Much has been said about teacher pay: It’s adequate or it’s definitely not enough, it impacts teacher retention or maybe it doesn’t, and it should or should not correlate to student performance, to name just a few hot-button topics. Recently, there’s been more exploration of pay policies to incentivize teachers to work in hard-to-staff roles or schools. Now, researchers from Texas State University have released a study that provides a remarkably broad view of this existing work, examining teacher compensation trends in hard-to-staff schools nationally over the course of three decades.
The analysis relies on the theory of “compensating wage differentials,” or the idea that workers want higher wages to perform less-desirable jobs. Being an oil rig worker, for example, is isolating and extremely dangerous; that’s why experienced oil rig workers can earn well into the six figures. Teaching isn’t nearly so hazardous, yet some teaching roles appear less desirable than others. Research shows that, unfortunately, teachers don’t prefer working in schools with a high percentage of low-income students, in schools with a high percentage of students of color, or in rural districts. Although the evidence indicates that teachers leave these schools due to poor working conditions, rather than student characteristics, the reality remains that such schools are more likely to face chronic teacher shortages. According to the theory of compensating wage differentials, teachers in these schools should earn salaries that compensate for the relative undesirability of their jobs. But do they?
To find out, the researchers use data from the 1988–89 to 2017–18 administrations of a public-school teacher survey conducted by the National Center for Education Statistics. Their statistical models account for factors including teacher characteristics (like demographics and years of experience), school characteristics (like average class size and grade levels taught), and socioeconomic factors (like collective bargaining rules). Their findings address wage differentials at high-poverty, high-minority, and/or rural schools, among teachers overall and among teachers with a B.A. in science, technology, engineering, or math (STEM). They define “high-poverty” schools as those with at least 50 percent of students who qualify for free lunch and “high-minority” schools as those with at least 50 percent enrollment of Black, Hispanic, Native American, Asian, Native Hawaiian/Pacific Islanders, and/or multiracial students.
The researchers found that teaching at high-poverty and at rural schools largely correlated with statistically significant wage penalties, even when controlling for cost of living. (The sole exception to this trend was high-poverty, high-minority schools in non-rural areas.) At high-poverty schools, if the share of minority students was held constant at zero in their statistical model, each percentage-point increase in poverty correlated to an average 0.17 percent wage penalty annually. Teachers at a school with 70 percent of kids qualifying for free lunch, then, would earn an average 3.4 percent less annually compared to their colleagues at a school where 50 percent of kids qualify for free lunch. For high-poverty schools in rural settings, the penalties per percentage-point increase ranged from 0.07 percent (if not high-minority) to 0.1 percent (if high-minority).
Conversely, teachers earned a wage premium at high-minority schools and at high-minority, high-poverty schools (as long as the schools were not rural). In high-minority schools with no students receiving free lunch, teachers earned an average 0.07 percent more annually for each percentage-point increase in minority students. In a high-minority and high-poverty school, each additional percentage point of both student poverty and minority was correlated with a 0.04 percent increase in wages. So teachers at a school with 80 percent of kids qualifying for free lunch and 80 percent identifying as students of color would earn an average 1.2 percent more annually compared to their colleagues at a school with 50 percent low-income students and 50 percent students of color.
These patterns were generally consistent for teachers overall and for teachers with a B.A. in a STEM subject, although the latter consistently out-earned their peers with non-STEM degrees.
In short, working at a rural school put teachers at an earnings disadvantage across the board; working at a high-poverty school also correlated to wage penalties, unless it was also a high-minority school; and working at a high-minority school gave teachers a slight earnings edge. Still, given that high-minority schools’ teacher turnover rate remains two-and-a-half times higher than that of schools serving fewer students of color, the theory of compensating wage differentials would suggest that teachers at all these school types still need to be paid more to offset the working conditions that make these jobs less competitive. A few hundred or even a few thousand dollars more just doesn’t cut it.
Additionally or alternatively, structural changes to improve working conditions at hard-to-staff schools could boost retention without requiring more fiscal expenditure. And further research could dive deeper into variations in these trends over time, including in the wake of more recent efforts to compensate teachers for filling harder-to-staff positions. Enduring teacher shortages make clear that what we’ve been doing isn’t working—and using compensating wage differentials as a lens for teacher pay policy could well be another tool for researchers, policymakers, and advocates to add to their kits.
SOURCE: Jieon Shim and Li Feng, “Estimating Compensating Wage Differentials for Public School Teachers in High-Poverty and High-Minority Schools: Evidence from U.S. National Data, 1988–2018,” Annenberg Institute at Brown University (October 2025).
