Most public school teachers in Michigan are paid according to a seniority–based salary schedule, which awards compensation according to a teacher’s years of experience and level of education. This is in contrast to most other areas of commerce and industry, where employees working under a “merit–based” schedule receive compensation that is commensurate with their job performance and productivity.

Under a seniority–based, or “single salary schedule,” system, individual teachers have a reduced incentive to innovate or excel in the classroom since their level of compensation is not tied to their performance. Most collective bargaining agreements in Michigan establish teacher salary schedules based solely on a teacher’s level of education and years of experience.

These salary schedules are organized into a “grid” which provides for automatic pay increases based upon the number of years a teacher has spent in the district and the kind of college degrees or number of additional academic credit hours he or she has accumulated or both (commonly referred to as “step” increases).

In most school districts, entry level teachers with only a bachelor’s degree and no prior teaching experience receive the base negotiated salary; few districts reserve the unrestricted right to establish the starting salary for a teacher on any step of the pay scale. This makes it difficult for schools to hire high–demand positions such as special education, math or science teachers.

School districts attempting to establish performance–based pay schedules for their teachers have invariably met with union resistance. However some districts, such as Saginaw, have been successful in bargaining a portion of their teachers’ salaries based on the requirement that teachers meet certain district–wide goals adopted by the school board.[51]

The Michigan Legislature strengthened school districts’ right to create performance–based salary systems when it passed Public Act 289 in 1995, which states in part that, “A school district or intermediate school district may implement and maintain a method of compensation for its employees that is based on job performance and job accomplishments.”[52]