An economic analysis of the teacher shortage

Abstract

The purpose of economic analysis is to clarify the world around us and to provide a systematic approach to the solution of problems. In recent years there has been great concern over the critical teacher shortage. This paper discusses some basic aspects of the teacher shortage in terms of elementary economic analysis. First, the of supply and demand does not say that market forces always directly determine prices or wages.1 Public school teacher's salaries are set by political bodies, and often salaries are not set in accordance with market realities. Second, the law of supply and demand does state that if price is not set by the market, (or in accordance with market realities), then the market will not clear. This means sellers will be looking for buyers, or buyers looking for sellers-depending on whether price has been set above or below the competitive level. Teachers' salaries have been set below the true market level and so there have been schools looking for teachers. There have not been enough teachers available at prevailing salaries; there has been a shortage in the technical sense. The shortage is related to, and governed by, price. The element of price explains the apparent paradox of a highly literate society being unable to find enough teachers to instruct its children. It is not surprising that some of the new African nations have difficulty in finding teachers, as some of those nations have comparatively few college graduates. Yet the United States has a high literacy rate and faces a teacher shortage. The shortage in the United States is basically a question of relatively low salaries. This can be illustrated by considering what probably would happen if classroom teachers received, say, $20,000 a year. A surplus of teachers would quickly