Are teachers underpaid? How much is a teacher worth? To answer this we must first define “value”. Although it is a common myth, there is no such thing as intrinsic value. Gold has no more intrinsic value than a lump of mud. The act of digging a hole has no more intrinsic value than teaching. By “intrinsic” I mean objectively measurable. Value is an entirely subjective human construct (just as “beauty” is.) It cannot be measured like density or boiling point. However, subjectivity does not imply lack of consensus. In broad strokes we rank things quite similarly (i.e. we prefer gold over mud). But at the finer scales our value rankings are different and can shift over time. These differences are in fact a necessary condition for commerce. Generally speaking, one values things they want more highly than things they already have. For example, if I buy your wristwatch for $10 then I value the wristwatch more than the $10. Likewise, you value the $10 more than the wristwatch. The value of the wristwatch is not $10, it is either more than $10 or less than $10 depending on who you ask. If that seems counterintuitive, consider this: would you sell your $10 bill for my $10 bill? No, because you gain nothing in the exchange. Then why sell a wristwatch for $10 if you gain nothing in the exchange? Both parties realize a gain in an exchange due to their different value rankings (within the context of that trade).

Both parties realize a gain in an exchange due to their different value rankings

So how does understanding subjective value relate to determining if teachers are underpaid? In a free (non-coercively influenced) market, every completed trade is “fair” in the sense both parties subjectively gained. In a free market being “underpaid” simply means there was a willing buyer that you failed to find that valued what you sold more than the party you sold it to. Subsidized public schooling is at best a semi-free market. It has actually driven wages higher, not lower, than they would be in a free market. We know this because if teachers were underpaid then private schools would poach the best teachers with elevated pay. In fact the reverse is true. Private school teachers make on average 25% less than public school teachers. And yet some would like to widen the disparity even more. For example at the “Save our Schools” rally in 2011 (see video at 3 min.) a woman implied we should spend $72 trillion/year on education (I guess the public schools indeed failed her in that she lacked the math skills to realize that spending $1 billion/child would come to that sum).

So how do we align the fact that most if not all of us value teaching above say professional football and yet teachers make far less? The cumulative effect of our individual value rankings when filtered through supply and demand across an economy can result in apparent societal ranking of value at odds with the ranking of value of the individuals making up that society. Teachers don’t make less than football players because “society” values them less. They make less because of math. A small number divided by a very small number is bigger than a large number divided by a very large number. (e.g. what each pays in property taxes or tuition far exceeds what one might spend on watching professional sports yet teachers make less because in part they vastly outnumber (about 4,000 to 1) professional football players).

If you really think teachers are underpaid you are certainly free to start a private school and pay them exactly what you feel is appropriate. That’s the advantage of a free market vs government; nobody’s approval is needed for you to immediately take advantage of the mistakes of others in the market