Curious how pensions are counted. I suspect that teachers' cash wages are suppressed by the need for school districts to make large pension contributions, much of which is to pay for underfunding resulting from past undercontributing. The result would be that younger teachers are particularly underpaid on a total compensation basis, as the value of their future pension is less than the value of cash compensation that is effectively taken away to fund those pensions.
Bravo for pointing out the undervaluation of pensions in the public sector. But that's a problem even when contributions are equal to those actuarially required (I'm a pension actuary). Shamefully, the actuaries are the ones undervaluing the benefits. In evaluating total compensation, the pension component should reflect only the market value of the pension benefits earned during a year, not the amortization payments, which can be a high % of pay. Just because of pension math, older teachers' pension accruals are worth a lot more than younger teachers', holding everything else constant (like pay level). It wouldn't be shocking if, just because of pensions, younger public school teachers are "underpaid" and older teachers are "overpaid."
I wonder how they account for the selection bias. Those who leave the profession are maybe more often poor performers than those who stay. It might make sense that they make less when they leave.
Curious how pensions are counted. I suspect that teachers' cash wages are suppressed by the need for school districts to make large pension contributions, much of which is to pay for underfunding resulting from past undercontributing. The result would be that younger teachers are particularly underpaid on a total compensation basis, as the value of their future pension is less than the value of cash compensation that is effectively taken away to fund those pensions.
Right, those are also not comparable. The EPI work does try to account for higher benefit costs in the public sector, but they use actual contributions rather than the value of the benefits or *actuarially required* contributions. I wrote a bit more about these issues here: https://www.eduwonk.com/2019/10/we-should-probably-stop-citing-epis-teacher-wage-gap-data.html
Bravo for pointing out the undervaluation of pensions in the public sector. But that's a problem even when contributions are equal to those actuarially required (I'm a pension actuary). Shamefully, the actuaries are the ones undervaluing the benefits. In evaluating total compensation, the pension component should reflect only the market value of the pension benefits earned during a year, not the amortization payments, which can be a high % of pay. Just because of pension math, older teachers' pension accruals are worth a lot more than younger teachers', holding everything else constant (like pay level). It wouldn't be shocking if, just because of pensions, younger public school teachers are "underpaid" and older teachers are "overpaid."
I wonder how they account for the selection bias. Those who leave the profession are maybe more often poor performers than those who stay. It might make sense that they make less when they leave.