Eduwonk:

Sweden did: ($$):

In Sweden the fixed pay scheme for teachers was abolished in the mid-1990s as part of an agreement designed to enhance local autonomy and flexibility in the school system. The government committed itself to substantially raise teacher salaries over a five-year period, but on the condition that not all teachers received the same increase. There is accordingly no fixed upper limit and only a minimum basic salary is centrally negotiated, along with the aggregate rise in the teacher salary bill. Salaries are negotiated when a teacher is hired and teacher and employer agree on the salary to be paid upon commencement of the term of employment. Teachers’ work roles and performance are considered in the negotiation and linked to the pay. There is now much greater variety in teachers’ pay, with those in areas of shortage and with higher demonstrated performance able to negotiate more.

It may seem strange that a social democracy so willing to limit economic freedom would embrace market-oriented reform of teacher pay. But according to this, Swedish policymakers concluded that “an expansion and improved quality of social services could not be accomplished without improving the efficiency in the public sector.” And the unions agreed, “in order to improve salaries and working conditions.”

Too often in America, we are forced to choose between destroying the public sector and preserving its every bad feature. But this guy was on to something. There is, well, a third way. And it’s a little sad when Sweden is working harder to find it than we are.