day 6 part 1 Teacher Salaries and Economic Equilibrium

Vocabulary and key economic concepts regarding the application of the demand-supply model to teacher salaries versus financial analyst salaries.

Entry-level teacher salary

The average annual salary for beginning teachers across both public and private institutions, cited as approximately $38,600$.

Private school teacher salary

The average annual earnings for teachers in private institutions, which is approximately $30,000$, notably lower than public school counterparts.

Public school teacher salary

The average annual earnings for teachers in public institutions, which is approximately $40,000$.

Financial analyst salary benchmark

The comparative salary used in the lecture for financial analysts, which is approximately $74,000$.

Bureau of Labor Statistics (BLS) finding

A statistic showing that teachers in the US earn $30\%$ less than all other college graduates.

Hypothesis 1 (Undervalued Narrative)

The hypothesis that teachers are paid less because society values them less, represented in the demand-supply model as the demand for teachers ($D_T$) being lower than the demand for financial analysts ($D_{FA}$).

Quantity of Teachers (2019 Data)

The total number of employed teachers in America, consisting of $3,200,000$ in public schools and $500,000$ in private schools, totaling $3,700,000$.

Quantity of Financial Analysts (2018 Data)

The total number of employed financial analysts in the US, recorded as approximately $211,000$.

Hypothesis 2 (Cost of Entry)

The hypothesis that teaching pays less because it is less expensive or more desirable to enter, represented by the supply of teachers ($S_T$) being higher than the supply of financial analysts ($S_{FA}$).

Economic Cost Factors for Teaching

Reasons why the supply of teachers is higher, including lower tuition costs compared to business schools and the perceived difficulty of math-heavy fields like financial analysis.

Job Satisfaction and Supply

Non-monetary benefits of teaching, such as summer breaks and doing what one loves, which lowers the implicit cost of the profession and increases labor supply.

Equilibrium Quantity Prediction keeping supply equal (Hypothesis 1)

A model prediction where if lower wages were driven only by lower demand, we should observe a lower quantity (Q_{FA} > Q_T), which is rejected by the data in the teacher vs financial analysists example.

Equilibrium Quantity Prediction keeping demand equal (Hypothesis 2)

A model prediction where a higher supply leads to both a lower equilibrium price and a higher equilibrium quantity (Q_T > Q_{FA}), which matches the observed data in the teacher vs financial analysists example.