Imagine teachers as free agents before adopting pay for performance

(This commentary first appeared in TOP-Ed.)

U.S. Education Secretary Arne Duncan and a raft of supporters in the foundation world fervently want to replace the tried-and-true teacher salary schedule with pay-for-performance schemes. They should be careful what they wish for.

The idea seems straightforward: Replace raises conditioned on years of service and education beyond the minimum required for a teaching license with conspicuous rewards for good teaching measured, at least in part, by student test scores. Unsuccessful teachers would see the lack of salary advancement as a sign that they should seek another line of work. Successful teachers would be incentivized, take home tangible rewards, and encourage other teachers to follow in their wake. A circle of virtue would ensue.

Hardly anyone would disagree that high-performing teachers deserve rewards and recognition, but the policy mavens seem not to anticipate that departing from the single salary schedule might cost a lot of money and change teaching in unanticipated ways. It’s about Talent. Not talent, as in singing or dancing well, but Talent as a commodity that can be bought or sold.

The switch from considering teachers as economically interchangeable widgets to scarce and valuable Talent would have profound effects, increase the overall wage bill for education, and give teachers unions their greatest organizing opportunity in half a century. Talent, once identified, will demand to be paid.

The cautionary tale about rewarding performance comes from Malcolm Gladwell. In a New Yorker article published in October 2010, the always-provocative Gladwell tells the story of Talent’s rise to economic royalty starting in 1966, when Marvin Miller took over the Baseball Players Association. Talking to the San Francisco Giants player Bobby Bonds, Miller said, “If we can get rid of the system as we know it, then Bobby Bonds’s son … will make more in one year than Bobby will make in his whole career.” In fact, in 2005 Bobby’s little boy Barry was paid $22 million, more than his father and all his teammates made in their entire careers.

Miller’s insight was that labor organizing could be applied to valuable and scarce abilities known collectively as Talent, and that Talent could make huge demands on Capital. Labor relations was no longer to be a contest between Capital and interchangeable worker Labor, but Capital’s capitulation to highly valuable Talent. Goodbye reserve clause. Welcome to the world of seven- and eight-figure sports salaries, billion dollar bonuses for investment bankers, and outsized salaries for executives.

It is hard to imagine such galloping salaries in schools where teachers are economically treated as interchangeable parts. But before Marvin Miller, it was hard to imagine baseball players as other than big kids under the paternalistic control of club owners. The history of categories suggests that once a category is created, economic value follows. One of the most recent examples is in the creation of Board Certified Teachers, which was followed shortly thereafter by salary differentials for them. We should expect the same from Talented Teachers, those with proven track records of lifting student achievement. Indeed, this is what Secretary Duncan and others desire.

But what if the Talent of these teachers was recognized and promoted by their schools? Colleges and universities already do this and offer large salary premiums to their stars. Increasingly, they also offer insecure part-time employment to those who teach many of their core undergraduate courses. Some charter school organizations are built around conspicuous displays of Talent. Some traditional school districts also poach Talent from other places with promises of favorable salary scale placement and other work life enhancements: a lab of technological goodies or a schedule with plenty of time to teach the things Talent wants to teach. If these things can exist in the current teacher-as-widget salary schedule, imagine what might happen if Talent recognized its worth and conspicuously organized around its protection and advancement?

Imagine teachers as free agents, teachers with agents, teachers unions as agents. Imagine school districts demanding salary caps, and lawsuits demanding that salaries be corralled into something like a civil service salary schedule so that schools in less wealthy areas could compete. Imagine the division of teaching into conspicuous rewards for Talent and slim pickings for the rest. Imagine brutal competition among Talent.

And maybe Talent drags up the salaries of everyone. Between 1985 and 2007 the average baseball player salary increased tenfold, not counting inflation. Over the same years the average teacher salary increased less than 2.4 times, from $20,694 to $50,478, barely keeping up with inflation, according to the Digest of Education Statistics.

One suspects that the advocates of conspicuously rewarding Talent haven’t reckoned the wages that Talent demands.

