The future of teachers' pay: time to send a better price signal

The future of teachers

At the peak of their careers, teachers earn less than electricians, physios, PR people and chiropractors and half that paid to lawyers and finance managers.

What we pay people – especially those at the top of their game – says a lot about what we value. 

As we to look towards a post-Covid-19 world we need to think about what signals we send young people making initial career choices and those planning the rest of their working lives. 

Currently we are sending the wrong signal about teaching.  And that message has been deteriorating over the years. 

There are two fundamental problems.

The first concerns the slide in teachers’ pay compared to other professionals in Australia. In 1986 female teachers earned 102% of the female professionals’ average and male teachers earned 99% of the male professionals’ average. By 2018 the position of teachers had worsened- women teachers earning 93% and male teachers earning 84% of the respective professionals’ average. 

The second concerns their flat earnings profile. While entry level wages for teachers are relatively high, the top of the teacher’s pay scale in Australia is compressed relative to that paid to their peers in many OECD countries and most other professions in Australia.

What needs to be done?

Research released today points to the need for a sizeable increase (minimum of 10-15%) in teachers’ wages. This would restore teachers’ pay relative to that earned by the average professional to that which prevailed 30 years ago. 

This must be accompanied by solutions to the problem of the teacher’s compressed wage structure. Top teachers need to be paid significantly more. Compared to nearly all other professionals in Australia, experienced teachers are paid significantly less than experienced lawyers, engineers and ICT professionals. These professionals have significantly higher rates at the top of the scale (in the range of 30 – 50 per cent higher than those at entry level).

As such, change needs to occur at two levels: the average paid to all teachers to rectify the historic slide in pay compared to all professions and a new, higher paid classification to the most skilled and experienced in the profession. 

Increasing the top wage rate would have the effect of increasing the attractiveness of teaching as a lifetime career and greatly increase the likelihood that the best teachers will be retained in the future.

Reports of looming teacher shortages are growing. This was recently acknowledged by the NSW Minister Sarah Mitchell. She noted in February that:

“I recognise there are issues with teacher shortages across the state. It’s pronounced in regional and regional areas, but I hear it from teachers based in the city as well. I am proactively considering ways in which we can better incentivise teachers to take up positions in rural and regional areas. … It is an ongoing challenge. I do think money is part of it. But it’s not the only part." (SMH 21/2/20)

And this is the situation before an anticipated, huge growth in student numbers.  According to Infrastructure NSW enrolments in NSW schools are projected to increase by approximately 300,000 (or around 20%) by 2036. Clearly urgent action is needed.

Conventional economic theory says employers should respond to current and emerging teacher shortages with higher wages.

As the Minister has noted, in practice pay alone is never the only solution to staff shortages. Equally it is difficult to overcome such problems without significant adjustments in remuneration. Increasing pay is an ‘essential ingredient’ in any serious policy package devised to attract and retain labour. 

Such movements send a signal. In this case it would make clear that teaching is as highly valued as many other occupations in society - professional and non-professional. 

An improved price signal, especially for those in the upper reaches of the profession, has the potential to profoundly change Australians’ career decisions. It would influence those at the beginning of their working lives, retain the best teachers in the system and help those interested in shifting to teaching at later stages in their careers make the move.

Professor John Buchanan, University of Sydney Business School. He is currently leading a multi-disciplinary team exploring on education and the future of work for UNESCO.