Understanding Public Employee Compensation Structures

Introduction

The claim that public school teachers are underpaid has become a widely accepted narrative. Each year, reports are released reinforcing this belief, often without serious scrutiny. But what happens when we compare those claims against real, verifiable compensation data? This article examines recent findings from the Economic Policy Institute (EPI) and contrasts them with actual pay records from California school districts.

The Economic Policy Institute's Claim

The Economic Policy Institute (EPI) recently released its annual study on public teacher compensation, concluding—once again—that teachers are underpaid compared to similarly educated private-sector employees. EPI has published similar analyses for several years, consistently reaching the same conclusion. Media outlets frequently promote these findings without question, reinforcing a long-standing belief that teachers are poorly paid.

Why the Narrative Goes Unquestioned

The "teachers are underpaid" narrative resonates because it aligns with assumptions many people have held for decades. However, popularity does not equal accuracy—and this is where closer examination becomes necessary.

Questions About EPI's Methodology

EPI's analysis relies on U.S. Bureau of Labor Statistics Current Population Survey data, based on monthly telephone surveys of approximately 60,000 households. Key concerns with this approach include:

• The data is anecdotal and unverifiable
• Certain teacher categories (pre-K, kindergarten, adult education, special education) are excluded without explanation
• High earners are "top-coded," meaning wages above $150,000 annually are not fully recorded

While EPI attempts to estimate earnings beyond this threshold, this introduces room for error—especially when comparing compensation at higher income levels.

How Transparent California Collects Data

In contrast, Transparent California uses actual payroll records obtained directly from school districts through legally authorized Public Records Act requests. This data:

• Comes directly from district computer systems
• Includes total annual compensation with no income caps
• Reflects real payments, not estimates

Size and Reliability of the Data Set

In 2021, Transparent California collected data on 252,550 certificated employees, covering more than 97% of K-12 enrollment statewide. This represents an overwhelming sample size—effectively capturing compensation data for almost all public school teachers in California.

What Teacher Pay Really Looks Like (2021–2022)

Transparent California's data reveals a different picture. For the 2021–2022 school year, the median total compensation for California teachers was $102,625. This includes:

• Base salary: $84,625
• Retirement benefits: $18,012
• Healthcare benefits: Additional value not included in this figure

Comparing Teachers to Private-Sector Workers

When comparing teachers to private-sector employees with similar education levels, the data shows:

• Median private-sector compensation: $77,000
• Median teacher compensation: $102,625
• Difference: Teachers earn approximately $25,625 more per year

The "Teacher Penalty" vs. the Reality

EPI claims a –19.2% "teacher penalty" in California. However, actual compensation data shows the opposite: teachers enjoy a significant compensation advantage. This discrepancy highlights the importance of using verified, comprehensive data rather than survey estimates.

The difference between EPI's findings and actual payroll data can be attributed to several factors:

• EPI's data excludes many teacher categories
• Top-coding limits accurate representation of higher earners
• Survey data may not capture total compensation accurately

The Teacher Benefit Advantage

Beyond base salary, teachers receive substantial benefits that significantly increase their total compensation:

Long-Term Impact of Retirement Benefits

If a private employee invested an extra $18,000 annually over a 30-year career, the retirement value would approach $3 million. To match a teacher's compensation and retirement benefits, a comparable private-sector employee would need to earn approximately $120,648 per year—about 30% more than the actual private-sector median.

Total Compensation Advantage

Even excluding healthcare benefits, California teachers in 2022 earn approximately $27,000 more per year in total compensation than comparable private employees.

Why This Matters

EPI reports a –19.2% teacher pay penalty in California. Actual data shows a 30% compensation advantage. This discrepancy raises important questions about public policy, education funding, and union demands—especially when increased compensation directly reduces funds available for classroom resources and student education.

Final Thoughts

Whether the teacher compensation premium is too high, too low, or appropriate is ultimately a public decision. However, that decision should be based on real data, not assumptions or incomplete analyses. Honest discussions about education funding require transparency—and accurate numbers are the foundation of responsible policymaking.