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The case for $320,000 kindergarten teachers
Old 07-30-2010, 02:55 PM   #1
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The case for $320,000 kindergarten teachers

"Mr. Chetty and his colleagues — one of whom, Emmanuel Saez, recently won the prize for the top research economist under the age of 40 — estimate that a standout kindergarten teacher is worth about $320,000 a year. That’s the present value of the additional money that a full class of students can expect to earn over their careers. This estimate doesn’t take into account social gains, like better health and less crime."

http://www.cnbc.com/id/38447475/

$320,000 kindergarden teachers will never happen, but I like this line of thinking -- how much is a good teacher (or other people-related profession) worth in terms of what his or her students can produce in their future careers?
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Old 07-30-2010, 03:27 PM   #2
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But in another thread... we were told that there is no way that we can measure how much a teacher affects the learning of a student...



The other problem with the $320,000 amount is that it is the PV of the future earnings of the students... so it comes OUT of their earnings (or someone elses now) and then they are now back to equal...

It also does not (IMO) make any adjustments for other teachers after kindergarten.... who knows, it might have all be the 1st grade teacher that made the difference...
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Old 07-30-2010, 03:31 PM   #3
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Huh - I used to study with Mr. Chetty - really nice, really bright guy! Had lost track of him...
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Old 07-30-2010, 03:31 PM   #4
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Well if that class of students makes $320k, why not just send them to kindergarden, then let them enter the workforce. Because it's obvious (LOL) that the 2nd grade reading teacher or the 8th grade sex ed teacher had NOTHING (LOL) to do with the success.

I realize the study had suggested that the early education is the driving factor, but to suggest all of the credit go to one grade is a little over the top to me.
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Old 07-30-2010, 07:41 PM   #5
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Originally Posted by FinallyRetired View Post
"Mr. Chetty and his colleagues — one of whom, Emmanuel Saez, recently won the prize for the top research economist under the age of 40 — estimate that a standout kindergarten teacher is worth about $320,000 a year. That’s the present value of the additional money that a full class of students can expect to earn over their careers. This estimate doesn’t take into account social gains, like better health and less crime."

http://www.cnbc.com/id/38447475/

$320,000 kindergarden teachers will never happen, but I like this line of thinking -- how much is a good teacher (or other people-related profession) worth in terms of what his or her students can produce in their future careers?
Isn't that the kind of creative accounting that got Enron in trouble?
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Old 07-30-2010, 08:57 PM   #6
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... but I like this line of thinking ...
Sorry, but I hate this kind of thinking, not as it applies to teachers, but as it applies to anything at all.

Let's apply that thinking to everything then. Good for the goose, good for the gander.

They should have charged Einstein a huge amount for the pad of paper that he developed his theories on. What was the sales clerk thinking, charging Einstein the same as some one who just made their grocery list out on it.

How much should Bill Gates be charged for the Harvard computer time he used to develop BASIC for the Altair? The Jobs family should have charged millions in rent to the two Steves to use their garage. etc, etc, etc.

There is no way for individuals to assign a 'worth' to anything in the market place (especially future worth). It is worth different things to different people. But the law of supply and demand can do it without prejudice. I suggest we follow that law. In this case, let the Kindergarten teacher earn what the market will bear.

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Old 07-31-2010, 12:31 AM   #7
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There is no way for individuals to assign a 'worth' to anything in the market place (especially future worth). It is worth different things to different people. But the law of supply and demand can do it without prejudice. I suggest we follow that law. In this case, let the Kindergarten teacher earn what the market will bear.
Amen.
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Old 07-31-2010, 06:33 PM   #8
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Originally Posted by FinallyRetired View Post
"Mr. Chetty and his colleagues — one of whom, Emmanuel Saez, recently won the prize for the top research economist under the age of 40 — estimate that a standout kindergarten teacher is worth about $320,000 a year. That’s the present value of the additional money that a full class of students can expect to earn over their careers. This estimate doesn’t take into account social gains, like better health and less crime."

http://www.cnbc.com/id/38447475/

$320,000 kindergarden teachers will never happen, but I like this line of thinking -- how much is a good teacher (or other people-related profession) worth in terms of what his or her students can produce in their future careers?
Don't know if KG teacher is worth anything close to $320K, but it is true that:

http://www.scrapbook.com/poems/doc/842/36.html
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Old 07-31-2010, 08:25 PM   #9
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Sorry, but I hate this kind of thinking, not as it applies to teachers, but as it applies to anything at all.

