Stanford’s Terry Moe:

The Department of Education recently announced its first grants in a new $94-million program to fund incentive-pay plans for teachers. The money itself is a drop in the bucket for a public school industry that spends more than $400 billion annually. And only a small portion of the nation’s school districts will be chosen to participate. But the idea — that a teacher’s pay should depend in part on how much his students actually learn — is revolutionary. It is also common sense.
The current system makes no sense at all. Beyond a brief probationary period, teachers have lifetime job security (tenure) and are virtually impossible to dismiss even if their students learn absolutely nothing year after year. Their pay, moreover, is based entirely on a salary schedule defined by seniority and credentials, and takes no account of whether their students are learning anything. All teachers, good and bad, are rewarded equally — a truly dumb idea. With this kind of reward structure, teachers are not given strong incentives to promote student learning to the fullest, because nothing happens to them one way or the other. Good teachers do not gain from their successes; mediocre teachers suffer no consequences for their failures. So why strive extra hard to get students to achieve? Taking it easy yields the same rewards.
To make matters worse, teachers who are especially talented, skilled and effective — qualities that employers throughout the economy are looking for — are well aware that their superior value will only be rewarded if they leave teaching for another career, which many of them do. Mediocre teachers, meantime, have the same lifetime security and pay as the good teachers. And people of low quality have especially strong reason to seek out these jobs and remain in the system until retirement, because almost nowhere else (outside government) would their poor performance be tolerated — indeed, rewarded. The disconnect between pay and performance, then, inevitably affects the quality and motivational character of the entire pool of people who wind up in the classroom.

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