September 2015: Lifetime Earnings

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You’ve heard it before: teachers aren’t in it for the money.
While money may not be the primary motivation for becoming a teacher, salaries
matter. Salaries can play an important role in attracting and retaining the
best teacher workforce possible. This month’s Trendline updates NCTQ’s analysis in Smart Money: What teachers
make, how long it takes and what it buys them and estimates how much a
teacher can make over his or her career, using salary information from the
2014-2015 school year.

Changes in salary

The average change in salary across districts in the
database was 0.6 percent.[1]
While 25 districts offered no salary adjustments, eight districts offered their
teachers significant average increases of more than five percent. Wake County(NC), Fresno, San Diego and Guilford County(NC) all increased teachers’ salaries by more than 6 percent on
average. 

Starting and ending
salaries

Across the 110 districts in this analysis, the average
starting salary is $40,752 and average ending salary is $76,037.[2]
Starting salaries range from $31,750 in West Ada (ID) to $51,539 in theDistrict of Columbia, while the projected
salary after a 30-year career ranges from $52,925 in Oklahoma City to $106,540 in the District of Columbia.

Of course, in order to fairly compare teacher salaries
across districts, the cost of living needs to be taken into account. For the
rest of this Trendline, salaries have
been adjusted using Regional
Price Parities developed by the Bureau of Economic Analysis.[3]
This adjustment means salaries can be compared across districts, as the
adjusted salaries represent equal purchasing power.

Before we get to the results, it’s important to note that the
salaries and estimates of lifetime earnings reported in this piece are not
directly comparable to the salaries and estimates of lifetime earnings reported
in Smart Money. This is due to a
change in the way cost of living was taken into account. As explained above,
here we’ve used data from the Bureau of Economic Analysis to adjust for cost of
living; in Smart Money we used a
different measure from the Council for Community and Economic Research.[4]
We made this change because the data from the Bureau of Economic Analysis is
publicly available and makes our analysis more transparent. 

After adjusting salaries for cost of living, Northside(TX) offers the highest starting salary to teachers ($52,912). Albuquerque offers the lowest starting salary to teachers ($32,956). By the end of a 30-year teaching career, St. Louis offers the highest salary ($100,460) and Oklahoma City offers the lowest ($57,216).

Lifetime earnings

Starting and ending salaries don’t tell the whole story. Just as important is how much a teacher can make throughout his or her career. To get a sense of this, we projected a teacher’s potential lifetime earnings across 110 districts over a 30-year career using 2014-2015 salary schedules. This estimation assumes that a teacher begins teaching with a bachelor’s degree and no previous experience, earns a master’s degree after four years of teaching and a PhD (or the credit equivalent) after 10 years of teaching.[5] All projections are adjusted for the cost of living in each area.

As you can see in the map below, lifetime earnings vary greatly across districts. The median lifetime earnings, adjusted for cost of living, are $1.86 million. Teachers make more than $1.86 million in districts that are blue and less than $1.86 million in districts that are orange. You can access an interactive version of the map here. 

Teachers in Boston make the most across a 30-year
career, $2.53 million.  Not too far behind
is Hartford, where teachers make $2.51
million over their careers. Coming in third is Chicago with lifetime earnings of
$2.38 million. Teachers in Albuquerque,
Oklahoma City, Austin and Mesa (AZ) make the least over a
lifetime, all earning less than $1.5 million over 30 years. 

Salary trajectory over
time

Even more telling of how competitive a district’s salary
schedule is than starting and ending salaries and lifetime earnings is how a
teacher’s salary progresses over time. The graph below shows the salary for a teacher
at any given year in four districts: Boston,
the district where teachers earn the most over 30 years; Albuquerque, where teachers earn the least; Northside (TX), the district with the highest starting salary; and Portland (ME), a district that
offers a low starting salary, but a high lifetime earning potential.

Although teachers in
Boston and Portland start their
first year of teaching with a pay difference of more than $10,000, both
districts offer larger lifetime earning potential than two-thirds of the
districts analyzed,  thanks to a relatively
steep climb in salary. In fact, Portland
rises to this position despite a starting salary in the bottom ten of the
districts analyzed. In contrast, Northside
offers the highest starting salary, but due to a relatively long, flat salary progression,
teachers in Northside actually have below-average lifetime earnings potential.  

Generally, teachers in districts with faster climbs to
higher salaries have higher lifetime earnings than those with long climbs. The
average ending salary, adjusted for cost of living, is
roughly $76,000. Using this as a benchmark, in 52 of the 56 districts with
lifetime earnings below average, it takes longer than a 30-year career to make
$76,000, whereas it takes longer than a 30 year career to make $76,000 in only eight
of the 54 districts with above average lifetime earnings. Mouse over any
district on the interactive
map to see how long it takes to reach $76,000.

There is no doubt that starting and ending salaries are important factors in how much teachers make over a lifetime, but just as important is what happens in the years in between.

[1] NCTQ calculates changes in salary by matching, step for step, the current year’s salary schedule and the previous year’s salary schedule and calculating the percent change. We do this for all steps on the bachelor’s and master’s lanes and then take an average.

[2] Ending salaries are estimated based on a teacher who has earned a PhD or the credit equivalent and completed 30 years of teaching.

[3] Specifically, we used the 2013 Regional Price Parity for the Metropolitan Statistical Area where each district is located. 2013 data are the most recent available. 

[4] In developing cost of living indexes, statisticians must make assumptions about which goods and services to use to compare prices in each area and how to weight each good or service in accordance with how much people in each area spend their money. This is a nuanced process and thus no two measurements will be exactly the same.

[5] It is worth noting that in 46 districts there is some form of performance pay. This analysis assumes that in those districts, a teacher receives an effective evaluation rating every year and the salary increases or bonuses that are associated with that evaluation rating. In addition, this analysis does not include bonuses or pay increases associated with teaching in a hard-to-staff school or subject area.