Aaron Churchill, via a kind reader:

Many teachers are paid according to salary schedules that reward seniority and degrees earned, the result of state laws that require school districts to follow this rigid compensation scheme. Unfortunately, this method fails to acknowledge other factors that legitimately should influence teachers’ wages, including their classroom effectiveness, professional responsibilities, or demand for their labor.

But what if these constraints were loosened, so that school leaders could pay teachers in a more flexible way? A recent study by Yale University’s Barbara Biasi looks at what happened in Wisconsin after lawmakers passed reforms via Act 10 in 2011 that allowed districts to ditch the traditional salary schedule and adopt flexible pay policies. Roughly half of Wisconsin’s districts leveraged these new autonomies to negotiate salaries with each employee, much like many businesses do. The other half maintained a traditional seniority- and credentials-based salary schedule that applied to all teachers.

Her analysis reveals several eye-opening findings about the Wisconsin districts that switched to a flexible pay structure. These districts:

Offered higher salaries to early career teachers. To give an example, Green Bay—a flexible pay district, post Act 10—paid teachers with less than five years of experience anywhere between $42,000 and $55,000 per year. In contrast, Madison, a district that stuck with a traditional salary schedule, set salaries for less experienced teachers within a narrower range of around $38,000 to $45,000. The higher salary ceiling in flexible pay districts allowed them to attract talented early career teachers (see next point).

Attracted high-performing teachers, especially younger ones. Flexible pay districts drew teachers with significantly higher value-added scores, especially among those with less experience. The same was not true for traditional pay districts. They didn’t experience an influx of highly effective teachers. The analysis also indicates that teachers with lower value-added scores were more likely to exit flexible pay districts. Due to these entrances and exits, flexible pay districts saw an increase in the overall quality of their instructional staff.

Rewarded instructional quality. In flexible pay districts, a one standard deviation increase in teachers’ value-added scores was associated with a 0.4 to 0.7 percent higher salary. No such correlation between wages and value-added existed among traditional pay districts. Even though Wisconsin districts didn’t receive value-added scores during this time period—those were calculated by the author—they were still able to identify quality teachers and modestly boost their pay.

Increased performance among all teachers in the district. In addition to improvements linked to teacher mobility, the new compensation structure incentivized higher performance among all educators in the district. After the switch to flexible pay, the average value-added score of teachers in flexible pay districts rose more rapidly than in traditional pay districts. The prospect of higher wages under a system that rewards performance and effort, rather than longevity, could explain those results.

Moved the needle on student achievement. Given all this, it’s not surprising to see students reaping the benefits. In Wisconsin’s flexible pay districts, student achievement on state exams rose by 0.06 and 0.05 standard deviations in reading and math, respectively—which, according to the author, is equivalent to about one-third of the effect of class size reductions. In traditional pay districts, however, achievement was flat. The bottom line, as Biasi puts it: “These tests indicate that changes in the composition and effort of teachers in flexible pay districts following the change in pay schemes led to a sizable increase in students’ test scores.”