I generally favour higher wage rates over lower wage rates. Higher wage rates enable parents to work fewer hours. (Commission for the Family, take note.) Further, higher wage rates encourage firms to economise on labour. The result is higher productivity; more outputs from fewer inputs.

I am more than happy that secondary school teachers have won a substantial wage increase. But the economics teacher in me rejects the notion that primary teachers and kindergarten teachers should, thanks to pay relativity deals with the government, free ride off the efforts and sacrifices of the PPTA membership. Maybe if the primary and kindergarten teachers had also participated in the industrial action then it would be fair for them to share in the winnings from a successful struggle.

Then maybe not. Some economists would worry about labour monopolies. Others would say that, if it is right to link the pay of kindergarten teachers to secondary teachers, then why stop there? Why not link the wages of crèche workers, nurses, police, zookeepers and prison workers to secondary teachers' salaries?

The refutation to such a proposition is in the PPTA's own mantra. "Recruitment and retention" is what it's all about, they say. "We should be paid our market price" they would appear to be saying. Recruitment and retention difficulties are proof that secondary teachers' pay rates have been too low.

So the argument then about primary teachers and kindergarten teachers should also be about their market price. Is there a recruitment and retention issue for primary teachers? For kindergarten teachers?

My guess is that crèche workers are harder to recruit and retain than are kindergarten teachers. So crèche workers should probably be getting pay increases as big as if not bigger than kindergarten teachers. But what about the people who must pay the wages?

The government may be able to afford to pay kindergarten workers more. But I'm not sure that parents of pre-schoolers would be happy to pay substantially more for childcare fees. Ironically, the parents that are best placed to resist rises in childcare fees would be parents who are themselves getting paid more, enabling them to reduce their hours of work. Parents who have to work long hours have no choice but to pay whatever fees are charged for childcare.

If we pay primary and kindergarten teachers more than their market price, then the result would be unemployed primary and kindergarten teachers. I wonder if - at times of teacher unemployment - the PPTA or the NZEI would consider industrial action to eliminate unemployment in their profession. They could, for example, strike for lower wages. And pigs might fly. I find it hard to be convinced that existing teachers are really concerned about improving the efficiency of the teacher market.

Should history teachers get the same wage increases as maths teachers? As an economic historian with a maths degree, I have an interest in both subjects.

It is my understanding that recruitment of maths teachers is a much bigger problem than the recruitment of history teachers. So why should history teachers get wage increases won on the basis of a recruitment and retention argument that does not relate to them? History teachers would probably be collectively better off if they received lower pay than maths teachers. If the price for history teachers is set so that the market for history teachers clears, then young people who want to be history teachers would have the satisfaction of knowing that, once qualified, they will get a job doing what they want to do. The satisfaction of doing what you want to do is surely greater than the satisfaction of being able to say you earn as much as maths teachers. Overpayment of history teachers does no favours for the history teaching profession as a whole, although it would do favours for individual history teachers.

The nub of the issue is that some kinds of teachers are scarce and other kinds are not. Pay scales should reflect the varying scarcities of different kind of teachers, and not simply the workloads or the equivalence of the status of different teachers' degrees.

I don't favour bulk funding in which teachers get individual "performance" pay. How do you measure individual performance in a profession whose outputs depend on teamwork, and on the socio-economic status of their pupils? Pay differentials based not on performance but on relative scarcity are necessary, however.

We should not be using worker relativity arguments to engineer a more egalitarian society. There are much better ways to create such a society than by creating a rigid labour market. The best ways to create an egalitarian society is for each person to get an equal return on the many tangible and intangible assets that we collectively own. Capitalism has a greater unrealised potential to increase equality than labourism ever did.

Deaf Ears: Speaker On Support For Mojo Mathers

Scoop Audio: In a press conference this afternoon Speaker Lockwood Smith defended his handling of requests for support for profoundly deaf MP Mojo Mathers' participation in Parliament, and said he was "deeply concerned" by the way the issue had been portrayed.

Earlier today the Greens said they had been told they would have to fund support Mathers requires out of their own budget. More>>