Does District Performance and the Regional Labor Market Influence How Districts Pay Principals in California?

This study seeks to address whether past performance influences how districts pay principals in California and whether that relationship changes after accounting for wages of the principals’ regional labor market. Evidence from this study provided affirmations to both questions. Using multiple regression analysis on principal salaries, I found a positive relationship between principal salaries and past performance (b = .51, p < .001); furthermore, the salary premium falls when wages of the regional labor market for principals is accounted for. The coefficients for both past performance and the regional labor market wage remain significant after accounting for several control variables. This supports the theory that past performance and the regional labor market wages both have influences on principal salaries. Furthermore, the coefficient for past performance remains a significant predictor of salaries when additional prior years of performance are accounted for, suggesting the existence of a salary premium for not only performance level but growth as well. Recommendation for future research is provided.