Charles Taylor Kerchner is Research Professor in the School of Educational Studies at Claremont Graduate University, and a specialist in educational organizations, educational policy, and teachers unions. In 2008, he and his colleagues completed a four-year study of education reform of the Los Angeles Unified School District. The results of that research can be found in The Transformation of Great American School Districts and in Learning from L.A.: Institutional Change in American Public Education, published by Harvard Education Press.

The piece also appeared in Conditions of Education in California, the blog of the PACE, Policy Analysis for California Education.

Filed under: Commentary, Pay and Tenure, Teaching


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10 Responses to “Imagine teachers as free agents before adopting pay for performance”

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  1. Roxie Tew on Apr 25, 2011 at 9:20 am04/25/2011 9:20 am

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    Thank you Jessica for pointing out the variables that do make such a difference in a teacher’s ability to do a good job.  From year to year there can be a huge difference in the ability of the teacher to instruct the children.  Parents as well as sociatal issues make a huge difference.  What are the factors in a baseball player’s ability to “do good”?  Just what he does himself to improve his game, mostly.  Also, how much do we need to pay ourselves (for supplies, education, etc.) just to get better?  Teachers are mostly on their own as far as PD and special things for their classroom.  What about the autistic child in the regular classroom who is so distracting to all the other students?  What about children who don’t come, are continually tardy, have no support at home, don’t take their meds., or don’t bring their glasses to school?  And on and on and on.  How much is it our “fault” or our “influence” that makes a difference?

  2. Stacey on Feb 7, 2011 at 3:01 pm02/7/2011 3:01 pm

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    I think what edfundwonk is trying to say is that measurable Talent requires Demand first.  Public education is just not going to see the kind of Demand that professional sports does.  If public education were more like professional sports with Talent, there would be no problem for top Talent to command the professional sports kind of salaries.  Society would willingly be throwing money hand over fist at Talent.


    • Jessica on Apr 5, 2011 at 7:42 pm04/5/2011 7:42 pm

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      What’s sad is that there is more of a demand for sports then education, and I know it’s a numbers game, but it isn’t just that. Also, the whole point of the merit pay is saying that teachers don’t know what they are doing and need this, just like standardized tests to make sure they are doing their jobs right. This article just shows how lawmakers have not thought out this concept of merit pay like many other proposals in education, and it is going to turn away good teachers who worry about getting a class that doesn’t try and the teacher hasn’t done anything different than she has any other year, but it now being penalized as if she did something or shouldn’t be in this field of work. What about the role parents and society in general plays? We need to ask the ones that are in the front lines every day what works, the teachers, not some politician who hasn’t a clue.

  3. edfundwonk on Feb 3, 2011 at 10:39 am02/3/2011 10:39 am

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    Let’s get back to Prof Kerchner’s analogy between the market for baseball players and the hypothetical market for “Value” that he postulates. My question is, “What’s the problem?” The highest paid employee of any university with a football team is — you guessed it — the football coach. UC Berkeley pays not only its coach but its assistant coach over $1 million. Don’t these folks operate in a free market? Aren’t they “free agents?” You betcha. Why do they draw such big salaries? Because they have Value: there are darn few coaches with the talent needed to produce winning teams, and alumni give more money to a winning alma mater. Is this immoral?

    Why does a fat cat own a baseball team? Is it for the love of the game? I doubt it. What does he do if his team loses season after season? He gets rid of it. The owner is an entrepeneur like any other. He buys a baseball team because he thinks it will give a good return on his investment. The team produces this return by filling stadiums with fans who pay $100+ a ticket. He fills stadiums by having a winning team. He gets a winning baseball team by buying the mix of players of vaious costs (salaries)  that he thinks will be a winning team and give him the greatest return on the amount he has to spend. 

    There’s nothing unusual here — just the owner making calculated decisions to maximize profit in a free market, where profit is revenues (ticket sales) minus costs (total compensation of players). Ticket sales are a function of the team’s quality (win-loss record) and the team’s quality is presumably related to the mix of players purchased with the amount the owner wants to spend. The salient point is that, unlike schools, the owner assembles a winning team by buying the mix of players that will give the greatest Value (likelihood of success) for the amount he has available to spend. 

