Tenure for Teachers: How much is it Worth?

(by Howard Wainer)

In recent weeks the budget crises that affect the Federal, state and local governments have led to a number of proposals that are remarkable in one way or another. It seems apropos at this time to examine New Jersey’s governor Christie’s campaign to get rid of tenure for teachers. Although there are many ways of characterizing the value of tenure, I will focus here on the possible effect of the removal of job tenure on education budgets.
The fiscal goal of removing tenure is to make it easier, during periods of limited funds, for school administrators to lay-off more expensive (i.e. more senior/tenured) teachers in favor of keeping less experienced/cheaper ones. Without the protection of tenure, administrators would have less pressure on them to gather the necessary evidence that due process requires, to terminate a senior teacher. Thus, it is argued, school districts will have more flexibility to control their personnel budgets. Is this an approach that is likely to work?

Let us begin to examine this by first looking backward to understand better why the policy of giving public school teachers tenure evolved in the first place. The canonical reason given for tenure is usually to protect academic freedom; to allow teachers to provide instruction in what might be viewed as controversial topics. This is surely true, but battles akin to those that resulted from John Scopes’ (1900-1970) decision to teach evolution in the face a dogmatic school board in Dayton, Tennessee, are, happily, rare (but not rare enough, alas). But the reason that most teachers would want tenure is because it provides them with increased job security in general, and, in particular, as protection against capricious personnel decisions.

A more interesting question is why did states agree to grant tenure in the first place? They must’ve known that it would reduce districts’ flexibility in modifying school staff, and that it would make following due process in terminating a tenured teacher more time consuming and expensive. Why is tenure almost uniformly agreed to in all public education? I don’t know for sure, but let me offer an educated guess. First, I am sure that most progressive education officials appreciate, and value, the importance of academic freedom. But that is not the most pressing practical reason. Education officials recognize that for teachers, tenure is a job benefit, much like health insurance, pensions and sick time. As such it has a cash value. But it is a different kind of benefit, for unlike the others, it has no direct cost. Sure there are expenses associated with tenure when a teacher with it is to be terminated. But if reasonable care is exercised in hiring and promotion, such expenses occur very rarely. So, I conclude, tenure was instituted to save money, exactly the opposite of what is being claimed by those who seek to abolish it.

Who is right, Governor Christie or me? Happily this is a question that, once phrased carefully, is susceptible to empirical investigation. The answer has two parts. The first part is the title of this essay: How much is Tenure Worth? The second part is: Do we save enough by shifting the salary distribution of staff to compensate for the cost of its removal? I have no data on the latter and so will focus on the former.

How can we determine how much tenure is worth? One way would be to survey teachers and ask them how much money we would have to give them for them to relinquish it. The responses to such a survey would surely be complex. Teachers at different stages in their careers would likely value it differently. Someone very close to retirement might not care very much, whereas someone in mid-career might insist on a much larger number. Teachers in subject areas, like mathematics, in which there is a shortage of qualified instructors, might not ask for much. Others, like elementary school teachers, in which there is a large supply, might hold tenure very dear indeed. One thing is certain, the likely answer to such a survey is going to be many thousands of dollars.

A second way to estimate the value of tenure is to take a free-market approach. Suppose we run the following experiment: we select a few school districts, say 5 or 6, and designate them the experimental districts in which teachers do not have tenure. Then we pair them with an equal number of districts, matched on all of the usual variables that characterize a school district (size, ethnic mixture, safety, budget, academic performance, parental education, etc.). These we can designate as the control districts, and they do have tenure. We also try to have each experimental district geographically near a matched control district.

Now we run the experiment. All of the faculty from all the districts are put in one giant pool and the personnel directors of each district are directed to sample from that pool of teachers to staff their district. This continues until the pool is empty and all of the districts are fully staffed. At this point we look at a number of dependent variables. The most obvious one is the difference in mean salary between the two groups. We might also want to look at the differences in the conditional distributions of salary, after conditioning on subject expertise and years of experience. I suspect that non-tenure districts would pay more for teachers at a given level of training and experience, but be forced to concentrate their recruiting at the lowest end of the scale.

While I am sure that the experimental (non tenure) districts will have to pay more for their staff, the question of importance is how much more. I suspect that if budgets are held constant, the non tenure districts may run out of money before they are fully staffed.

I am not sanguine that such an experiment is going to be done any time soon, although I would welcome it; perhaps so too might the teachers’ unions. Of course, how could a free-market governor object?

Happily, we actually have some observational data that sheds light on this subject. To get a running start on the kinds of data that can help let us consider the teachers’ salaries shown in Figure 1. In it are shown the annual mean salaries of public school teachers for four north-eastern states along with that of the entire US. The average salary increase for the four states was just slightly less than $1,500/year (with NJ the highest of the four with a mean increase of $1,640). For the US as a whole, it was about $1,230. The increase over these thirty years has a strong linear component.

Figure 1. Mean teachers’ salaries for four states and for the US

Let these data serve as a background for the rest of the discussion. Now in Figure 2 I repeat the NJ results for teachers and include as well the mean salary for school superintendents. As we can see, superintendents make more than teachers. In 1980 they made a little bit more, but by 2010 they made a lot more. Superintendents’ salaries increased, on average, more than $4,000/year. Figure 2 shows the increasing disparity between the salaries of superintendents, but it leaves veiled the point at which this increase began. For this, we need to look at a different plot.

Figure 2.

In Figure 3 I have plotted the ratio of average superintendents’ salaries to average teachers’ salaries for the past 35 years. We quickly see that in 1975 the average superintendent in NJ earned about 2.25 times as much as the average teacher, but this disparity was diminishing, so that in the early 1990s the average superintendent was earning just twice what the average teacher earned. Then the disparity began to increase sharply, so that by 2010 superintendents’ pay was two-and-a-half that of teachers. What happened that should occasion this dramatic change? In 1991 the New Jersey legislature eliminated tenure for superintendents. We can see in Figure 3 that there was a three or four year lag between the removal of tenure and the relative increase in superintendents’ wages, which is likely due to the need for existing three or four year superintendent contracts to expire before they could renegotiate salaries within the new, non-tenure, environment. But once this happened it is clear that superintendents felt that they had to be compensated for the loss of tenure, and that compensation involved tens of thousands of dollars.

And now the real irony. New Jersey’s legislators are well aware of the cost of eliminating tenure. On August 19, 2010 Assemblywoman Joan Voss, vice chair of the Assembly Education Committee said in a press release that “Removing lifetime tenure for superintendents has had some serious unintended consequences…. Bloated salaries and over-inflated, lavish compensation packages taxpayers are currently forced to fund.” To remedy this she and Assemblyman Ralph Caputo proposed legislation (A-2359) that would reinstitute the system of career tenure for school superintendents, which existed prior to 1991.

Figure 3. Salaries for school superintendents in NJ, relative to those of teachers, soared after career tenure was removed in 1991.

(Howard Wainer is a statistician at the National Board of Medical Examiners. His latest book, Uneducated Guesses Using Evidence to Uncover Misguided Education Policies, published by Princeton University Press, will be available in the fall of 2011. He would like to think David Helfman, Rosemary Knab, David Wazeter, Arthur Wise, and Harris Zwerling for data and helpful advice.)