Merit pay, while standard practice in the private sector, is not common in public education. This is partly attributable to teacher union opposition and partly due to the difficulty of determining an appropriate basis for evaluating teacher performance. Student test scores are the most commonly suggested measure of teacher performance.
Merit pay was first implemented in the United States in 1908 in Newton, Massachusetts, but it failed to achieve national popularity at the time. In the 1960s, President Richard Nixon introduced "performance contracting" which was a system of incentives for private firms to improve student achievement. By 1978, a national survey of school districts larger than 300 students found that only 4% of districts based teacher pay on student performance. A number of districts continued to experiment with pay for performance programs, including a nationally recognized plan in Fairfax, Virginia that was implemented in 1986, but the plan was abandoned by the school district in 1992.
The trend grew in national popularity in the 2000s with federal support and established funds creating incentives for compensation systems that include the use of test scores. Chicago, Denver, New York, Minneapolis, San Antonio and Toledo all adopted pay for performance systems. By 2008, eight states used systems that based teacher pay in part on performance, however, not all schools in these states participated in merit pay plans. In 2006, Florida enacted a law requiring 60% of teacher bonuses to be based on student test scores.
In 2012, Secretary of Education Arne Duncan stated merit pay for teachers was the Department of Education's highest priority. The $4.3 billion Race to the Top fund encouraged states to implement performance pay systems among other changes.
Types of plans
Some merit pay plans are designed to reward outstanding work by individual teachers. Others are based on the assumption that student progress depends on the cooperative work of a teaching team and therefore lead to bonuses or pay increases to the entire staff of a particular school, sometimes including non-professional staff.
Merit pay should not be confused with pay for achieving certain credentials, whether advanced degrees or certifications based on peer evaluations of portfolios. Nor should it be confused with skill-based pay, which involves higher salaries for teachers with scarce qualifications (e.g., ability to teach honors calculus) or "hardship pay" for accepting certain difficult assignments (e.g., teaching in low-income areas).
The Teacher Advancement Program is a system of merit-based pay created by the Milken Family Foundation in 1999. In 2006, the plan was expanded with a $600 million federal grant program called the Teacher Incentive Fund and later expanded again in 2009 under the American Recovery and Reinvestment Act.
The goals of the Teacher Incentive Fund are:
- Improving student achievement by increasing teacher and principal effectiveness
- Reforming teacher and principal compensation systems so that teachers and principals are rewarded for increases in student achievement
- Increasing the number of effective teachers educating poor, minority and disadvantaged students in hard-to-staff subjects
- Creating sustainable performance-based compensation systems
Claims and criticism
Proponents of merit pay claim the following benefits of merit-based pay:
- Better education outcomes for students
- Attracts talented teachers to low-performing schools
- Improves teacher retention rates
Critics of merit pay argue that there is research demonstrating that merit-based pay alone does not increase student achievement, and they claim the following negative effects of merit-based pay:
- Increases competition among teachers and lowers teacher morale
- Creates incentives for collusion and cheating
- American Labor Studies Center, Glossary of Negotiation Terms
- Teacher Incentive Fund
- Race to the Top Fund
- Sarah Tan, NOLA.com, "Teachers to begin receiving merit pay based on 2013-14 evaluation scores," October 3, 2013
- Nick Morrison, Forbes, "Merit Pay For Teachers Is Only Fair," November 26, 2013
- Wisconsin Education Association Council, "The history of merit pay," accessed February 20, 2014
- The Economist, "Into the hornets' nest," May 10, 2007
- Wisconsin Education Association Council, "Pay for performance today," accessed February 20, 2014
- Paul Tough, Slate, "The Bonus Lottery," September 4, 2008
- John Rosales, National Education Association, "Pay Based on Test Scores?," accessed February 20, 2014
- U.S. Department of Education, "Race to the Top Fund," accessed February 20, 2014
- The Economist, "Bonus time," November 22, 2012
- U.S. Department of Education, "Teacher Incentive Fund," accessed February 20, 2014
- Heartland Institute, "Merit Pay for Teachers Improves Student Achievement in Arkansas," accessed February 20, 2014
- Dana Goldstein, Slate, "What Happens When Great Teachers Get $20,000 to Work in Low-Income Schools?," accessed February 20, 2014
- Richard M. Ingersoll, American Educational Research Journal, "Teacher Turnover and Teacher Shortages: An Organizational Analysis," accessed February 20, 2014
- Melanie Moran, Vanderbilt University, "Teacher performance pay alone does not raise student test scores," September 21, 2010
- Lewis C. Solmon and Michael Podgursky, University of Missouri, "The Pros and Cons of Performance Based Compensation," accessed February 20, 2014
- Nathan A. Bramble, St. John Fisher College, "Merit and Performance-Based Pay," accessed February 20, 2014