Why aren't teacher salaries rising more?

School district payrolls are rising, but shifting employment trends are eating up the increases

Over the last two decades, the average teacher salary has risen, but not as fast as inflation.

What’s going on?

It’s not about the total amount of money. We’re spending more on K-12 public schools than ever, and inflation-adjusted, per-student current expenditures rose 24% from 2000 to 2020.

Employee benefits, especially the rapidly rising cost of teacher pensions, are a part of the larger story of hidden costs eating into school district budgets.

But monthly payrolls—which exclude benefit costs—are also rising faster than the rate of inflation. So what’s going on? Why is the money not showing up in higher teacher salaries?

Today I’m going to look specifically at the growth in payroll costs using the Census Bureau’s Annual Survey of Public Employment and Payroll (ASPEP). Since 1999, it has been collecting payroll data on a broad array of state and local government functions. The data are collected in March of each year, and the most recent data comes from 2022.

The chart below shows the rate of payroll growth for school districts across the country. The red line shows the payroll growth over time while the gray line shows the growth in inflation. Roughly speaking, school district payroll growth has outpaced inflation by about 1% a year for the last few decades. That’s not huge, but it adds up over time.

What’s driving the increase in payrolls specifically? I’ll use the ASPEP data to illustrate three main trends:

Trend #1: More workers overall

Public schools have added staff faster than they have increased student enrollments. That was especially true in the early 2000s, dipped down in the wake of the Great Recession, and then saw slow growth from there.

More recently, staffing numbers fell dramatically in the first year of the COVID-19 pandemic but made a quick recovery. (And, because student enrollments fell, the per-student staffing ratios have risen to historic levels.)

In other words, part of the story with the payroll increases is simply that more people are receiving a monthly check.

The ASPEP data doesn’t give a clear definition for teachers versus non-teachers—it only captures “instructional” versus “non-instructional” staff—but it does break out its data across full- versus part-time workers, and those have some more clues about how districts are spending their money.

Trend #2: More full-time workers

The chart above looks at total staffing levels as measured by full-time equivalents (FTEs). But the mix of employees matters too, and schools have recently begun to prefer full-time over part-time staff. Over the whole time period where we have data, the number of full-time staff has risen by 19.5%, compared to a 6.2% decline in the number of part-time staff.

This trend affects payroll costs because salaries are not pro-rated. Part-time employees tend to be hourly wage earners, and they earn less money than full-time, salaried employees.

In other words, schools have added staff overall, but they have also tilted toward a slightly more expensive staffing mix.

Trend #3: Higher pay for part-time workers

There are fewer part-time workers in schools than there used to be, but the remaining part-time workers have gotten bigger increases over time than their full-time peers. Part-time workers earn only about $20,000 a year compared to the $61,000 earned by full-time education employees, but the increases for part-time workers (in green) has been much larger than the increases for full-time workers (in red). Teachers might be in favor of giving higher raises to part-time employees, but that choice eats into district payroll costs and makes it (slightly) harder to fund teacher salary increases.

The full story looks something like this: Districts have higher payroll costs, but those are divided among more people on the payroll, there are more full-time employees to share the pie, and meanwhile part-time workers are earning bigger increases in average pay.

TLDR: Teacher salaries might be higher if districts made different staffing choices.