Merit pay for state school teachers means rewarding teachers for better performance according to specific and measurable criteria. State schools are schools that the government provides (in the US and Canada known as ‘public schools’), as opposed to ‘private schools’, which are schools created and financed by the private sector/civil society.
Merit pay is a broad term that may encompass a number of alternatives to the traditional salary schedules used in most schools. For instance, teachers can be rewarded for individual performance and/or for the performance of their entire department/school. Teachers can also be paid fully based on merit, or have a fixed base salary on top of which financial rewards are added whenever performance exceeds the criteria. And, teachers might be rewarded for taking on additional duties or responsibilities. In this case, we assume that merit pay means that teachers will receive individual rewards for performance on top of a some base salary, but will try to keep the arguments as general as possible. If the arguments refer to another case definition, it will be noted and explained. We also assume that teacher performance is assessed based on student performance, specifically how much their students improve on specified, standardized tests.
Merit pay for teachers is currently a hot topic in the United States. For example, on March 24, 2011, Governor Rick Scott of Florida signed a bill to put this motion in effect. The state of Denver introduced a merit-based pay programme into its school system in 2004, with teachers’ approval.
Just as in the private sector, workers should be judged and rewarded on the actual results they achieve. Whether it's through sheer talent or through hard work, some teachers consistently deliver better results than other teachers. Those teachers are more effective and efficient at providing societal value: with the same amount of work-hours they manage to more effectively educate children. It is therefore only just that their pay is differentiated according to the results they achieve.
It is unfair to reward extra achievements on top of the base level. To provide societal value from education, the base level of performance in education is already set very high. This means that even teachers who perform at base level are already working very hard to provide the societal value we require. Any difference above that already very high level is likely the result of luck and talent, both on the part of students and teachers themselves. Rewarding fortunate individuals for something they themselves didn't create is unjust and can only make other jealous.
Moreover, many students may enter the school system- at various stages- accompanied by a range of external advantages and disadvantages. A student’s home environment is a major influence on their ability to achieve when in the school environment. Although a teacher’s pastoral role is growing, there is little that they can do to address poor parenting, or to encourage the engaged, stimulating parenting that produces some of the most able pupils.
For decades now, teachers have been remunerated based on 'seniority'. This means that they don't have an incentive anymore to improve themselves, no matter how motivated they were at the beginning. Why try to improve yourself if you have nothing to gain from it? Adding a financial reward for exceptional performance will motivate teachers to do their utmost to develop the knowledge and talents of their pupils.
 Muralidharan and Sundararaman, “Teacher Incentives in Developing Countries: Experimental Evidence from India”. Podgursky and Springer, “Teacher Performance and Pay” 2007
It will not give teachers an incentive to improve their teaching. Teaching is a calling, not something you choose for the money. Teachers are what we call 'intrinsically motivated': they want to realize an ideal, in this case, educating and raising responsible citizens. Recasting this ideal into a financial reward system actually demotivates teachers who feel the inherent value of their work now suddenly has become sullied by chiefly monetary rewards, which is why performances pay hasn’t worked in many places.
eaching salaries for years have remained steady or even declined. This made teaching as a job unattractive and so the influx of new, talented teachers halted. Although the effect of fiscal changes on teachers’ pay has been minimal (controlling for the consequences of the financial crisis), high productivity has become central to many private sector pay schemes. As a result, the contrast between non-responsive pay for teachers and high rewards for talented private sector employees has become more pronounced.
With the opportunity to increase income through performance, teacher pay can rise, making it a more attractive profession financially.
It will not attract more teachers. As said above, teaching is a calling. Many of the expected new teachers will be motivated solely by the increased pay, not by any intrinsic motivation. Because they are not intrinsically motivated, they will underperform. They might leave again after a year, but in that year they will have taught a class without the requisite skills and inspiration, possibly spoiling the educational experience of an entire class for the rest of their lives.
Measuring teachers' performances will create a transparent market for teaching talent. Underperforming teachers will be selected out because they are less in demand, unless they adapt and learn from what their competitors apparently do better. So, the overall quality of the teacher pool will rise and this will increase the quality of education for all students.
Competition will diminish the quality of education across the board. Teamwork is essential for the effectiveness of schools. Making differences in performance more visible will hamper teamwork because it will create perverse incentives. For instance, teachers who have devised a successful method for teaching a particular subject area will be less likely to share this because sharing it means eroding their 'strategic advantage' in the 'marketplace for teachers'.
The success of a student depends on many factors, like innate talent, the ability for hard work and concentration and socio-economic background. This means that any progress that a student can make is largely outside of a teacher's control. This will result in some teachers being rewarded just because they happen to teach in a good environment to 'advantaged' children whereas other teachers who do a good job in a bad environment to 'disadvantaged' children are just unlucky.
Teachers are the single biggest influence on student performance. Even though many factors influence student performance, the teacher is still the most important schooling factor. For example, having an effective versus and ineffective teacher has been shown to be equivalent to a class size reduction of 10-13 students and can make the differences of more than a full year’s learning growth.
 Rivkin et al, “Teachers, Schools and Academic Achievement”, 2005
 Hanushek, “The Trade-off between Child Quantity and Quality.” 1992
Cheating is inevitable in any bureaucratic system that holds educational institutions accountable- in any way- for the outcomes of the educational processes that they supervise.