Let's apply that thinking to everything then. Good for the goose, good for the gander.

They should have charged Einstein a huge amount for the pad of paper that he developed his theories on. What was the sales clerk thinking, charging Einstein the same as some one who just made their grocery list out on it.

How much should Bill Gates be charged for the Harvard computer time he used to develop BASIC for the Altair? The Jobs family should have charged millions in rent to the two Steves to use their garage. etc, etc, etc.

There is no way for individuals to assign a 'worth' to anything in the market place (especially future worth). It is worth different things to different people. But the law of supply and demand can do it without prejudice. I suggest we follow that law. In this case, let the Kindergarten teacher earn what the market will bear.

-ERD50
Mmm... well, I don't really follow your argument there. Why does that say what Einstein should be charged for the pad of paper? The line of reasoning above says that Einstein should have been paid a whole lot more than whatever he made as a patent clerk. Not a good example, though, since no one knew what e=mc^2 would lead to.

But you say the law of supply and demand can do this without prejudice. So I assume you think that Snoop Doggy Dog is really worth $500,000 a year after beating his murder rap, 10 times more than the average KG teacher? That's what the law of supply and demand says is fair and without prejudice.

On the other hand, maybe Snoop had a really good KG teacher
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Old 07-31-2010, 08:50 PM   #10
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So I assume you think that Snoop Doggy Dog is really worth $500,000 a year after beating his murder rap, 10 times more than the average KG teacher? That's what the law of supply and demand says is fair and without prejudice.
It's the market (you and me--society) that says the annual product of his labor is worth 10-15 times more than the annual product of the labor a kindergarten teacher. Anyone who disagrees has a (legitmate, IMO) gripe with his fellow members of the market, not with the system itself.
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Old 07-31-2010, 08:58 PM   #11
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But you say the law of supply and demand can do this without prejudice. So I assume you think that Snoop Doggy Dog is really worth $500,000 a year after beating his murder rap, 10 times more than the average KG teacher? That's what the law of supply and demand says is fair and without prejudice.
It is not my place to set the 'worth' of anything, other than what I buy/sell. You and I, as individuals would agree that $500,000 to some rapper seems crazy - but who are we to say? If he earned it legally, and people are paying for the product, what could be any 'fairer' than that? So if you like country music more than Opera, banjo pickers should earn more than Baritones? What if someone else feels the opposite? It's crazy.

Your turn, you describe the alternative...

Do we set up a 'salary approval board'? Does some govt agency determine what each individual can earn, based on some...what?

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Mmm... well, I don't really follow your argument there. Why does that say what Einstein should be charged for the pad of paper?
That was your argument - that we charge for things based on their future value, not what the market will bear. Einstein can negotiate his own compensation package, and I'll negotiate mine.

Should we charge the Fire Dept more for the water they buy to fill their trucks than any other water?

We should pay and earn what the market can bear. It might seem out of whack to you and I from time to time, but I can't imagine any other system working at all.

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Old 08-01-2010, 09:03 AM   #12
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Your turn, you describe the alternative...

Do we set up a 'salary approval board'? Does some govt agency determine what each individual can earn, based on some...what?
-ERD50
No, I don't have an alternative. And my point was not that this could or should be an actual way of setting salaries -- as I said, this will never happen. Clearly, salaries and by and large set by supply and demand and barring better practical ideas that's the best we can do.

The reason I like this thinking is that it is one way of quantifying the value of a specific profession, in this case KG teachers. A similar thing was done some time back to quantify the value of a stay-at-home spouse by calculating how much it would cost to hire out meal planning, child care, cleaning service, etc. Of course this wasn't done in any practical way, just a theoretical exercise that points out how much a stay at home spouse is worth in financial terms. OTOH, if I provided the meal planning, cleaning, etc, those services would have minimal value.

But this also got me to thinking about salary distortions that arise through the system we have, as in the Snoop case. Yes, he earns what the market will bear, but when looked at contributions to society, producing rap lyrics that encourage crime and drug use creates a worse society -- and yet we reward him handsomely. Go figure.
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Old 08-01-2010, 09:04 AM   #13
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Interesting as this touches on a lot of different things. The education system in the US, teacher salaries, even nature vrs nurture debates. How much do you really learn from your kindergarten teacher?

