Paul Hill and Marguerite Roza
Center on Reinventing Public Education
July 2010
These eleven pages do something quite useful: Explain the disconnect between education inputs and outputs in the language of economics. The affliction is Baumol’s cost disease, or “the tendency of labor-intensive organizations to become more expensive over time but not any more productive…(defined as the quantity of product per dollar expended).” Take a string quartet that “produces the same music from the time it is first assembled until the players retire.” Then consider that the education sector solves problems by adding more (money, teachers, etc.)—“the string quartet both gets wage and benefit increases and adds enough new members to become a sextet.” This is a structural problem, the authors explain, and one that better teachers and competition from independent operators (e.g., charter, private, and voucher-receiving schools) cannot (at least not alone) fix. But other industries have cured Baumol’s—or at least controlled its effects—which leaves hope for education. Some strategies are more applicable (or even already in use) than others: deregulation, which allows in new firms and new efficiencies (e.g., alternative certification routes), and information technology, which streamlines capacity, extending the touch of workers so that companies need fewer of them (e.g., virtual education). Others are further off, such as production process innovation, wherein tasks become specialized by competency and paid accordingly (e.g., the medical model: doctors supported by descending chain of residents, interns, nurses, etc.). The bottom line is that not tackling Baumol’s in education will result in more hiring freezes, layoffs, school day furloughs, and wage and benefits cuts, not fewer—and that, because the system is not currently structured to adopt achievement-raising efficiencies in response to financial difficulties, cuts will do damage unless we can change the model. Read it here.
