September 23, 2010
A new Vanderbilt University study on merit pay - the most rigorous ever conducted - shows that a merit-pay plan in Tennessee had no statistically significant impact on student achievement. That is the bad news. The good news is that it also produced none of the doom-and-gloom predictions that unions normally attach to the concept of merit pay.
Eric Hanushek (Stanford University) notes that the study did not examine the long-term effects of attracting higher-quality teachers to the profession via merit pay (they no longer have to wait 15 years to maximize their salary). We already know that the average teacher today is recruited from the bottom third of college graduates and that paying teachers more money doesn't attract better teachers (we just pay more money for the same talent pool), so maybe merit pay has the long-term potential to attract higher-quality teachers. At this point, we still don't know.
Dr. Matthew Ladner (vice president of research at the Goldwater Institute and a policy fellow at the Nevada Policy Research Institute) still supports the idea of merit pay (for reasons including those given by Eric Hanushek) and wonders why merit pay worked in Little Rock, Ark., but not in Tennessee. He thinks more research on the right way to do merit pay is still needed.
Dr. Jay P. Greene (University of Arkansas) claims to have always been skeptical of merit pay (and now is even more skeptical). He reasons that creating market forces (via merit pay) won't work when the teachers are still operating within an uncompetitive, government-controlled monopoly. According to Dr. Greene, the whole system needs to change.