Successful compensation systems generally include some form of pay-for-performance. If you are a salesperson, you receive higher commissions the more you sell. If you are an assembly line worker paid by the piece, you receive a bigger check the faster you work. Even if you are a CEO, you receive a larger bonus for achieving higher corporate profits. Pay-for-performance is a simple concept used broadly in virtually every industry—except education.
Why?
Teachers’ unions almost universally oppose paying K-12 educators for performance. This opposition is in spite of a Gallup Organization survey showing that 75 percent of public school parents support teacher pay being tied to students’ academic achievement. The stated reasons for union opposition are generally founded in some variation of performance measurement difficulties for teachers. The nation’s largest teachers’ union, the National Education Association, states, “for example, when pay raises are based on student test scores, you’re only measuring a narrow piece of the teacher’s work.” Really? How is student performance a narrow piece of a teacher’s work? Shouldn’t student learning be more or less 100 percent of a teacher’s work?
Perhaps there are other unstated reasons for unions to oppose teacher pay-for-performance. Compensation based on student learning outcomes increases accountability, something teachers’ unions have a history of opposing. Likewise, if teachers are paid for their students’ achievement, what need is there for a union to negotiate pay raises—and actually, what need is there for teachers to even pay union dues?
While it is likely that these reasons play a large role in union and teacher opposition to pay-for performance plans in education, there actually is a better reason to be against the scheme: It doesn’t work!
A multi-year study across several school districts conducted by Vanderbilt University found, “We tested the most basic and foundational question related to performance incentives — does bonus pay alone improve student outcomes? – and we found that it does not.” Likewise, a Rand Corporation study unequivocally stated that when utilizing pay-for-performance, “…it did not improve student achievement at any grade level.” While we know that outcome based compensation plans are widely and successfully utilized in virtually every industry, they don’t work in education. Why? The answer is actually based on a pretty simple economic principle: The wrong people are being paid for the performance outcomes.
Here’s a simple question to bring the issue into focus. Who is responsible for the grade received on a test? It’s not the teacher, it’s the student. Paying a teacher for better student test scores is like paying the maker of a hammer for increased housing production. A hammer, like a teacher, is a tool used in production. Neither are the proximate cause of the desired outcome. A carpenter produces a house just as a student produces a test score. Students, not teachers, should be the ones receiving financial rewards for performance.
Regardless of the conventional bias against “pay-for-grades,” it turns out the idea really works. A far reaching study conducted by Northwestern University economist C. Kirabo Jackson found that schools paying students for achievement in a Texas school district had increased AP course enrollment, higher SAT and ACT test scores, and higher college matriculation. These results are not insignificant. The findings show an average increase in SAT/ACT scores of 30 percent, increased college matriculation rates of 8 percent, and increased college graduation rates for Hispanic and black students who were paid for performance while in high school.
Paying students for learning outcomes places the reward where the effort is expended. Achievement by students that is financially rewarded results not just in short term “measurement outcomes,” but in permanent long term increases in college attendance, college GPA, and college graduation rates. But do you know how I know it really works? Against her better judgment my daughter, a teacher herself, recently offered to pay her two children for improved grades. Guess what: straight A’s!
Kevin Cochrane teaches business and economics at Colorado Mesa University, and is also a Permanent Visiting Professor of Economics at the University of International Relations in Beijing.
