I think any job description can fall into a pay scale range. Within that range a person can be graded based on attitude and skill. I don't believe that anyone should be paid top dollar just because they are the longest on the job. Using the example of Clarkston vs Pontiac, judging the quality of the teacher does not need to be based on the grade scales of the student. You said it yourself, it should be based upon a teacher's efforts and attitudes.
RE fire and police, I'd much rather have a young energetic problem solver working for me than an old frumpy guy who thinks he got passed by unfairly and holds a grudge. I don't claim to have all the answers but I'm a firm believer that a person shouldn't be paid the highest amount just because he has the highest seniority. There are people who are willing to go the extra mile and there are people who won't go an extra step because "that's not my job".