How Much Is a Good Teacher Worth in Cash?

According to a new study: $400,000. (That’s a lot of apples.)

But it’s true. Sort of. Research done by Eric Hanushek of the National Bureau of Economic Research has found that compared to an average teacher, a good teacher creates $400,000 more in future earnings for a class of 20 students. Not only that, but if the bottom 8 to 10 percent of poor-performing teachers were replaced with average teachers, the study predicted that the U.S. could jump to the top of international math and science rankings and bolster the GDP by $100 trillion, a figure that would put to shame “the discussions of U.S. economic stimulus packages related to the 2008 recession ($1 trillion).”

What does this mean? Well, the sunniest interpretation is that this proves the value of teaching in cold hard cash. Oh, and that they should be paid more. As Adam Ozimek from Modeled Behavior writes:

If good teachers are very valuable, then bad teachers are very costly. This means we should be willing to pay more for good teachers, but it also increases the benefit of getting rid of bad teachers and ensuring we have a system that can do that … I think progressives tend to be very pleased with claims like [Hanushek’s $400,000], which is that teachers have a very high value. You can find similar results in the work of Raj Chetty, which suggests that good kindergarten teachers are worth $320,000. If this is true then the marginal benefit of teaching skill—or quality, if you want to think of it that way—is far below the marginal cost, and therefore we should increase wages to draw more talented teachers.

And Hanushek isn’t talking about superstar teachers. He’s talking about the 16 percent of teachers who are one standard deviation above the mean. In short, good teachers—they don’t all have to be Robin Williams in Dead Poets Society). This in many ways makes the numeric predictions more impressive. Karl Smith from Modeled Behavior agrees:

Social value isn’t a feel-good concept. Hanuschek limits himself to future earnings of the students. The other big drivers are always crime reduction and public assistance reduction. So we are saying better teachers lead to higher wages, lower crime, and less welfare. This is a far cry from trying to put numbers on soft factors like civic engagement.

But the topic, of course, is not that simple. Reihan Salam of the National Review notes that shrinking class sizes may have diluted teaching talent:

I do wish that someone would connect the dots and make the obvious yet important point that Rick Hess has been making for ages: shrinking class sizes over the last 40 years has diluted the teacher talent pool. Had we stayed at the teacher-student ratios of the 1970s, we’d have 2.2 million public school teachers rather than 3.2 million. Know what else happened over the last 40 years? Labor market discrimination against women and African Americans declined, giving talented female and African American workers who had once gravitated to the teaching profession other options. Allowing effective teachers to take on larger classes in exchange for more pay could have a powerful positive effect. With the same compensation bill, we could pay far higher salaries.

And Catherine Rampell from The New York Times points out that studies like this are great—but in order to justify more pay for teachers, there needs to be more context and more proof that pay and effectiveness go hand in hand. Hanushek himself was careful to point out that his research doesn’t tie “more pay” to “better teaching.” (Instead, his goal was to suggest “that the economically appropriate rewards for particularly effective teachers in the context of a performance pay plan could be very large.”)

Here’s Rampell:

Earlier this year my colleague David Leonhardt wrote about a new study that found that a good kindergarten teacher could greatly improve students’ future earnings. On that basis, an especially strong kindergarten teacher is arguably worth about $320,000 a year, which is the present value of the additional earnings that a full class of students can expect to earn over their careers.

So does that justify paying teachers more money? Only if pay can be directly linked to effectiveness.

At the end of it all though, I agree with Adam Ozimek’s statement that regardless of the context or the study, “these results reinforce one fact that progressives and conservatives should agree on: this is a really important issue.”

An apple for your thoughts?



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About Lu Fong

Lu Fong was a staff writer and blog editor for the Good Men Project in its formative years. As the requisite woman on staff, her hobbies included cleaning, cooking, knitting, fainting, and childbearing. Follow her on Twitter @lufong.


  1. Sounds great! Let’s put this in effect immediately! How?
    What kind of system would fairly and effectively determine a bad teacher? They are out there, but how do you identify those individuals? If you just look at test scores from one year compared to other teacher of the same subject, during the same grade level, at equal demographics, and equal parent involvement.
    A teacher may thrive at one school, and get his/her teeth kicked in at another.
    Although I agree with your blog, it’s a fairy tail..

  2. What an interesting idea! I really like the idea of linking the performance of teachers to future outcomes. I believe that some sort of incentivized program could be created but it would probably have to be based on local norms/standards. It wouldn’t be possible from a federal level to make effective and meaningful across the board accountability standards. However, state and local level school systems could develop a rubric for measuring effective teaching. It wouldn’t have to be based solely on outcomes. There are plenty of standards in educational psychology about effective ways to deliver information and manage classrooms. There is a huge amount of research that shows the difference between expert and novice teachers. If “bad” teachers are identified, they can be offered continuing education to learn some of the more effective teaching techniques. It’s completely possible to create a system to assess teachers and their ability to teach. The idea that “it’s too hard so we shouldn’t do it” is a weak excuse for allowing things to stay the way they are. Hopefully, this research will motivate others to write a practice component response about what this could look like or what’s already being done.

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