As to the article itself, this strikes me as another individual that someone labels "expert" pulling numbers out of his or her arse, calls it an estimate and the media run with it. If you're really unlucky some doofus in government bases a regulation on it or uses it to pay back his constituency and political supporters. For the children, of course.

I'll say this though, if kindergarten teachers ever did command a 320k salary, you'd see a massive spike in post graduate work on macaroni art and finger painting.
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Old 08-01-2010, 09:11 AM   #14
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As the husband of a teacher of AP Calculus and Algebra II, I like this idea. Following this line of thinking could move our FIRE date up substantially.
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Old 08-01-2010, 10:15 AM   #15
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The reason I like this thinking is that it is one way of quantifying the value of a specific profession, in this case KG teachers.
I still disagree. It is almost impossible to to quantify the value of anything this way.

EXAMPLE: Maybe you need a ditch dug to provide drainage to your house. W/o the ditch, you risk $10,000 damage to your remodeling job every season. So do you pay the ditch digger what he is 'worth' ( the future value of all the flood damage repairs), or do you bid it out and find whoever will do the job correctly at the lowest price?

Since you support this idea, clearly you would make a ditch digger very happy, and your bank account very sad.

Especially when it comes to a municipality spending my tax dollars in my name, I want to see fiscal responsibility. That means finding good Kindergarten teachers (fill in any govt employee here) at the lowest compensation package the market will bear - no more, no less.

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As the husband of a teacher of AP Calculus and Algebra II, I like this idea. Following this line of thinking could move our FIRE date up substantially.
Be careful what you wish for.

We must apply this line of thinking to all, to be fair, right? So if you need your car to get to work to earn that salary, I guess the car repair guy can charge you what the future value of that repair was worth. Your salary for the life of the repair? Wow, that will be a big repair bill!

And if I pay someone to remodel my kitchen, and it doesn't end up adding resale value to my home, that means I don't owe the re-modeler anything because there was no 'value' there? etc, etc, etc. Sorry, but I this line of thinking is insane. Do it with your own money if you want, but don't do it with my (tax) money.

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Old 08-01-2010, 10:30 AM   #16
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EXAMPLE: Maybe you need a ditch dug to provide drainage to your house. W/o the ditch, you risk $10,000 damage to your remodeling job every season. So do you pay the ditch digger what he is 'worth' ( the future value of all the flood damage repairs), or do you bid it out and find whoever will do the job correctly at the lowest price?
Actually, I do look at the future value of the ditch diggers' work when I decide the most I would pay for the job. If the risk is $10k a year, I might pay a multiple of that to save the future expenses. Now, if a guy came along and offered to do the job for half of that, and do it well, of course I would go with that quote. But in reality I would be underpaying for the service as compared with future benefits. Same as many KG teachers are underpayed given the future benefits of their work. So you're right that we don't establish salaries based on this algorithm, nor should we, but I disagree with you that it's impossible to quantify the value of anything this way.

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Especially when it comes to a municipality spending my tax dollars in my name, I want to see fiscal responsibility. That means finding good Kindergarten teachers (fill in any govt employee here) at the lowest compensation package the market will bear - no more, no less.
Let me ask you something. I don't know how much KG teachers earn in your town, but supposed the board took your approach and low balled compensations to see where the breaking point was in getting teachers. Say they offered $15K a year. I'm sure someone would knock on their door with the minimal qualifications to do the job. So you knock it down to $10k, $5k. At that point you would not get applicants with college degrees, but could probably find someone who could teach finger painting and the basics of KG. That's the lowest the market will bear, so will you support that level? I assume you wouldn't because you say you are looking for "good" teachers. So what is a good teacher? Someone with a college degree? Someone who meets your individual criteria for "good"? Somewhere along the line you are making a value judgement as to what that teacher is worth, and I bet it has something to do with what that person will produce in terms of future value to society.

If not, then please tell me what your criteria is to avoid the $5k a year KG teacher, that is, if you want to avoid that.
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Old 08-01-2010, 10:56 AM   #17
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Be careful what you wish for.

