Why Your Kid’s KinderGarten Teacher is Worth $320,000

by Darwin on July 29, 2010

There have been some rather controversial yet entertaining posts on teacher pay in the PF blogger world of late.  First, Evan at MTJM threw some fuel on the fire by venting about Why Teachers Anger Him.  Well, with my wife being a teacher and seeing first hand the various myths and misunderstandings about teachers, work hours, pay and stress that continue to propagate amongst people unfamiliar with the role, I did a post on In Defense of Teachers. Similarly, Crystal at Budgeting in the Fun Stuff shared her insight being the spouse of a teacher as well in A Teacher’s Reply. (sorry Evan, it’s the gift that just keeps on giving).

Well, anecdotes and opinions aside, today, the NY Times had a piece on how a Kindergarten teacher is worth $320K as calculated by the present value of ADDITIONAL future earnings of your child into adulthood when they have a strong kindergarten teacher.  This of course does not even account for the benefit of quality of life, longer life expectancy, better fiscal management outcomes, etc., over peers that have lousy teachers.

In essence, while previous studies had focused on test scores and scholastic achievement through primary schooling, for the first time, a major study (and seemingly well controlled) was conducted to track 12,000 children in a planned experiment from the 1980s.  Now that they’re into their 30s and the data set was so large, meaningful data could be gleamed by comparing their adult outcomes with their Kindergarten teacher experience.

Key Findings:

  • Children who learned more in Kindergarten were more likely to go to college than peer group (normalized for other background noise)
  • These students were also less likely to become single moms and dads
  • They exhibited better retirement/savings behaviors
  • They earn more money
  • They earn about $100/percentile per year improvement over average.  So, if your child had a top tier teacher/test score of 90 percentile, your child could reasonably be expecting to earn $4000 more per year than an average student and the effect tends to grow over time.
  • Based on these outcomes and considering the financial impact of future earnings, it was calculated that the value of a top kindergarten teacher is $320,000 per year.  That’s about 4-6 times what most of them make, depending on location and experience.

The key takeaway here isn’t the number; that’s actually a bit of a silly anecdote to me with many assumptions built in.  For instance, when I was in a sourcing role and saved $5 Million for my company on a single deal, I didn’t expect to get paid $5 Million that year, or even see anything different than my typical income – since that was my job!…to save money.  So, a teacher’s job is to teach and do it well.  This isn’t an argument on whether teachers should get paid more, but rather, people should take note of the key financial and net economic benefit teachers provide to society now that there is more firm data tied to it.  To naysayers who consider teachers to be high paid babysitters, the data is tough to ignore.  They matter.

Your thoughts?

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Weekend Reading: Life is Good Edition
August 5, 2010 at 10:28 pm

{ 11 comments… read them below or add one }

1 Evan July 29, 2010 at 10:45 pm

My Thoughts? My initial reaction is to quote your awesome analogy on causation and correlation.

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2 Darwin July 29, 2010 at 10:52 pm

Well, in this case, the authors normalized for other factors and it’s by no fault of their own if children get a shitty teacher; however, the poor can sign up for a rewards credit card just like I can. But I’m sure one could poke holes in the study since all studies like this make certain assumptions (i.e. even the $320K is local right? What about Long Island vs. midwest?)

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3 tim July 30, 2010 at 12:58 pm

You’re confusing social economics effects for cause. Having good K teachers is an effect of being richer and being in better school districts.

It’s like saying: Kids whose parents spend lots of money on vacations and drive nice cars make more money over their lifetime. Therefore, buy expensive cars and take expensive vacations, and your children have a better chance at success.
Tim

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4 Darwin's Finance July 30, 2010 at 1:18 pm

According to the study, they corrected for those factors. They looked at schools and families in the same area. As you can imagine, even within a single class, there are varying levels of parental income. So, by factoring that in, they were able to hone in on teachers as the key variable. Sample size is certainly large enough to believe plausible.

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Evan Reply:

@Darwin’s Finance,

I hate being that guy attacking studies (I don’t know why but it bothers me) but how could the reasearches possibly know how much parental reading there was at home? Did mom and dad sit down and do math with each kid for the same amount of time?

Darwin, I say tht you are more important than a glorified babysitter – kindergarten teacher… (as grades get higher I wouldn’t say that).