Teachers will have an incentive to cheat the system, for example by altering students' test results or giving them easier tests. On a more 'macro' scale, teachers will have an incentive to only want to teach at 'good' schools with 'advantaged' students who have both the will and the ability, because their chances of a good performance there are higher.
Cheating can be prevented by ensuring that the person giving and grading the test is not the same as the person preparing the students for the test. Likewise, the 'macro'-problem can be prevented by designing good measurement systems. If performance is measured as comparing results of individual students across time, then it doesn't matter whether a student comes from a 'disadvantaged' background. The same goes for innate talent: we can design a measurement that rewards any improvement in significantly less talented children sufficiently high to ensure that teachers are motivated in teaching them.
Teachers will start 'teaching to the test' to ensure their classes make the grade. Independent, creative, self-reliant thinking will therefore be discouraged as the teacher focuses on getting as high test results for their pupils as they can regardless of whether they really understand the concepts behind what they are doing. If the primary goal of education is to create critical thinking citizens, then merit pay may hinder rather than help achieve that goal.
It will not create uncritical 'learning drone' students. Creative and critical thinking begins with the basics: literacy and numeracy. Even learning to the test will result in literate and numerate students who can then move on to much more critical thinking. We can then define successful criteria that measure general critical thinking skills, like have students write essays or pass oral exams.
Narrowing of the curriculum is a concern in later stages of education, but the growth of a critical approach to humanities subjects has ensured that rote learning has been de-emphasised in these areas. Critical outcomes, nonetheless, remain measurable.
Students come from very different backgrounds and have very different skill-sets. This makes the attempt to define a measuring system that covers all cases a bureaucratic nightmare. Even if this succeeds, it is still very difficult to define what a 'good performance' is, because a student's individual performance is determined by many other factors than the teacher and also because an individual student's 'performance' is actually a complex set of attitudes, skills and abilities which are in and of themselves hard to operationalize in a standard test. And even if this succeeds, then the questions is how much of a student's performance is attributable to what specific teacher: oftentimes, at least in high school, students will have many different teachers, making it impossible to gauge what teacher was responsible for what test result.
Finally, it should be noted (per the argument included above) that merit based education does not encourage the dissemination and normalisation of best practice. A merit-based pay scheme is likely to collapse when too many of those who work under it meet its criteria for bonus payments, making it too expensive.
Once merit based pay becomes part of the structure of an institution, it will become hard to attract and retain staff if it is removed. Concurrently, performance at the same level will be expected by the public, although an institution may not be able to afford it. For the reasons stated above, good ideas are unlikely to be shared by teaching staff under a merit-based status quo, for fear that they may be giving away a competitive edge over their colleagues.
It might be better to raise standards in education by investing sustainably in improved training for teachers and improved facilities in schools, rather than creating an unsustainable merit-based reward system.
It is possible to implement. Testing students is not that difficult. After all, we have been examining students with all kinds of standardized test ever since formal education began. Similarly, we can know what teacher is involved in what result: the biology-teacher is relevant for biology, not French or arithmetic.
The economist Dale Ballou, in his 2001 article “Pay for performance in public and private schools” determined that the prevalence of merit-based pay in private schools demonstrates that it can be cost effectively implemented in complex institutional settings.
Ballou, Dale. 2001. “Pay for performance in public and private schools.” Economics of Education Review, Vol. 20, No. 1, pp. 51-61. http://upi-yptk.ac.id/Ekonomi/Ballou_Pay.pdf
Hanushek, E. A. (1992). “The Trade-off between Child Quantity and Quality.” Journal of Political Economy 100(1), 84-117.
Jacob, Brain A. and Steven D. Levitt. “Prevalence and Predictors of Teacher Cheating”. The Quarterly Journal of Economics. August 2003. Available online here: http://pricetheory.uchicago.edu/levitt/Papers/JacobLevitt2003.pdf last consulted on August 15, 2011.
Miami Herald, Fla. Governor Rick Scott Signs Teacher Merit Pay, Tenure Bill. Huffington Post, Source url: http://www.huffingtonpost.com/2011/03/24/rick-scott-teacher-pay_n_840306.html last consulted on August 15, 2011
Muralidharan, Karthik and Venkatesh Sundararaman. “Teacher Incentives in Developing Countries: Experimental Evidence from India”. The National Bureau of Economic Research. NBER Working Paper No. 15323.
Podgursky, Michael, and Mathew Springer. “Teacher Performance and Pay: A Review.” Journal of Policy Analysis and Management, vol. 26, no. 4, 2007, pp. 909–949.
Rosenthal, Robert, and Lenore Jacobson, Pygmalion in the classroom. 1992, Irvington Publishers.
Rivkin, Steven G., Eric A. Hanushek, and John F. Kain. "Teachers, Schools, and Academic Achievement." Econometrica 73, no. 2 (2005): 417-58.
White, Alex, Performance pay for teachers is a terrible idea and here’s why, blogpost from May 2 , 2011. Source url: http://alexwhite.org/2011/05/performance-pay-for-teachers-is-a-terrible-idea-and-heres-why/ last consulted August 15, 2011