sector demonstrated the ability to respond constructively to fiscal crises?

Schedule Conflicts

As most people know, the majority of public school teachers are paid based on salary schedules. Most (but not all) contain a number of “steps” (years of experience) and “lanes” (education levels). Teachers are placed in one lane (based on their degree) and proceed up the steps as they accrue years on the job. Within most districts, these two factors determine the raises that teachers receive.

Salary schedules receive a great deal of attention in our education debates. One argument that has been making the rounds for some time is that we should attract and retain "talent" in the teaching profession by increasing starting salaries and/or the size of raises teachers receive during their first few years (when test-based productivity gains are largest). One common proposal (see here and here) for doing so is reallocating salary from the “top” of salary schedules (the salaries paid to more experienced teachers) down to the “bottom” (novice teachers’ salaries). As a highly simplified example, instead of paying starting teachers $40,000 and teachers with 15 years of experience $80,000, we could pay first-year teachers $50,000 and their experienced counterparts $70,000. This general idea is sometimes called “frontloading," as it concentrates salary expenditures at the “front” of schedules.

Now, there is a case for changes to salary schedules in many places – bargained and approved by teachers – including, perhaps, some degree of gradual frontloading (though the research in this area is underdeveloped at best). But there is a vocal group of advocates who assume an all-too-casual attitude about these changes. They seem to be operating on the mistaken assumption that salary schedules can be easily overhauled – just like that. We can drastically restructure them or just “move the money around” without problem or risk, if only unions and "bureaucrats" would get out of the way.**

An International Perspective On Corporate Pay

Our guest author today is Michael Tims, associate professor of biology at Montgomery College in Takoma Park, Maryland. Some of his writing can be found on his science blog, Bardo's Calculus, as well as at the Hyattstown Mill Arts Project, where he is a board member.

The growing wealth gap in the United States has worried some commentators for years. The length and breadth of the economic crisis, and the suffering it has brought with it, have moved those concerns into the mainstream. One aspect of this development that warrants more attention is the connection between declining rates of unionization, and the incredible gap between the pay of workers and their bosses.

As corporate resistance to unions has increased and union density declined, the discrepancy in pay between management and worker has grown extreme. Since the mid 1970s, the average multiple of CEO pay to worker pay has increased from 28x in 1970 to 158x in 2005, to almost 400x in 2010. . Their average "total realized annual CEO compensation" is currently $12 million, according to Governance Metrics International. During this same period, worker pay has stagnated and fallen behind inflation, despite an historic rise in workforce productivity

This phenomenon of high pay disparity in the industrial world is uniquely American, with the next highest countries being Britain (25x), Sweden (13x), Germany (11x) and Japan (10x). Claims that these pay levels represent success on the part of the CEO appear to be misleading.

For Many Teachers, Reform Means Higher Risk, Lower Rewards

** Also posted here on “Valerie Strauss’ Answer Sheet” in the Washington Post

One of the central policy ideas of market-based education reform is to increase both the risk and rewards of the teaching profession. The basic idea is to offer teachers additional compensation (increased rewards), but, in exchange, make employment and pay more contingent upon performance by implementing merit pay and weakening job protections such as tenure and seniority (increased risk). This trade-off, according to advocates, will not only force out low performers by paying them less and making them easier to fire, but it will also attract a “different type” of candidate to teaching – high-achievers who thrive in a high-stakes, high-reward system.

As I’ve said before, I’m skeptical as to whether less risk-averse individuals necessarily make better teachers, as I haven’t seen any evidence that this is the case. I’m also not convinced that personnel policies are necessarily the most effective lever when it comes to “attracting talent," and I’m concerned that the sheer size of the teaching profession makes doing so a unique challenge. That said, I’m certainly receptive to trying new compensation/employment structures, and the “higher risk, higher reward” idea, though unproven in education, is not without its potential if done correctly. After all, teacher pay continues to lose ground to that offered by other professions, and the penalty teachers pay increases the longer they remain in the profession. At the same time, there is certainly a case for attracting more and better candidates through higher pay, and nobody would disagree that accountability mechanisms such as evaluations and tenure procedures could use improvement in many places, even if we disagree sharply on the details of what should be done.

There’s only one problem: States and districts all over the nation are increasing risk, but not rewards. In fact, in some places, risk is going up while compensation is being cut, sometimes due to the same legislation.

Public Servants Versus Private Contractors ... Again

Has the battle over public sector compensation turned a decisive corner? Have much-maligned government workers won an evidence-based victory?

Reasonable people might think so, thanks in part to a study by the Project on Government Oversight (POGO), a nonpartisan group that keeps close tabs on government operations. According to the findings of the POGO report – findings that they call "shocking" – the "federal government approves service contract billing rates … that pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the total compensation paid in the private sector for comparable services."

More specifically, federal government employees cost less than private contractors in 33 of the 35 occupational classifications reviewed – and non-federal private sector worker compensation was lower than contractor billing rates in all of the reviewed classifications. In one case, contractor bill rates were nearly "5 times more" than the full compensation rates paid to comparable federal workers.