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Darwin Reply:

@Evan, You’re considering individual anedotal evidence in the context of a data set in the tens of thousands. That’s like looking at a clinical trial for a drug and saying, “Well, that guy had a bad diet too so of course the mortality rate was high” – you look at the entire data set, correct for known biases and look at the result vs. a control group. That’s what the study did.

I don’t disagree that parental influence is paramount, but this study removed that as a variable and showed the incremental benefit above and beyond other factors like home, socioeconomic status, starting IQ, etc.

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5 Budgeting in the Fun Stuff July 30, 2010 at 4:01 pm

That study seems hinky somehow – too many factors to take into account, but I know teachers offer more than babysitting services. It’s hard to ignore the staggering amount of people who remember that one teacher that put them on a track for something or changed their life in some way. Even kindergarten teachers are way more than glorified babysitters.

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6 jim July 30, 2010 at 6:07 pm

Interesting topic. I agree with the idea in general but the $320k figure is pointless.

I think the idea that a good kindergarten (KG) teacher will have a positive impact on average lifetime earning for students (on average) seems like obvious common sense to me. A good KG teacher will improve your chances of learning more in school. And in KG if you’re a step ahead then you’ll have higher succees in 1st grade, which will set you up to do better in 2nd grade, etc. Everything is so much easier if you start ahead and this will make your education much more of a success from the start. Better success in school gives you a better quality education. A higher quality education will result in higher lifetime earnings. Of course these are all generalizations applied to a very large population. A crappy experience in KG can be overcome and a great KG year can be wiped out with later difficulties.

Think of it this way: Would you rather have a great KG teacher or a crappy KG teacher? Kinda answers itself. Good teachers obviously have higher value.

Obviously other things matter as much or more for your education success and lifetime earnings. The affluence and education level of the parents, the aptitude of the child, funding for the school, etc will all have a big impact on how well you learn. But as Darwin said, the study controls and factors out those elements. Also note the study findings do say that class size matters a lot and the quality of the class ( how well the other students do) also matters a lot. 20% more average teachers would have the same impact as if everyone was a +20% increase in teacher quality.

The $320k figure is kind of meaningless. I mean what do you do with that number? Give your above average KG teachers a $320k raise? Of course not.
I mean on the other side of that coin, are they saying that a below average teacher costs us $320k?

[Reply]

joe Reply:

@jim, Yep. Economics, Sophomore year. If giving a dollar gets you X, then taking a dollar costs you X at any point on a curve. Investments are fluid.

Same can be said for foreign aid. If giving $100 billion to Africa ‘saves’ 50 million lives, then reducing aid by half ‘costs’ 25 million lives. If you want to take credit for the good, then you have to admit the consequences of the bad.

Good teachers are worth much more than they get. Bad teachers cost us billions.

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7 Ralph August 3, 2010 at 10:01 am

Teachers play a big part in for children’s growth, I can see how you made this connection. Thanks for sharing.

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8 Nicole August 10, 2010 at 3:30 pm

I was at that talk. It was very poorly presented. I’m still not entirely clear what they were doing and they obviously had not yet done a lot of the low-hanging regressions, instead focusing on obscure second order fixing of standard errors. I would not be surprised at all if their results change several times before publication.

I wish I could tell you that it was a great talk and they took in all those factors into account. But it wasn’t. They obviously still have a LOT of work to do. And the presenter seriously needs to work on his presentation skills. (Not Raj Chetty– he was great, but he just did set up. It fell apart after that.) Out of all the fantastic talks at that conference, I was really surprised to see this one as the one in the NYTimes.

BTW, the actual point of the paper was showing that class size leads to better outcomes later on. That part was pretty convincing. They followed up the Tennessee Star experiment students, which was a randomized experiment putting kids in different class sizes. They haven’t been out in the labor force long, but it does appear they spent more time in school and have slightly higher salaries. Those findings will probably continue to improve as the cohorts making little money now completely graduate college and start earning money and gaining work experience.

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9 chris March 31, 2011 at 2:44 pm

If we can we pay the good teachers $320K and fire the bad teachers, I’m in. But teachers unions protect the garbage, lessening thevalue of the whole group. Don’t they?

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10 Mike May 24, 2011 at 3:31 pm

If the woman in the picture is a kindergarten teacher, she is worth $320K! She is teaching double-digit multiplication to kindergarteners! That is simply an impossibility. I think she is worth every penny of it!

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11 joe May 3, 2012 at 6:55 pm

Only $320k a year? They are worth ten times that, at least.

And we wonder why the nation is going bankrupt.

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