Thursday, May 20, 2010

School Reform, Teacher Tenure, and Instructor Age Distribution

When I first started to get interested in labor economics, in the late 1980s, one of first papers I read was by Ed Lazaer, Why Is There Mandatory Retirement? The argument in the paper is pretty simple. To get incentives write for employees, it is efficient to rear load their compensation - pay them less than their productivity early an and more than their productivity later in their careers. This implicitly "bonds" the employee to the employer and thereby encourages the employee's vigorous participation while reducing the likelihood of the employee's turnover. That is all for the good. And if over the employment lifetime the wages paid equals the employee's productivity, then it all adds up.

However, all good things must come to an end. For most of the worker's tenure, the employee is bonded. However, once the employee is earning more than his productivity, the bond shrinks. As the employee continues to earn more than his productivity, eventually the bond hits zero. This is when Lazear says retirement should be and it should be agreed upon in advance so all parties understand that's the deal. Contracts that provide for employee tenure but that have a mandatory retirement date, say at age 65, then can fit the Lazear solution. However, indefinite tenure contracts that now exist because age discrimination laws have ruled out mandatory retirement create a problem. Under them you can have old farts in the system who have "negative bonds" - they keep drawing in pay more than their productivity. The employer wants to get rid of them, but can't because of the tenure.

I don't know the details of teacher compensation in public schools, so can't even make an eyeball guess as to when in schools that have seniority based compensation, as I take it that most public schools do, is it that the mandatory retirement date a la Lazear should be set. However, I was readily able to find these tables of the experience distribution of teachers on a state by state basis. While we know productivity varies from one teacher to the next (much of the point of the current debate) the Lazear type argument still largely holds. If efficient separation should happen after 30 or more years of experience, these tables suggest tenure is not that big an issue. There are probably less than 5 per cent in this category in most cases and one might hazard a guess that those long timers are actually pretty good teachers. If instead, however, efficient separation should happen at 20 or fewer years of experience, then tenure is a big deal as it would seem there might be 20 per cent or more of all teachers in some states in this category.

Suppose 20 years of teaching and then off to something else is efficient. What would that something else be? That's a thought to scratch your head about.

At present teaching jobs appear to be quite scarce. But ten years ago, when they were not, I believe I was told by a friend who was in the College of Ed here at the time, that the biggest issue with teaching was early burnout. Most teachers didn't last more than a couple of years on the job. If that's the problem you are trying to address with your compensation scheme, then a seniority based compensation is just the ticket. I have seen essentially no press on the issue of early burnout of teachers as of late. All of the press seems to be about those unproductive types who have tenure.

The thing is, if you are really thinking through lifetime compensation schemes, and if teaching is (or should be) a lifetime calling, you don't really want to vary the social contract in response to current labor market conditions, except perhaps at the entry level. However, you do want to vary the contract in response to what was a permanent change in the age discrimination laws, the change that got rid of mandatory retirement. In this case compensation needs to align with productivity for senior workers. Then folding it back earlier in the employee's tenure, compensation needs to align with productivity then, as well. Perhaps there can be a small amount of bonding early on, during a probationary phase. But that needs to be paid off quickly after which productivity and compensation should be equated.

The union leaders need to understand this logic, even while they have to defend the rights of their membership, most of whom cut their teeth on a seniority based model of compensation. There is something about changing the rules in midstream, especially for able if not outstanding teachers, that the reformer types seem to blithely ignore.

There is then the issue of the testing itself as a productivity measure. There is a lot to critique there. But maybe the critique needs to come from elsewhere than from the teacher unions. One variable that doesn't seem to get much discussion, but should in my opinion, is the anxiety level of students, particularly the high achievers. The testing mentality encourages these kids to stress out to the max. And it encourage a certification mindset in all learners that instead of getting into it because it's interesting in its own right, do it for the credential. We seem to be so myopic in our goal setting that we are blind to these sort of consequences, which are well beyond the usual teach to the test critique. Learning to deal with some pressure may be an important life lesson, but if the system itself is too highly cooked, that is a problem, one that doesn't seem to be getting much examination at all.

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