Economic Theory in Teacher Salaries: Why the ProComp Negotiations Matter

Imagine you have complete control over a new school district. You need to design a salary structure that fits what we know about education. Empirical evidence suggests that:

1. Teachers have steep learning curves, making dramatic improvements in the first few years, but showing few gains, or possibly even slowing, as they near retirement.
2. Teachers, as public employees, often have enormous retirement incentives to stay in their job near the end of their career to max out their defined benefit pension plan.
3. After teachers earn tenure, they secure due process rights that make it difficult for them to be removed.
   
4. The true value of teachers is difficult to measure, and while we've gotten much better at assessing merit, no one indicator, and certainly no proxy, has proven to be sufficient.
   
5. Teacher quality, as measured by college GPA, college selectivity, and SAT score, has declined over time.
   
6. Teachers with higher academic credentials, measured by college GPA, college selectivity, and SAT score, leave the profession earlier and in greater numbers.
7. Teacher quality varies widely by school and subject, with younger and less-credentialed teachers concentrated in high-minority and -poverty schools.
   

Knowing these things, you must create a system for compensating teachers. There's a finite amount of money, so you can't just give all teachers what they deserve $100,000 and call it good. Instead, you have to use what you know to structure a salary system that is empirically based and fair.

You'd want to have a reasonable but not exorbitant starting salary, followed by a dramatic rise for teachers who have proven themselves on the job. Over time you would want to provide incentives for good teachers to stay, but you'd also want to make them demonstrate their merits through rewards for attaining greater educational achievement, working in high-needs schools or high-needs subjects, earning satisfactory evaluations, and for demonstrated value-added student growth.

In other words, you'd want a system like Denver's Professional Compensation System for Teachers (ProComp). Crafted after a four-year pilot program and a mixed teacher-administrator task force, ProComp, unlike most performance pay plans across the country, got funded through a citywide vote.

Union and district officials are currently negotiating the future of ProComp, and news reports ($) are showing the union taking particularly polarized positions. Union officials want a 3.5% across-the-board raise, but across-the-board raises have little empirical support. Worse, they're threatening a strike to get what they want, and to time the strike to correspond with the upcoming Democratic National Convention in the city.

District officials are asking for two main changes. They want to increase the starting salary $9,000, to $44,000, and they want to almost triple the amount, from $1,067 to $2,925, for teachers in high-needs schools and subjects. Those requests align well with the empirical lessons above. If evidence matters at all in education, it should help the district's objectives drive these negotiations.