Under much debate these days is LIFO, or last-in-first-out. Its the policy used frequently by public schools to determine who gets laid off by simply going with whoever was hired the most recently. Critics of this policy point out it’s obvious shortcoming: that the youngest teachers are by no means the worst, and that if you could fire one older, ineffective, more expensive teacher, you could save two younger teachers’ jobs. Defenders of LIFO first bristle at the notion that there are plenty of old ineffective teachers sitting around who can be clearly and uncontroversially  identified and removed. They also point out that any alternatives to LIFO will allow administrators to cut costs by shedding older workers, and that young workers will be much less eager to go into a career where job security is poor and an inverse function of age. After all, who wants to know that the longer you work somewhere the more likely to be fired?

But the question to ask is why is it that administrators would want to fire older teachers? There’s two possible explanations: administrators don’t care about quality, or the cost their spending isn’t worth the quality. While the former may be true in some cases, whether it is or not, the latter is likely to be true almost all the time. As Michael Petrilli points out in Education Next, teacher pay scales continually rise with experience even though studies show that only the first few years of experience increases teacher effectiveness. So for example, even though a teacher with 25 years experience is no worse than a teacher with 10 years experience, he or she gets paid a lot more. Consider the following chart from economist Jacob Vigdor, which shows how average teacher pay grades compare to doctors and lawyers.

In these other jobs pay rises rapidly with experience, whereas teacher pay rises much more slowly and don’t peak until age 55, even though the benefits of experience all occur within the first five years. As Petrilli points out, if teacher pay rose in a commensurate fashion with quality enhancing experience, then it would increase quickly in the first five years, and then flatten out, which by making pay proportional to quality would remove all of the incentive to lay off older teachers. This is not to make the case for lower pay for teachers overall, in fact you could do this whole thing in a revenue neutral way.

So there are two big benefits to a flatter pay scale:  it doesn’t distort incentives in a way that creates an older then optimal teacher workforce, and it allows schools to replace LIFO with something better without worrying about effective older teachers being targeted. In addition, if we’re concerned that too many young teachers are leaving the field too quickly (and almost half do within the first 6 years), then a pay scale that increases more quickly is a way to encourage them to stay.

When schools are forced to adhere to a system where costs are so divergent from benefits, you can expect unintended consequences. What can result is a pile of inefficient policies, each trying to offset the unintended consequences of the next. That certainly seems to be the case here.

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