A couple weeks ago, Andrew Biggs, an AEI colleague, and Jason Richwine of the Heritage Foundation, authored a controversial study on teacher pay. They used federal wage, benefit, and job-security data, along with measures of cognitive ability, to argue that teachers are overpaid compared to what they’d earn in the private sector. The analysis generated heated reaction, including an unusual, personal attack by Secretary of Education Duncan. In the aftermath, given that I’m director of ed policy studies at AEI, there were a number of inquiries regarding my thoughts on this provocative analysis.

My take is threefold. (An earlier version of this originally appeared as an Ed Week commentary last week, but I thought it worth sharing a tweaked version here with RHSU readers.)

First, claims that teachers are, in Duncan’s words, “desperately underpaid,” are a familiar refrain. Yet, given that we’ve steadily boosted staffing and after-inflation spending in recent decades to little obvious effect, and that states and districts are wrestling with structural shortfalls, it’s healthy to question such orthodoxies. Biggs and Richwine remind us that the costs of teacher benefits dramatically inflate the cost of compensation, even if the results aren’t always obvious when scanning a paycheck. Recall, for example, that University of Arkansas economist Bob Costrell pointed out during the Wisconsin collective bargaining fight earlier this year that the average Milwaukee teacher earned a salary of $56,500 but, due to benefits, actually cost the district $100,005 in total compensation. This ought to be of particular concern to educators eager to see more of their compensation show up in their pay stubs. In light of that, I’m disappointed (if not surprised) that most of the responses I’ve seen to Biggs and Richwine have been ad hominem, with Duncan declaring in the Huffington Post that the study “insults teachers and demeans the profession.”

Second, their analysis is intriguing, but it rests upon assumptions and data which deserve to be carefully scrutinized. For instance, Biggs and Richwine rely upon SAT and GRE scores to measure cognitive ability. It’s fair to ask both how good those metrics are and how much they may say about teaching ability. And it’s worth noting that their cognition data are nearly two decades old; if the makeup of the teaching force has changed significantly in that time, it would obviously change the outcomes. Similarly, the job-security and benefits data don’t reflect more recent developments or the fact that teaching positions may be less secure going forward; it will be interesting to see how such changes might impact the underlying data. At the same time, it’s important to note that Biggs and Richwine penned for the HuffPo what I thought was a pretty compelling response to the two methodological criticisms that Duncan had raised.

Third, I ultimately think the are-teachers-overpaid-or-underpaid question is just not that interesting or helpful to those of us in the fields of schooling and education. It’s a useful question for policymakers who must decide how to allocate dollars for highways, health care, and schooling, but for those of us working in the K-12 arena, the more relevant question is: How do we most wisely spend the dollars we have?

For what it’s worth, I’m firmly convinced that, today, some teachers are underpaid and others are overpaid. When I am asked the long-standing question about whether teachers are underpaid or overpaid, my consistent refrain is, “Yes.” I’m much more interested in the broader issue of how we can rethink the profession, make fuller use of talented teachers, and wisely spend the dollars we do have than in debating what the “right” wage level should be.

Under today’s step-and-lane pay scales, the primary way we determine how much teachers are worth is how long they’ve taught and how many graduate credits they’ve accumulated. Now, there’s nothing innately wrong with step-and-lane compensation. Indeed, when introduced in the early 20th century, it was a sensible response to reflexive, sweeping discrimination under which women were routinely paid half as much as their male counterparts. When a captive market of women had few options except to teach, the benefits of this more equitable system outweighed its defects.

Today, however, the world has changed. Whereas limited professional options meant that more than half of women graduating from college became teachers in mid-20th-century America, the figure today is closer to 15 percent. At the start of the 21st century, new college graduates--both men and women--are much less likely to stick to a job for long stretches, the competition for college-educated talent has intensified, and we are becoming better able to track educational outlays and outcomes. All this adds up to a new environment in which step-and-lane industrial-era pay is ill-suited to attracting and retaining talent. The consequence of treating different employees similarly, despite their varying work ethics and skills, has become a growing burden.

As school systems wrestle with tough fiscal decisions, it’s vital to understand that one-size-fits-all pay is insensitive to questions of productivity. Although the term “productivity” is typically regarded as a four-letter word in K-12 conversations, teacher productivity means nothing more than how much good a given teacher can do. If one teacher is regarded by colleagues as a far more valued mentor than another, or helps students master skills much more rapidly than another, it’s axiomatic that one teacher is more productive than the other. Yet, step-and-lane pay makes no allowance for such differences.

Today, we’re paying the most productive employees too little, paying their less productive colleagues too much, or, most times, a little of each. In a world of scarce talent and limited resources, this is a problem. School systems casually operate on the implicit assumption that most teachers are similarly adept at everything. In a routine day, a 4th grade teacher who is a terrific English language arts instructor might teach reading for just 90 minutes. This is an extravagant waste of talent, especially when one can stroll down the hallway and see a less adept colleague offering 90 minutes of pedestrian reading instruction.

One approach to using talent more wisely might entail overhauling teacher schedules and student assignment so that an exceptional 4th grade English language arts instructor would teach many more students. Colleagues, in turn, would shoulder that teacher’s other instructional responsibilities. An essential component of such rethinking is to adjust compensation to recognize the importance of their various roles.

After all, we pay thoracic surgeons much more than we do pediatric nurses--not because we think they’re better people or because they have lower patient-mortality rates, but because their positions require more sophisticated skills and more intensive training and because surgeons are harder to replace. Salary should be a tool for solving problems by finding smarter ways to attract, nurture, and use talent; it should not be an obstacle to doing so.

Almost any effort to really rethink staffing and pay entails some educators earning more--probably, a lot more--and other educators earning less. That sounds about right. The real question isn’t whether we should pay all teachers more or less; it’s how to pay the right teachers more, in a way that serves students and maximizes the bang we get for the educational buck.