Teachers fill critical roles in our public education system, with far-reaching effects on the lives of the students they teach. Over the past 10 years, research and policy have both prioritized efforts to attract, develop, and retain highly effective teachers in the classroom. How salaries are distributed across teachers is relevant to these discussions, and decisions to pay some teachers less and others more may at times come into conflict with politics, economics, or other desired policy objectives.

Public school teachers are overwhelmingly compensated using salary schedules, in which states or districts set salary levels for teachers, with adjustments made depending on teachers’ years of experience (commonly referred to as “steps”) and education credentials (“lanes”). Though salary schedules were designed to avoid wage inequalities on some dimensions, they institutionalized inequalities on others—namely, experience and credentials.

In a new report from the Brown Center at Brookings, entitled “Scrutinizing equal pay for equal work among teachers,” we examine inequalities in public school teacher compensation and explore its relationships to inequalities in both school funding and teacher pensions.

Our analysis is motivated by a simple observation: Prominent debates about inequalities in both school finance and teacher pension systems share similar origins in teacher salaries. Moreover, scholars have long criticized how teachers are compensated, providing monetary rewards on seemingly unproductive dimensions and creating their own types of inequalities. We hypothesize these inequalities in teacher compensation are correlated with inequality measures in finance and pensions.

Inequalities in teacher compensation

Based on our analysis using nationally representative data from the American Community Survey, we find the level of overall salary inequality among public teachers is low in comparison to other occupations. In addition, teacher salaries show very little evidence of inequalities based on either race/ethnicity or gender dimensions, but show relatively high levels of wage inequality based on age (our proxy for experience), education, and geography.

In fact, we find state-level inequalities accounted for a surprisingly large share, roughly 20 percent, of total inequalities observed across all public school teachers nationwide. Though not terribly surprising (after all, public teachers are government employees), this suggests state policies and practices towards compensation are very influential, more so than other professional service-oriented occupations.

When looking at state-level wage inequalities (see map below, Figure 2 from the report), we find inequalities vary considerably across states. Yet, they do not systematically differ in familiar ways. For example, some states with high levels of wage inequality are associated with industrial strength and union influence (states in the Northeast and Illinois), while others are far less populous without such influences (states like Utah and Montana). Though the South is commonly associated with historical racial inequalities, these states show some of the lowest levels of wage inequalities among public school teachers.

Wage inequalities and inequalities in both school funding and teacher pensions

We then combine the state-level measures of wage inequalities among teachers with state-level inequality measures on school funding and teacher pensions. We know that there is a mechanical relationship between teacher payroll, finance, and pensions. What makes our analysis different, however, is that we hypothesize inequalities will be correlated across these different state-level measures.

In fact, that’s exactly what we find. States with greater salary inequality among teachers tend to allocate less funding per pupil to school districts serving the most number of students in poverty than to school districts serving more affluent students (correlation coefficient: -0.37). They also tend to have greater inequalities in the way pension benefits are allocated across teachers. We analyze two different state-level measures of pension inequalities and find correlation coefficients in excess of 0.35.

Implications of teacher wage inequality

Why do these findings matter? Though our report is descriptive in nature, and decidedly not prescriptive, we believe the evidence presents four important implications.

Connected inequalities demand more holistic solutions. Scholars, advocates, and policymakers typically consider policy changes in these domains in isolation without directly seeing the relationships among them. Therefore, further exploration of reforms on any one of these dimensions should be carried out in a more holistic way in the future. Salary schedules influence the number of teachers in the workforce by attracting and retaining them. Though the extent of the nationwide teacher shortage is disputed, the fact that a wave of retiring baby boomer teachers continues to create more vacancies in schools across the U.S. is not. This continuing trend makes the need to attract more individuals into the profession even more acute. These discussions warrant greater attention in school districts serving mostly low-income students, as these schools face the most difficulty in staffing their schools. Teacher compensation is unique among professions, but it’s not clear it needs to be. Both state policies and teachers unions have blocked differentiating teacher compensation for things like teaching in high-demand subjects or in high-need school settings, but this type of price discrimination would be an expedient way to address many of the persistent teacher vacancies districts increasingly face. Modest shifts to better align salary schedules with outside wages or signals of productivity, rather than steps and lanes based on age and education, may also alleviate some of these pressures. How we pay teachers influences who comes to teach. Our exploration of this issue was initially motivated by a hypothesis that wage inequalities may be lurking behind the lack of minority representation in the work force; though we find little evidence of wage inequalities on race/ethnicity among teachers, our results suggest that inequalities on other dimensions may still be important. Rewarding teachers for advanced degrees and experience tends to be attractive to teachers with those attributes, but may be viewed as unattractive for millennial teachers who are increasingly mobile in their career choices and may be hesitant to take on greater amounts of student loan debt to get a master’s degree in order to increase their salaries.

You can read the full report here.