Suppose you overhear a conversation by a former school teacher who laments how teachers are so underpaid while the need for a sound education is so high. How might supply and demand help explain this discrepancy between the high demand for education and the modest to low wages of teachers?
There are at least two ways to answer this question. One of them has to do with demand while the other has to do with supply.
On the demand side, I would argue that there is not really strong demand for good teachers because it is hard to identify good teachers objectively. Most people would probably be willing to pay extra to make sure that their children have good teachers. The problem is that they cannot tell which teachers really are good. This means that there is not truly high demand for quality education.
The more important argument is the one that focuses on supply. Even if we say that demand for education is high, we can still end up with low teacher pay (in this former teacher’s view) if the supply of teachers is high. It has been relatively easy for people with college degrees to get into teaching. Teaching also seems like an attractive job to many college students, particularly those in majors like English or History for which there are not many other obvious well-paying job opportunities. Therefore, many college students elect to become teachers. With the supply of teachers being high, you could argue, the pay for teachers will end up being low. When there is a given level of demand, prices drop as supply gets higher. This would be the main argument I would make when talking to this ex-teacher.