Wendy Warcholik, Ph.D. | February 23, 2015

An Economist Looks at Teacher Shortages

Wendy Warcholik, Ph.D.

Oklahoma’s shortage of public school teachers has been much in the news lately. Those in the education establishment say that solving the problem will require increased funding and greater teacher satisfaction (by limiting class sizes, for example).

Many of the articles being written about Oklahoma shortages seem to assume that the solution will be found at the intersection of money and teachers. However, the most basic explanation of temporary shortages is that prices don’t match the demand and supply of goods (such that if English teachers are in abundant supply compared with math teachers, salaries will be lower for English teachers than for math teachers).

Unfortunately, the simple economic dictum that markets aren’t clearing does not adequately address what is going on in the schools.

The superintendents, other education bureaucrats, and teachers’ unions ultimately do not compete with one another. Instead, the teacher unions enforce collusion among these groups such that they form an industry or monopoly—the education establishment.

In the education-establishment monopoly, prices don’t adjust to market conditions. Further, when the establishment has the power to expropriate property (via taxation) for refusal to pay for education (output), the power is not in the hands of the consumers (parents/taxpayers/children). Rather, the power is in the hands of the establishment which receives the rents. The consumer is certainly not empowered to effectively solve the shortage problem, especially when it is beneficial for the establishment to make policy decisions that create these so-called shortages.

The only real solution is to break up the monopoly by expanding school-choice opportunities.

One local superintendent recently told Oklahoma lawmakers that “the teacher shortage is about kids.” But again, ever the economist, I am suspicious that the shortage might indeed be the result of the policies of the education establishment.

In fact, the first article that comes to mind is the highly lauded work of economists Andrei Shleifer (Harvard) and Robert W. Vishny (Chicago) published 22 years ago entitled “Pervasive Shortages Under Socialism.”

The authors address the relationship between rent-seeking bureaucrats and shortages. They write: “We argue that an important reason for pervasive shortages is self-interested behavior by the ministry bureaucrats who set the planned prices and output. These bureaucrats intentionally plan shortages in order to invite bribes from rationed consumers.”

I don’t use this quote to insinuate that education bureaucrats “intentionally” manufacture shortages. Rather, the system has been designed such that it exhibits socialist characteristics and produces results similar to socialist entities.

It makes perfect sense that those producing a public good—superintendents and their partners they collude with, teachers’ unions—would scare consumers (the public) by creating a crisis to extract higher rents (increases in teacher pay, more lavish fringe benefits, more planning days in proportion to teaching days, smaller classes, and so on).

The concept of pervasive shortages to extract rents is built upon the rent-seeking literature of notable economists like Gordon Tullock, Anne Krueger, and Richard Posner, where rent seeking is defined as lobbying for benefits (rents) through the political arena.

So, what then is the relationship between the rent-seeking superintendent and socialism? That’s easy—the superintendent represents the public school, which, in turn, exhibits a key tenet of socialism: the education bureaucrats do not directly keep the profits as there are no direct profits in public education. So, they must turn to other methods to extract privileges or rents.

Could that be what’s going on in Oklahoma?

Wendy Warcholik, Ph.D.

OCPA Research Fellow

Wendy P. Warcholik (Ph.D., George Mason University) is an OCPA research fellow. She formerly served as an economist at the U.S. Department of Commerce’s Bureau of Economic Analysis, and was the chief forecasting economist for the Commonwealth of Virginia’s Department of Medical Assistance Services. She is a co-creator (with J. Scott Moody) of the Tax Foundation’s popular “State Business Tax Climate Index.”

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