A New Wave of Teacher Compensation Reform

Reflecting the national pressure to increase student learning, policymakers at the state, local, and federal levels recently adopted a flurry of programs intended to attract new teachers and to improve the quality of existing teachers.

For example, a number of local school districts have instituted recruitment bonus policies for prospective teachers. Discussion and action have also taken place at the federal level, resulting in a number of initiatives designed to recruit additional high-quality teachers into the profession through housing and loan-forgiveness incentives.

Instead of augmenting starting salary, some local school districts and state governments have instituted merit pay plans to more radically change the way that teachers are compensated. These compensation plans link salaries to student achievement measures.

Another set of programs designed to recruit and retain high-quality teachers is composed of bonus plans enacted at the state level that reward entire schools rather than individual teachers for meeting or exceeding certain goals.

In a third set of initiatives, some state-level policymakers are focusing on improving teacher skills and eliciting greater effort in the classroom. For example, some policies encourage teachers to demonstrate additional knowledge and skills through credentialing organizations such as the National Board for Professional and Teaching Standards (NBPTS). In its National Board Certification program, teachers are evaluated on classroom effectiveness and rigorous standardized exams.

The Teacher Labor Market

Most education policy initiatives ultimately are crafted to produce conditions that result in higher levels of student learning — some through transforming teaching into a more attractive profession. Yet many have been developed without considering the significance of teacher labor market forces.

As a result, these policies may affect teacher quality in unintended and undesirable ways. For example, recent research shows that the decline in teacher quality has been greater for schools serving low-income or minority students.

Policy distortions such as this can be prevented with a more comprehensive approach to recruiting, retaining, and developing high-quality teachers. This requires an understanding of schools as institutions and teachers as actors in those institutions in the framework of the teacher labor market. An important piece of that framework is teacher compensation.

Teachers are fundamentally different from other school resources. Unlike textbooks, computers, and classroom facilities, teachers have preferences about whether to teach, what subject areas to teach, and the conditions in which they want to teach.

The character of the teacher labor market ultimately depends on the choices of current and potential teachers, the hiring decisions made by school officials, and the interactions between these two groups.

Teachers' preferences begin with the courses they select as college students and extend through their decision about when to leave the labor force through retirement.

All of the complex choices made during a teacher's career depend on a variety of factors such as work conditions and the relative wages of alternative occupations.

National, state, and local policymakers must understand how both teacher compensation and other labor market factors influence teachers' choices, or they risk implementing policies that may not achieve their intended purpose.

Therefore, to determine the efficacy of the current compensation policies on the table merit pay, school-level bonuses, and competency and contingency pay it is imperative that we discuss teacher compensation within the analytical framework of the teacher labor market.

This perspective will provide policymakers with a greater understanding of existing programs and help ensure that new strategies will serve the purpose of increased student learning through higher-quality teachers.