Association for Public Policy Analysis & Management

Panel: Examining the New Teacher Contract: Compensation and Retention in the Context of Waning Union Power

(Education)

Traditional public school compensation for teachers has been dictated by a “step and lane” salary schedule that rewards teachers based on their experience and credentials. These policies have been ingrained in the collective bargaining agreements (CBAs) that govern policy in the majority of U.S. school districts. Recent policy initiatives at the federal and state levels have mandated changes to this common compensation structure, either by removing the rights of teachers’ unions to negotiate compensation, or by requiring districts to implement incentive-based compensation and promotion systems that reward teachers for measurable effectiveness in the classroom. Although these policy changes are taking place across the country, little is known about the effects of these changes on teacher and union behavior. It is unclear how total compensation will adjust to reductions in guaranteed salary and benefits, and how these changes will impact teacher retention and teacher quality. The papers in this panel holistically address the issue of trade-offs between compensation and working conditions and the effects of new compensation policies that have emerged as teacher unions have been weakened, a phenomenon that is unprecedented in public sector hiring practices. The papers selected here reflect diversity in theoretical and methodological approaches to this important issue, as well as geographic diversity across four policy settings. The first two papers directly address the question of how teacher compensation incorporates trade-offs between wages and working conditions. Strunk & Marianno examine teacher contract changes in California during the Great Recession to measure the degree to which teachers sacrificed financial rewards in return for both non-monetary benefits (such as time off) and improved working conditions (such as smaller class sizes). They find that teachers do trade compensation for other benefits negotiated into contracts. Barrett et al. provide an empirical estimation of the value of working conditions with and without CBAs by estimating hedonic wage functions for teachers at charter schools in New Orleans (without a CBA) and teachers in traditional Louisiana districts. This paper finds that decentralized hiring in New Orleans provides opportunities for charter schools to attract teachers to less desirable positions through higher wages, partially reversing some of the perverse effects of CBAs which tend to reward positive working conditions through seniority-driven teacher sorting. The next two papers address the impact of financial rewards on the supply of teachers in districts where performance-based compensation has been implemented. Hendricks measures the effects of salary differentials on teacher quality in large Texas school districts. Here, the focus is on how differential salary increases across teacher experience levels influence teacher quality through retention and attrition. The results suggest that early career salary incentives disrupt a positive sorting process for novice teachers by increasing retention of low quality teachers. Adnot et al. focus on a second financial compensation strategy in Washington, DC – the combination of large performance bonuses and performance-related termination. Results suggest that these policies induced teacher turnover in a way that improved average teacher quality.