We must apply this line of thinking to all, to be fair, right? So if you need your car to get to work to earn that salary, I guess the car repair guy can charge you what the future value of that repair was worth. Your salary for the life of the repair? Wow, that will be a big repair bill!

And if I pay someone to remodel my kitchen, and it doesn't end up adding resale value to my home, that means I don't owe the re-modeler anything because there was no 'value' there? etc, etc, etc. Sorry, but I this line of thinking is insane. Do it with your own money if you want, but don't do it with my (tax) money.

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Old 08-01-2010, 10:56 AM   #18
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Actually, I do look at the future value of the ditch diggers' work when I decide the most I would pay for the job. If the risk is $10k a year, I might pay a multiple of that to save the future expenses. Now, if a guy came along and offered to do the job for half of that, and do it well, of course I would go with that quote.
Exactly. Of course we often will try to measure the value of something when we make a purchase decision. And the value to me will often be different than the value to you ( let's say a high efficiency furnace in a mild climate versus a very cold climate). So we decide to pay that or do without.

But what will be offered is what the market will bear, and that determines what we will pay, if we decide to.


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But in reality I would be underpaying for the service as compared with future benefits.
Yes, and all of us try to do this all the time, don't we? This is pretty much the entire basis of how our economy functions. Why would I buy anything today, if nothing provided an increased future value? I'd be paying upfront for any fuel savings on that furnace - what's the point (economically)? Fewer people would 'buy' a college education if they had to pay upfront for their increased future earnings. An industry wouldn't buy any new equipment or expand and create jobs, there would be zero ROI on it, under your view of the world. We couldn't even function.

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Same as many KG teachers are underpayed given the future benefits of their work.
And I would assume (hope actually) that I was 'underpaid' relative to my value to my employer. If they paid me what I was 'worth', they could not make a profit, and they would go out of business, and then there would be no jobs. If my compensation was all I was 'worth', that would mean I did nothing to contribute towards any success that my company had, I was just a break even number, and didn't contribute to any job growth.


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At that point you would not get applicants with college degrees, but could probably find someone who could teach finger painting and the basics of KG. That's the lowest the market will bear, so will you support that level?
Now your desperation/bias is showing. I never said to lower the entry standards, so you are making a false argument.

In fact, what I'm proposing could well mean higher pay for K teachers. If we could pull something positive from that article, it would be that there seem to be certain qualities in K-Teachers that really make a long-term difference in a student's life. We ought to figure out what those are, and learn how to make those qualities/methods more widespread. When we look at that, we might learn that we need to pay more for those qualities in an open market. Or we may find that a lower pay class of people can actually be more effective, with just a little extra training/awareness of best practices. It could go either way. I won't pre-determine that w/o evidence.

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Old 08-01-2010, 12:33 PM   #19
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The subject fascinates me, and it rolled around my head as I ate lunch, so you get at least one more post

Seems to me it is equally valid to look at this from another viewpoint. If one view is to attribute higher lifetime earnings of a class to the good teachers, then in turn one could also attribute the lower earnings of some kids to the less capable teachers. In that case, do we 'charge' those less capable teachers $320,000 per year for hurting the future earnings of their class?


Sounds like all this is leaning to 'pay for performance', and 'pay what the market will bear' (yes, the market does assign value to better performance). The taxpayers would probably benefit, and the children would benefit. But the teachers support an organization that is opposed to those principles. What to think?

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Old 08-01-2010, 01:32 PM   #20
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The subject fascinates me, and it rolled around my head as I ate lunch, so you get at least one more post

Seems to me it is equally valid to look at this from another viewpoint. If one view is to attribute higher lifetime earnings of a class to the good teachers, then in turn one could also attribute the lower earnings of some kids to the less capable teachers. In that case, do we 'charge' those less capable teachers $320,000 per year for hurting the future earnings of their class?


Sounds like all this is leaning to 'pay for performance', and 'pay what the market will bear' (yes, the market does assign value to better performance). The taxpayers would probably benefit, and the children would benefit. But the teachers support an organization that is opposed to those principles. What to think?

-ERD50
Just addressing the teacher part of your post, my wife teaches high schoolers and always says you can't undo in one year the damage done by poor parents over the course of 14-15 years. This is why many teachers oppose pay based on performance. That, and there is no good, fair way to evaluate performance given the different clientele each teacher is presented with.
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