The Bureau of Labor Statistics (bls.gov) reports that NC K-12 teachers are paid a median wage of $48,380 (May 2016), the (unadjusted) national average was $59,480. So it was slightly above 81% of the (unadjusted) national average. Some politicians have argued that in order to attract and retain good teachers, NC needs to pay at least the national average (an efficiency wage argument). Others have argued that increasing teacher pay across the board isn't keeping only good teachers, it is paying more to bad teachers as well, which is wasteful. Furthermore, they question whether we should be happy that we are getting a "bargain" for having less expensive teachers?

Additionally, many have argued that we shouldn't be looking at such large averages. Instead, we should focus on localities. For instance, since there is so much more to do in the Raleigh and Charlotte areas, there is little need to pay teachers in those areas more than the rest of the state even if the cost of living is somewhat higher.

You and your team are to evaluate what is a good system for K-12 teacher pay in NC. You should consider the merits of the efficiency wage argument for the NC teachers. You will also want to determine if your policy should be uniform. And finally, how would your solution change if the problem was for a for-profit company instead of a non-profit bureaucratic institution?

One further thought, are NC teachers underpaid? If so, how would an economist make that determination? To answer this, you will need to think about the following set of questions. What is a shortage? How would one recognize a shortage? Is there a general shortage of teachers in NC? What does a lack of a shortage of teachers say about their pay?