The market for teachers

Do market forces really work as described or is that just a theory? For some evidence on this issue consider the market for teachers, the number of job openings for elementary and secondary school teachers and the number of new college graduates qualified to teach. The number of job openings is a measure of the strength of the labor demand, the number of new college graduates qualified to teach is a measure of labor supply. The annual earning ratio of teachers is measured as the annual earnings of teachers as a percent of the median income employed year-round full-time in the economy.

A rule of thumb for estimating the demand for teachers is that it is always up - the demand for teachers grows faster than the supply of children born especially for those who will pass through the school system. In a situation of excess demand that is based on the model of demand and supply it predicts two things that should happen to bring back the market to equilibrium. First the earnings of teachers should rise and second the rise in earning should lead to an expansion of the supply as people who were previously teachers (for example women who quit teaching to raise children) are lured back into the field and as more people decide to obtain teaching degrees. On the other side of the coin it is the communities that upgrade teacher salaries in an attempt to find and keep scarce teaching personnel. In addition to that the supply of new teachers also expands yearly rapidly due to the fact that more people are majoring in education in college and are obtaining teaching certificates.

What if there is a glut in the teachers market based on the number of people trained to be teachers that far exceeded the number of new job openings. This imbalance does happen as students in college are lured with a prospect of a buoyant market and they graduate in record numbers with teaching certificates only to find the market has gone flat. In this situation generally the politicians try to interfere by trying to adjust the market in most cases the outcome is a failure. Former New York City Mayor Rudolph Guiliani tried with the Board of Education and currently Mayor Michael Bloomberg is trying with the Department of Education.

Given the excess of the supply of teachers that is based on the model of the demand and supply it predicts two things that should have happened to restore equilibrium. First wages for teachers should have fallen and second this should have caused a decline in the number of people choosing to be teachers. Based on the above Guiliani and Bloomberg could not dictate to people who choose to be teachers so the circus keeps on going.

So now it becomes a buyers market for teachers, when the demand for teachers is up primarily based on the increase of school age children the growth in supply of newly qualified teachers remains unchanged. The result? A growing shortage of teachers and a noticeable increase in teachers’ salaries. The obvious question is can this force of demand and supply be replicated in the transportation industry? Yes, however not in an institution such as ours.