What happens when school leaders are allowed to abandon “step and lane” pay scales

Writing for the Fordham Institute, Amber Northern recently reviewed what happened after the British government abandoned step and lane pay scales for teachers. Excerpts from the piece appear below.

In 2013, the British government ended the use of “annual progression” pay scales for teachers. These were similar to U.S.-style “step and lane” models but were set at the national level. Instead, Whitehall mandated that all 20,000-plus state-funded schools in England and Wales introduce their own Performance Related Pay (PRP) scales.

The previous “main pay scale” took into account teacher experience and work location, and incorporated geographic adjustments intended to compensate for the higher cost of living around London. The new arrangement did not alter school-level funding, which meant that, within their existing budgets, school leaders could now choose to change the average teacher pay and/or vary pay across teachers within the school. A recent study from the Economics of Education Review examines how this reform, which impacted nearly half a million teachers, affected multiple outcomes, including teacher pay progression, recruitment, and retention, as well as student performance.

Analysts find that the reform leads teacher salaries to grow faster in tighter labor markets. Post reform, there’s an immediate slackening of teacher pay growth across all districts, but the decrease is smallest in labor markets with higher outside wages—meaning places where competition for labor is the highest. Second, despite having the flexibility to reward teachers differently based on individual performance, within-school variance in teacher pay growth was no higher than in the pre-reform years, suggesting that any changes in teacher wage growth were applied to all staff equally. Schools tended not to hire new teachers but to use the funds to augment the salaries of existing ones. Evidence also showed little connection between the new policy and teacher retention and recruitment.

For more, see: https://fordhaminstitute.org/national/commentary/what-happens-when-school-leaders-are-allowed-abandon-step-and-lane-pay-scales

For the study, see Simon Burgess, Ellen Greaves, and Richard Murphy, “Deregulating Teacher Labor Markets,” Economics of Education Review (March 2022).