The Pros and Cons of Merit Based Pay for Teachers

A new study conducted as a joint effort by Harvard, the University of Chicago and UC San Diego has concluded that merit-based pay is an effective way to increase the performance and efficiency of teachers. Merit-based pay, or performance pay, as it is sometimes called, is a somewhat controversial practice that bases a teacher’s salary on the success of their students. Merit-based pay can be implemented through a rewards system, where teachers are paid more for their good performance, or through loss-aversion, where teachers are given a bonus and then asked to pay that money back if they fail to meet certain standards. The study examined a loss-aversion system and concluded that it had a positive effect on teacher performance.

According to the Washington Post, “The economist Raj Chetty of Harvard, for example, has found that students randomly placed with more experienced kindergarten teachers not only perform better on tests but earn more and save more for retirement as adults, are likelier to go to college and go to better colleges than their peers with less experienced teachers. Eric Hanushek of Stanford estimates that a good teacher – defined as at the 84th percentile, or one standard deviation above the mean – provides students with test scores associated with an increase of between $22,000 and $46,000 in lifetime earnings.”

Clearly, the performance of a great teacher is as crucial to success as the student’s effort to succeed, but the question is: Are incentives the right way to elicit quality performance from teachers? Furthermore, how are students’ successes effectively measured and what criteria for success go into determining how a teacher should be rewarded? Though merit-based pay for teachers has yet to gain widespread momentum, the question has been debated in some form or another for about 40 years. The ways to implement performance based pay are almost limitless, and the districts who have experimented with this approach do so in very different ways.

So what do you think? Should teachers be paid based on merit? Let’s take a look at some of the arguments for and against merit-based pay for teachers:

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Michelle Rhee, former chancellor of Washington D.C. public schools and founder of the education advocacy group StudentsFirst, has always been an outspoken proponent of merit-based pay for teachers. In the past, she has called merit pay the key to attracting great teachers, saying “we have to make [teaching] a profession that high achievers want to go into.” Her attempt to implement a merit-based pay system in D.C. was one of the reasons Rhee drew such hard criticism from unions and teachers alike. Essentially, merit-based pay is a way to incentivize teachers: to make them want to perform better. In Rhee’s model, which she tried implementing during her time in office from 2007 to 2010, teachers would be paid based on a combination of students’ test scores, academic gains and a third-party evaluation. In exchange, teachers would have to give up tenure and make it through a one-year trial period, but they could potentially earn up to $130,000.

The benefits of merit-based pay are seemingly obvious: Without tenure, ineffective teachers cannot be protected by seniority, making it easier to remove low-performing educators and promote high-quality teaching. Teachers are often thought to be underpaid or undervalued, so rewarding them based on how well they teach seems to be a good way of highlighting their importance. So if merit-based pay for teachers appears to benefit education, why has it not gained widespread momentum?


The National Education Association, one of the largest teachers’ unions, is one of the most outspoken opponents of merit-based pay. One of the issues they raise is the relevance of standardized test score to teacher evaluation. First and foremost, do test scores truly indicate how well students learn? Furthermore, are they indicative of how well teachers teach? Initiatives like No Child Left Behind and Obama’s Race to the Top Fund emphasize test scores as the primary indication of both students’ and teachers’ success. But is this an accurate assessment? The NEA believes that a teacher’s value should be placed on their knowledge of their subject, level of experience and certification.

One of the more pointed arguments the NEA makes is that merit-based pay can foster competition between teachers that could be detrimental to the sense of community that educators working in the same school should maintain. Also, what happens to the perception of students if they become integral to a teacher’s pay? Bill Raabe, NEA’s director of Collective Bargaining and Member Benefits says, “We all must be wary of any system that creates a climate where students are viewed as part of the pay equation, rather than young people who deserve a high quality education that prepares them for their future.”

While the debate around merit-based pay continues, districts across the country are revising their pay system for teachers and looking into alternative methods that benefit both educators and students alike. The questions at the center of the issue remain: How would merit-based pay affect students, and how are the criteria for teacher merit determined? The NEA is not against all forms of alternative pay, and they actually outline a couple of districts who they believe are implementing it effectively. This includes higher salaries and bonuses that are based on professional development and certification. The fact of the matter is that without a definitive model for alternative pay, the debate will continue as schools and districts experiment with methods that fairly quantify the merits of teachers.