Are We Ready For Merit Pay For Teachers?

February 27, 2011 § Leave a comment

As a conservative, I’m naturally inclined toward applying market solutions to all manner of public-sector problems and, as such, the idea of using merit pay to give incentive to the best public school teachers appeals to me on its face.  Upon further thought, though, I wonder what proponents mean when they say they want to pay teachers based on performance instead of on seniority and the level of the teacher’s own education.

There are is more than one goal we can try to achieve by using merit pay, and we should be sure we know which of those goals is being pursued by the current proponents of changing the way teachers are compensated.  For instance, merit pay for teachers shouldn’t be assumed to equate to a reduction in expenditures for education.  In fact, if we’re really ready to pay teachers for performance, then we should be prepared to see expenditures go up.  The reason that sales professionals are so easily paid for performance is that sales people can be convinced that their earning potential is unlimited based on how hard they work.  Great sales people can make hundreds-of-thousands of dollars per year, even millions.  Are we going to pay the best third-grade teachers in the nation six figures?

I don’t think that creating an elite class of millionaire teachers is the goal of all of this merit-pay talk.  The goal, I suspect, is to shift around some lesser amount of money than is currently spent on teacher’s salaries to provide an incentive to some teachers with money taken from others.  My guess is that merit pay for teachers looks something like this:

  • Non-merit based pay for third year teachers with a Master’s degree is $60k.  All third year teachers with a Master’s make $60k.
  • A state shifts to merit based pay, so now these third-year, well educated, teachers are paid $50k per year with a potential of getting a 20% annual performance bonus based on the performance of their students on standardized tests.
  • Teachers who’s students score above the mean get the bonus, while the others do not (half will get the bonus, half won’t — since half will be above and half below the mean).
  • Since half of the teachers will now make 20% less, and 50% will earn the previous standard ($60k), the teachers who’s students perform best on standardized tests will earn a “bonus” which was paid for by a pay-cut to those who’s students didn’t perform above the mean.

Of course, states that are talking merit-pay are also looking to reduce the cost of benefits to teachers.  So, the “best” teachers may get a 20% raise, but perhaps they’ll also lose something close to that in benefits.  They’re overall pay can still fall 5%-10%, or more, while those teachers who don’t qualify for the 20% bonus will become two-time losers, earning perhaps a third less, overall, than under the old system.

The “worst” teachers will leave the system, but better ones will not come in to fill the need.  Regardless of the overall quality of the teacher pool, half will always create performance bellow the mean, and half above it.  Why would better teachers come into the system knowing that they have a 50% chance of making well less in salary and benefits than current under-performing teachers earn.

Note that all of the above is speculation by me based on the twin goals that get kicked around when we talk about merit-pay for teachers:  To compensate the best teachers at a level commensurate with their performance as compared to other teachers, and to balance state budgets.  The later goal dictates that any merit-based pay system look something like I’ve described.  If the only goal was to increase performance through merit-pay, then we’d expect to see overall benefit and wage packages to grow rather than to shrink, and to become a greater burden on state budgets rather than less of one.

The only other way to accomplish all of the various goals (increasing teacher pay, decreasing overall impact of that pay on state budgets, while increasing overall student performance) would be to decrease the number of teachers by a greater percentage than we cut spending on education, which would leave a relatively larger chunk of money to be spread among the remaining (and presumably better) teachers.  However, many states limit the number of students per teacher by law, precisely because studies consistently show that student performance suffers as the student-to-teacher ratio increases.

What I would expect to see, if bolstering student performance is the goal, would be for overall pay to teachers to grow.  So, if the current third-year, Master’s degree, teacher makes $60, that would become the base, with a potential for bonuses above that level (so, the best of that level of teacher might make $72k per year, while the worst still earns $60k).  Benefits would have to either remain static, or merit-pay would have to increase by enough to offset any decrease in longer-term benefits.  All of this would have to be done without a decrease in teachers, so there would obviously be no benefit from to the states, in the form of overall budget savings, earned by a shift to pay-for-performance.

The point is:  We cannot talk about merit-pay and budget reduction at the same time.  These are mutually exclusive goals.  If we’re talking about cutting the impact of teachers on state budgets, then we’re talking about paying teachers less.  If we’re talking about paying teachers more, then we have to look elsewhere if we want to cut state budget deficits.  To talk about increasing pay for the best teachers with the simultaneous goal of reducing the overall impact of that pay on state budgets is like saying that you want to reduce your overall light bill by adding more, brighter, light bulbs.


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