different jobs should have different pay
pay should relate to performance
markets set wages based on supply and demand of the required skillsTypical Pay Systems Large employers in the private sector jobs (and even most federal and state government jobs) are 'graded'. This means that jobs are grouped together for pay purposes according to the level of skills required, and the level of responsibility that goes with a job. Jobs that require higher level skills and more responsibility will have a higher 'pay grade' than those that require fewer skills or have a narrower scope. And jobs with a higher pay grade offer higher compensation. I work for a large corporation, and it has a dozen pay grades, roughly as follows:
Grades 1-2 - Administrative & Clerical jobs
Grades 3-7 - Technical and Professional jobs
Grades 8-12 - Managerial and Executive jobs Within each salary grade, there is a pay range. And the salary grade minimums and maximums are set for each grade based on local labor markets. For example, Grade 3 jobs in Wilmington DE might pay $50,000 - $75,000, while Grade 4 might pay $65,000 - $85,000. Within the same pay grade, some employees will be paid near the top of the range: those with sustained higher performance , unique skills, or greater and more-relevant job experience. And finally, there is an annual bonus target for all employees. For employees in the same pay grade, managers will direct more bonus dollars to those who performed better and contributed more during the year. Most private sector employers approach compensation in a similar way. Even federal government and state government jobs are graded and classified, and pay bonuses. To me this compensation system is sound and sensible :
Different job types should be paid differently; similar jobs should be paid similarly
Jobs that require more skills and have greater responsibility will pay more
Pay for a job is set by the labor market
Bonus pay should be used to encourage extra effort and to align employees with organizational goals While this system is not perfect, it pays each position what the market requires (and nothing more), and it motivates employees to perform both short-term and long-term, by differentiating total compensation according to performance. Pay System for PSEA Teachers At UCF, teacher pay is captured in a contract, and that contract is the result of a collective bargaining process between the District and the PSEA. The pay system we have, called a "step and lane" system, is the preferred pay system of national, state, and local teacher unions. It has historically been difficult for school districts to deviate from the "step and lane" system, and as a result, this pay model is dominant across K-12 public education. The first premise of "step and lane" is that all teaching positions are equivalent, and therefore should be paid the same. In fact, there is one salary scale shared by all teachers. In this system, a gym teacher is the same as a physics teacher; a special education teacher is the same as an English teacher; a high-school AP calculus teacher is the same as a kindergarten teacher. Although it is well known that some skill areas are in surplus (Elementary and English teachers) and that some subject areas demand advanced skills (AP Calculus), all roles are paid off a single salary schedule. Effectively, there is one salary grade. Second, performance is not an element of the compensation system. There is no concept of an annual 'merit increase' where higher performing teachers get a larger raise than average performers. There are no performance bonuses. The Pay 'Step' How, then, do teachers increase their pay? There are only three ways. The first way to increase pay is to continue teaching. Every year a teacher advances one "step" in the pay system, for a maximum of 16 steps. At UCF, each step in the first 8 years is worth an extra 1-2%, and step increases in years 8-16 are worth 3%-5%. After year 16, base pay tops out on the 'longevity' factor. So a teacher who expects to have a 40 year teaching career will "top out" before being half-done with their career. The Pay 'Lane' The second lever to increase pay is for teachers to complete more post-secondary education. As additional education is completed, teachers move into a higher "lane". There are a total of seven lanes, from bachelor's at the bottom to Master's degree plus 60 additional credits at the top. A teacher with a master's degree earns 10% more than a teacher with only a bachelor's degree. A teacher with a Master's degree plus 60 additional credits earns 24% more than a teacher with a master's degree. The rationale here is that a teacher with more education is a better teacher and therefore should be paid more. (We'll also test this assumption in an upcoming post.) The pay of UCF teachers for 2012-2013 is summarized in the chart below. (Source is the Collective Bargaining Agreement here.)
All teaching jobs are paid on the same salary schedule -- all jobs are paid as if they were identical
Teachers can earn more pay by staying in the profession (longevity) and by completing additional graduate education. There are large incentives to pursue graduate coursework.
There is no performance dimension to teacher pay Negotiated Pauses to Pay Progression It is worth noting that contract negotiations can result in the deferral of step and lane movements. At UCFSD, step and/or lane 'freezes' have been a feature of recent contracts. So even though a teacher may ordinarily be entitled to a step increase each year, the contract may call for a one time, one year pause to pay progression. If this happens in multiple contracts, a teacher will eventually reach the same end point in pay, it may take more years to reach that destination than it would appear from looking at the single salary schedule. As with all elements of collective bargaining, both sides have to agree to any such pauses in pay progression.