Why a Master's degree for 5th grade teaching?

I have always found it difficult to understand why elementary school teachers with graduate degrees are paid more--degrees whether in the subject area or in the art of teaching. My instinct has been that this unnecessary credential ends up adding cost to the system, inflates educational qualifications by setting precedents, while not delivering additional benefits to student learning. But, this has been only my conjecture and, hence, never voiced my thoughts on it. Until now.

I was reading a post somewhere that referred to a comment from Matt Yglesias about compensation for teachers. Yglesias is not any ideological nutcase, and the Center for American Progress, while certainly to the left of the political center, is more like Clinton's New Democrats. So, later when I had some time, I followed up on what the CAP had to say on teachers and degrees, and it is pretty darn interesting:

Teacher salaries increase each year with longevity and graduate credits, making them destined to escalate, and yet they have little link to student achievement.

Decoupling salary from experience is a tall order, but forward progress on school reform requires school districts to revamp their spending habits somehow. One habit related to experienced-based salary is the practice of paying a teacher with a master’s degree more than an otherwise identical teacher with only a bachelor’s degree. The long-cherished “master’s bump” makes little sense from a strategic point of view.

On average, master’s degrees in education bear no relation to student achievement. Master’s degrees in math and science have been linked to improved student achievement in those subjects, but 90 percent of teachers’ master’s degrees are in education programs—a notoriously unfocused and process-dominated course of study. Because of the financial rewards associated with getting this degree, the education master’s experienced the highest growth rate of all master’s degrees between 1997 and 2007.

Now, I have data to work with, and my instinct-based hypothesis has some backing. (Note: the university I work for has a pretty busy master's in teaching program. My comments do not imply in any way that they are directed at that program. I have walked around with this hypothesis ever since I started thinking about public policy issues, back when I was in Southern California.)

So, how much is the cost escalation because of the additional compensation for graduate degree holders?

A 2007 study estimated that 2.1 percent of all current expenditures can be attributed to teacher compensation related to master’s degrees. Seen another way, the master’s bump costs the average school district $174 per pupil.
... A Nebraska lawmaker, for example, should probably be aware that, on a yearly basis, roughly $81 million dollars—$279 per pupil—are tied up in master’s degrees and thus unavailable for other purposes. During this time of fiscal stringency, it should raise eyebrows when a state automatically allocates over 3 percent of the average per pupil expenditure in a manner that is not even suspected of promoting higher levels of student achievement.

Hmmm .... here in Oregon, according to this study, the extra cost as a result of this master's bump is $109,520,560. That is, $109 million? Wow!!!