1. Adjusting Teacher Salaries for Variation in Regional Costs Jennifer Imazeki, Ph.D. San Diego State University February 2007

2. Why Adjust for Regional Costs? To ensure that all districts have equal capacity to attract/retain good teachers, salaries must allow teachers to buy a similar standard of living in all locations One dollar does not go as far in some places as in others Some places are nicer to live in than others – some places have higher costs – some have both

3. How to Adjust for Regional Costs? Cost of Living Indices Largely based on variation in housing costs May over-estimate wage costs in very desirable areas, and under-estimate wage costs in less desirable areas of the state

4. How to Adjust for Regional Costs? Comparable Wage Index Uses observed variation in wages of other workers If wages for lawyers, nurses, engineers, accountants, etc. are all 10 percent higher in Seattle than in Olympia, then teacher wages should also be 10 percent higher in Seattle than Olympia. If not, Seattle will have a harder time than Olympia in attracting/retaining teachers.

5. Average Washington Salaries, 2004-05

6. Average Wisconsin Salaries, 2004

7. Average Washington Salaries, By Region

8. Average Wisconsin Salaries, By Region

9. How to Adjust for Regional Costs? Variation in average wages driven by three factors: 1) Occupational mix 2) Education/experience profile 3) Location characteristics (cost of living, amenities) Only #3 represents costs that affect districts’ ability to attract/retain teachers

10. Comparable Wage Index - WA, 2005

11. Comparable Wage Index - WI, 2004

12. Alternative Samples A Comparable Wage Index intended for adjusting teacher salaries can be calculated using wages of: All college-educated workers Workers most comparable to teachers in skills and job duties Workers in occupations that are math/science intensive

13. Alternative Indices, WA

14. Alternative Indices, WI

15. Additional Considerations CWI reflects wage differentials across regions Does not address differences in wage levels between teaching and other occupations Other factors may affect teacher wage costs that are not reflected in the CWI Supply of teachers (e.g, proximity to teaching programs) Composition of teacher work force (affects total wage bill) District characteristics  Hedonic model