Market-Based Teacher Pay Increase

Calculating pay increases using the market median allows for districts to stay competitive with peer districts and align with compensation goals.

For districts that have adopted market-based pay, it’s best for teacher pay increases to be calculated on the market median average salary rather than the midpoint of the teacher pay scale.

While the midpoint is used to calculate a pay increase for non-teaching jobs on a pay range, the teacher pay scale does not have a traditional midpoint. Some districts pick a year of experience and calculate a percentage of that year’s salary. Others find the point halfway between the minimum and maximum of the hiring scale. However, neither of these is the midpoint of teacher pay, and neither has any connection to market value. This also creates and exacerbates compression in the educator career pathway by setting a higher basis for teacher pay increases than for other jobs higher in the pathway. Districts consistently giving relatively higher pay increases to teachers with no connection to market values risk creating an environment that disincentives movement up the teacher career pathway.

In a market-based pay structure, the midpoint represents the market value for jobs in the pay grade. The same rationale can be used for calculating the amount of the increase for teachers by applying the general pay increase percentage to the market median average teacher salary. To determine the market average salary for teachers, data can be retrieved from TASB HRDataSource™ for your local market peer group.

To access the data, log into HRDataSource. Click Salary Reports, then select Teacher Pay. Set the parameters, then run the report. Use the market median for the average salary found on the summary table of the report. For example, if the board wants to give a 2 percent increase, multiply the market average salary by 2 percent to get the general pay increase (GPI).

This would be applied to each year of experience to build a new hiring schedule, and districts can make additional adjustments to the pay scale for target years to improve recruitment and retention and to address distance from market.

When adjusting the teacher pay structure, districts always should review pay for jobs along the educator career pathway, such as counselor and assistant principal. Increases for those jobs need to be at or above increases for teachers.