Perspectives in Education- Part 21: The Basics of Merit Pay

Merit, or performance pay, is a relatively new phenomena in educational reform. Originally, when the United States was a more rural and agricultural Nation, teachers were hired to teach a variety of ages in a single classroom where the school paid their room and board and they received a small stipend. As the country became more industrialized and with the growth of urban centers, teachers were paid according to their skills and knowledge. This eventually developed into the system now in place known as the single salary, or step, system where there is a proscribed starting salary and annual increases based on seniority. The step system became codified with the growth of teacher unions and by 1950, more than 97% of all public school districts used this system. Despite the growth of merit pay systems in recent years- 27 states have some form- greater than 95% of school districts still use the step system. Despite the statutory authority, the overwhelming majority of school districts refuse to adopt a merit pay system.

This may help explain why studies on merit pay systems have resulted in disparate results where the “experts” today claim that the jury is still out. Studies out of both Harvard and Stanford indicate that children who have excellent teachers in the early grades can expect greater job stability, better pay, and higher educational levels later in life. A 2010 study by the Mathematica Policy Research Company found that merit pay, however, had no effect on student outcomes while another study by Vanderbilt in the Nashville area indicated improved student performance at only the fifth grade level. Why that grade level and not others was never explored. In 2007, New York experimented with merit pay to the tune of $75 million. Subsequent follow up by researchers at Harvard indicated that students showed no gains in academic achievement either. However, the researchers were on to something with this study. Instead of casting a long disapproving shadow on merit pay, the study showed that the method of administration chosen by bureaucrats in New York was probably the major factor in the effort’s failure. In this program, schools were allocated up to $3,000 per person to “reward” good teachers. Unfortunately, although there were broad guidelines, there was enough leeway within those guidelines where individual schools were rewarding stipends using differing criteria.

Instead, a study by EDIC- an educational research interest- offered, on an experimental basis, merit bonuses to teachers in a Chicago suburb school system that was 98% low income. Dividing teachers into three groups, the control group received no bonus while a second group was “given” $80 for every percentile increase in student performance up to a maximum of $8,000 for the school year. A third group, called the “loss group,” was given $4,000 up front and if their students failed to perform, they had to return the money. Surprisingly, students in the loss group showed the greatest improvement in student academic achievement. In fact, if they had been in the experimental group, they would have earned an extra $6,800 in bonuses. Among those in the experimental group, no teacher’s performance would have warranted more than a $5,000 bonus. This would seem to indicate that offering an upfront bonus, then taking it away for lack of performance works better than dangling larger incentives in front of teachers for improving student performance. And either way, both options work better than the traditional step system so prevalent today. Also, the obvious purpose is to improve student performance, not reward the status quo although that status quo may be above national norms to begin with. It makes intuitive sense: the “loss group” likely was more motivated to perform fearing “losing” that already spent $4,000.

The evolution of merit pay is kind of interesting. Originally, this was strictly a conservative idea based upon the fact that performance pay is used to a great extent in the private sector to motivate workers to perform above some established average. However, resting on that principle alone is fallacious because only 1 in 7 private sector employees falls under some form of performance pay system and most of them are concentrated in the sales and real estate sectors. Sociological studies also indicate that money is not always the prime motivator in increasing worker productivity or quality. Workers, like teachers, are more likely to be “good” if the they are aligned with the purpose of the job, they are granted some autonomy in performing that job, and if they receive support from the employer in gaining mastery of that job. Many things motivate a person to consider the teaching profession. To hear the teacher unions speak, one of those things is not pay although teacher salaries are certainly above those comparable professional careers in other fields. As for the autonomy issue, teachers are often given some leeway in the method of teaching, but other items like textbooks and such are out of their hands. The Core Curriculum State Standards being forced on states by the Obama administration actually reduces what classroom autonomy teachers currently enjoy. And as for support to gain mastery of the job (teaching), too often this translates into how many degrees a person has and factors in very little of classroom performance. The assumption is that because the person has a Master’s degree or a PhD in education, they have to be a good teacher and be paid accordingly.

Where the story gets funny is the fact that Obama- a liberal- has incorporated merit pay into one of many criteria for receiving Race To the Top grants from the federal government. In this way, he can claim to be using a traditionally conservative idea which is all well and good if it stopped there. But, there are other criteria present such as adopting those aforementioned curriculum standards and obtaining teacher union endorsement of a state plan for those funds. Even though a Time magazine survey in 2007 found that 71% of Americans supported merit pay, Democrats and liberals regularly denigrated the idea and sided with the teacher unions. Only after Obama and Arne Duncan somewhat embraced the idea did liberals suddenly see the light.

The obvious rationale for merit pay is to reward the better teachers in public schools. But, it can also be used as a means to recruit and retain high quality teachers. For example, in terms of recruitment, in the period from 1971-1974, more than 24% of all those people entering the teaching profession were in the top 10% of their college’s graduating class. Today, only 11% of new teachers can make that claim. Obviously, there has been a decline in academically qualified individuals entering the profession. With regards to teacher retention, about 58% of teachers leave the profession within 5 years with the percentages even higher in districts with a large minority or low income population. Some of this may be attributable to tenure considerations, or budget cut-backs at the local or state level where “last in, first out” is still the norm.