    Now let’s consider the market for teachers. School districts and team owners both have  budget constraints.  Schools’ budget are set through a political process which is largely outside their control.  School boards determine the amount spent on labor overall (from their respective revenues), but are unable to change the amounts paid individual teachers (e.g., pay more to teachers in shortage disciplines, teach in hard-to-staff schools, perform exceptionally well.) Teachers’ unions perpetuate the myth that, when it comes to teachers, the laws of supply and demand don’t exist. Consequently, the salaries of all are driven down to the least common denominator. This is in direct contrast to free agency in which players’ salaries are based on their value to the business (demand) and the number of players with their respective talent levels (supply).

    Now, let’s really make the market for teachers analogous to that for baseball players.  Each district would have a budget with no constraints on how it is used. The district would be able to determine the percentage of the total budget spent on teachers, the salaries of each teacher, the workload of  each teacher, and the criteria for paying  higher or lower salaries. Finally — and most importantly — each district must have a reason to compete against each other. 

    Supposing that the last issue can be resolved, what would happen? Would all teachers’ salaries skyrocket?  No — because every district would have a limited budget (as it does now). Would some teachers’ salaries increase and some decrease? Yes — each district would put together the best team of teachers it could in order to achieve the specified goal. If it spent more for some teachers, it would have to spend less for others, because the budget is fixed. What else could the district do? How about spending less on classified and more on certificated employees?  Or freeing up money by paying more to those who want to take on higher workload (larger class sizes). Or — horrors! — getting rid of the least effective teachers. The point is that, if the laws of supply and demand were allowed to operate, the market would “clear” at salaries where districts’ demand for teachers of various characteristics equalled their supply. 

    A final word on competition. In baseball, the goal is easily defined (money) and because the rewards all accrue to individuals who have the best team, there is a strong reason for owners to compete. Now consider education. There are lots of reports (most recent being the Governor’s Committeee on Education Excellence) recommending that increased funding for education be contingent on increase quality (vaguely called “reform”) and vice versa. The trouble with this prescription is that a statewide increase in quality has to occur on a case-by-case basis. And, although it’s in the interest of all districts as a group to get more funding, it’s in each district’s individual interest to let others do the heavy lifting and reap the benefits while doing nothing itself. Whatever the incentive, therefore, it must create competition among individual districts in order to be effective — more than a “Distinguished Schools banner.”

  4. Robert on Jan 28, 2011 at 11:06 am01/28/2011 11:06 am

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    I do know of several charter school principals, who after the publication of the elementary school teacher value added data in the LA Times sought out and made overtures to the higher performing teachers. So, you’re idea is already taking effect.

  5. Charles Taylor Kerchner on Jan 27, 2011 at 1:01 pm01/27/2011 1:01 pm

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    …also in “Winner Take All Politics” by Joseph Hacker and Paul Pierson.

  6. Dawn on Jan 27, 2011 at 10:07 am01/27/2011 10:07 am

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    …and let’s not forget the idea of principal’s pet getting the budget for raises given to any one site or other like scenarios.  This happens even in private companies where merit pay is lauded.  What we really need is more dollars spent on the education of our children.  Money does matter. 

  7. Paul Muench on Jan 27, 2011 at 9:54 am01/27/2011 9:54 am

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    This general idea was explored in a book called “The Winner Take All Society”, by Robert H Frank and Phillip J. Cook.

  8. Charles Taylor Kerchner on Jan 27, 2011 at 9:28 am01/27/2011 9:28 am

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    You are right on target.  Teaching and MLB are very different labor markets, and my piece was partly tongue-in-cheek.  But similar, if more modest, labor market dislocations are occurring in education, particularly higher education, where the value of star Talent tops the $300,000 level (if outside income is counted) and the vast majority of new hires are paid by the course or semester with no job security.   What had been essentially civic service employment has been turned into a very rough labor market.  My modest piece is just a cautionary tale to look at the downstream consequences of policy proposals.

  9. Mike McMahon on Jan 27, 2011 at 7:26 am01/27/2011 7:26 am

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    Not sure the analogy of comparing teaching positions to baseball players makes economic sense. There are about 800 positions available at the Major League level and over 4 million teaching positions available. Besides the scarcity of professional positions, I am having a hard time trying to correlate the how the egotistical drive of a team owner (i.e. Steinbrenner) to have a World champion translates to a school district wanting to be named the best school district.

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