Research has consistently shown that teacher quality is distributed very unevenly among schools, to the clear disadvantage of minority students and those from low-income families. Using North Carolina data on the length of time individual teachers remain in their schools, we examine the potential for using salary differentials to overcome this pattern. We conclude that salary differentials are a far less effective tool for retaining teachers with strong preservice qualifications than for retaining other teachers in schools with high proportions of minority students. Consequently large salary differences would be needed to level the playing field when schools are segregated. This conclusion reflects our finding that teachers with stronger qualifications are both more responsive to the racial and socioeconomic mix of a school's students and less responsive to salary than are their less-qualified counterparts when making decisions about remaining in their current school, moving to another school or district, or leaving the teaching profession.