This has been proposed by many commissions, but has been fought by teacher's unions. It was proposed in 1983 by the National Commission on Excellence in Education which authored "A Nation at Risk," and continues to be proposed currently [e.g., by Brian Crosby (The $100,000 Teacher), by Matthew Miller (The 2% Solution)]. The problem is that bad teachers with tenure are almost impossible to fire, and younger teachers are discouraged from working hard and being innovative when they see tenured teachers who mark their time are paid more.
Teachers in Denver have gone against this union position and supported merit pay. Under a system called ProComp, existing teachers can opt in, and new teachers are automatically in the merit pay system. Pay is based not just on student scores, but targets set for each teacher by the principal and school-wide performance.
The Denver pilot that led to ProComp showed that it improved school performance Other studies have shown the same, such as a study in England. ProComp and other merit pay initiatives are also discussed in Time magazine, "How to Make Great Teachers" by Claudia Wallis:
The Teacher Advancement Program (TAP) has had success where used, and encompasses 4 elements: (1) multiple career paths, (2) ongoing applied professional growth, (3) instructionally focused availability, (4) performance based compensation.
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