Generally speaking, as a country we collectively value hard work. No one denies that teaching is a difficult task sometimes and requires hard work. But equally important, as a country we collectively also value results and here the public educational system has not necessarily produced. Increasing pay based on merit rather than job title or the attitude that “we are professionals due more compensation because we are professionals” would provide the necessary financial incentive to produce those results while simultaneously rewarding their hard work. It would also likely help recruit more people to the profession and help retain those exceptional teachers, not because they obtained tenure, but because they would have the financial incentive to remain a teacher. It would also help address the inequities in pay that existed prior to the adoption of the step system which only made teacher compensation administratively more convenient.

Which brings us the alleged negatives of a merit pay system. The first thing cited is that it would create a bureaucratic nightmare in implementing. This is hogwash and a diversionary tactic used by teacher unions. They will inevitably cite studies indicating that merit pay systems are generally failures. But as the EDIC study indicated (and the New York study), how the plan is set up and administered makes the biggest difference as to whether it is a failure or success. Secondly, merit pay systems have been established and are at work in many school districts today. Certainly the more successful ones can be adopted and modeled elsewhere.

Unions and individual teachers will tell you that merit pay will harm teacher cooperation and morale. Well, not to hurt their feelings, but teacher cooperation and morale should not even consider into a compensation system. But, if we want to “give” them that argument for the sake of it, collaboration among teachers could be rewarded. Individual teachers or groups of teachers working together to increase student performance can be rewarded through performance pay. No matter what system is adopted- other than the current failure of a system- there will be competition among teachers for those rewards. But, is that such a bad thing? Imagine that- teachers competing against one another while student performance increases. I believe that is a trade off we should all be able to live with, assuming union assertions that they have the child’s best interests at heart is true after all.

The unions will argue that “success” is difficult to define. There is a shred of truth in this statement, but then that is like saying that defining “success” in any profession is beyond one’s grasp. Even still, other professions and jobs certainly have no problem defining “success,” turning it into some number, adding up those numbers and determining a raise in pay. Which brings us to the argument that if we want to retain and recruit teachers, we should just increase their pay. For the most part, that is what we do now for minimal gains, if any, in student performance. This works under two false assumptions. The first is that all current teachers are equal. The second is that every recent graduate is equal even before they step into a classroom. Obviously, not every teacher is equal. If they were, given their salaries, every student would be high performing and there would be steady progress across the Nation.

Ah, but the unions argue that unlike other professions, there are outside influences that affect academic performance. Every job and profession has outside influences that ultimately may affect worker performance. Yet, other businesses utilize performance pay and do quite well with it. Furthermore, one can argue that the truly good teachers and the ones deserving of merit pay are the ones that produce despite these outside influences. The unions will argue that teaching is qualitatively different from these other professions and that teaching should not be run like a business. If that were true, there should be no teacher unions since they are the ones who most treat it like a business come contract negotiation time.

Obviously, the system would have to be based upon some evaluation process. Prior to the step system, teacher evaluations were very subjective. Subjectivity in administration of the program can never be totally eliminated, but it can be minimized. They argue against the system used in Florida and since adopted in other states where at least 50% of a teacher’s evaluation must be based on student achievement and performance. However, since the purpose is improving academic performance and student achievement, negating this metric would be counter productive to the program’s goal. There should be administration and perhaps trained peers who also contribute to the evaluation process. And equally important, parental input should part of this process.

Finally, unions inevitably use the excuse that teachers would simply not teach the more challenging students. This can be overcome by measuring gains, not necessarily academic achievement levels. In fact, there would be the greatest incentive to teach challenged students since this would be the group where the potential for most progress can be achieved since there is more room for improvement. While a teacher near the top of the pay scale may not opt to work the “harder class,” other teachers with the most to gain financially and who show results in increasing student performance would likely opt into the system. In fact, when tried in certain areas, this is exactly what happened- more teachers opted for the difficult schools or classes in search of more compensation.

In part 22, I will continue addressing merit pay and look at some concrete examples of successes and failures to determine what works and what does not. Before leaving, however, it is incumbent that the NEA’s stance- considered “the middle ground”- be looked at. Cloaked as a merit pay system, they are for it provided it rewards teachers taking on more responsibilities without transferring to administration. They are also for increased compensation for rewarding the retention of skilled teachers and rewarding outside activities that enhance academic skills in students. And they argue for increasing teacher pay overall to make it more competitive with other professions. Obviously, their idea of merit pay differs greatly from true merit pay systems. “Additional responsibility” to them translates into professional development courses long on theory and short on practical application. Rewarding retention means little if there is a tenure system in place. The equal pay argument is the same old song and dance and rewarding outside activities deserves no response. In the end, their rendition of merit pay is the current step system simply repackaged; it is the status quo only with higher starting salaries and no caps on salaries. It rewards not merit, but teacher longevity and attendance at teacher education classes. All the education in the world and all the year’s experience mean little if you are turning out average or below average students year in and year out. The goal is progress, not stagnation.