Sunday, July 23, 2017

Advantages of Performance Pay for Teachers Vs. Tenure Pay

The following is a brief scholarly analysis of pay-for-performance models of teacher compensation (also called performance pay) versus tenure models of teacher pay, based on USA-American and international implementation. The model has been implemented in Dallas ISD under the name Teacher Excellence Initiative for three years, resulting in increased retention of the highest-achieving and highest-rated teachers. As the area considers the future of TEI, it is important to consider also the research on the subject of educator labor markets in general, for application to this place.
- Jeannot R. Jonte Boucher, M.Ed., AMI

Advantages of Performance Pay for Teachers
It is a fundamental of staffing economics that workers respond to incentive with sharp increases in productivity and higher profits for the consumer-company (Lazear, 2000). In many fields, pay is readily linked to performance. Currently, there is much discussion about the benefits of offering performance pay to teachers, who might yield higher productivity leading to higher student achievement. Economic examination of the field of education reveals multiple advantages to linking increases teacher pay to performance. First, performance pay is less controversial among high-achieving teachers than pay for years of service. Higher-achieving teachers prefer performance pay (Muralidaharan & Sundararaman, 2009).  Additionally, as high-quality instruction delivered by the teacher is the strongest predictor of student success, attention arrives at the labor market for attracting high-achieving teachers. As the most effective teachers will be harder to find and hire, incentive pay makes schools more competitive to hire these teachers (Hanushek & Rivkin, 2010). Finally, as performance pay rewards overall teacher quality, there is a gain to overall student achievement and gross domestic product, providing long-term sustainability to the models (Hanushek & Woeessman, 2010). Therefore, pay for performance models should inform public decisions for a new direction in public teacher pay markets.
Less Controversial: A Quality-Teacher Preference
A series of international studies in Israel, Kenya, and India examined whether teachers prefer performance-based pay systems. While these systems are rare in public systems in the United States, they are found more frequently abroad. According to the research of Pradesh and Muralidharan (2009), there is a positive correlation and causal relationship between teacher quality and the preference for performance pay. In other words, since higher quality teachers overwhelmingly prefer performance pay, offering this pay model would attract better teachers, by measure of student achievement. There is also a possibility that performance models would repel less effective teachers into low- to no-accountability settings in other environments or careers. The main finding from Muralidharan is that over 80% of teachers preferred performance-linked pay. Furthermore, the degree of support relating to actual teacher performance suggests that teachers are self-aware of their abilities. That could mean that with the knowledge that they should be paid better for their ideas and work, more teachers would be attracted to the field.
However, there are some mixed results in the research on increased teacher satisfaction. Belfield & Heywood, 2008, found that teachers were not more satisfied in performance pay settings. As a detail, the teachers in performance pay settings did receive more income over the span of their careers. Additionally, the ability of the teacher to work collaboratively did significantly increase the performance pay. This answers the question of whether single-teacher performance is an appropriate indicator, since teaching should be a collaborative profession. Nevertheless, Belfield and Heywood did not isolate teacher satisfaction by achievement group, so the findings of Puresh and Muralidharan remain: The highest quality teachers are the most satisfied with performance pay.

Competitive Pay Yields Student Success
Under years of experience pay scales, teachers gain salary slowly over time. This is a challenge to fair compensation, because teacher quality shows sharp incline early in the career and a sharp decline toward the end of the career (Hanushek and Rivkin, 2010). This is the opposite pattern from traditional years of service scales, which increases in compensation over time instead of acknowledging that teacher support and ability declines steeply with advanced age. Allowing teachers to earn an amount closer in line with their salaries boosts retention of the highest-quality employees.
Gordon, 2006, writes extensively on how to determine teacher effectiveness, monitoring trends. Since one of the key purposes of performance pay is to retain the highest quality teachers, Gordon examined New York State data to learn about teacher retention, and there was no difference in retention between two-year contract Teach for America volunteers and certified teachers (<0.01 standard deviations). This reflects a crisis of teacher retention, something Gordon proposes could be improved by competitive offerings.
Ultimately, teacher retention would lead to improved teaching, since Gordon observed that teacher’s performance was significantly higher after the first two years—again, that sharp climb. This would validate the findings, too, of Lavy, 2009, who observed that monetary incentives for teachers contributed to significant gains in student success. Lavy compared observing Israeli schools competing for $1.44 million in rewards, given as either more school resources versus paying the teachers that amount cumulatively, and the ultimate comparison found the greater outcome to student success from direct teacher pay, rather than heavily endowed schools.

Financial Gains, not Losses
A common criticism is that school districts cannot afford to pay additional funds to teachers for doing a good job. However, Hanushek (2010) noted that there is a social benefit overall which can be measured in the gross GDP of the place, when the highest quality teachers are retained in the classroom. In this manner, policymakers have the opportunity to offer teachers room for advancement without leaving the classroom. As more effective teachers stayed in the classroom, the community became more measurably prosperous over time. According to Muralidharan, the support from teachers aligns so closely with student achievement levels that it is predictive of teacher efficacy before any other factors indicate the teacher’s effectiveness level. Therefore, teachers who show higher ex-ante support have better ex-post support.
Teacher labor markets receive a great deal of scrutiny, as a large part of many school district budgets. In economic terms, the field of teaching suffers from high turnover and quit rates of new teachers, leading to diminished supply pool. Lowered productivity stems from this initial high quit rate. Belfield & Heywood continued their analysis of teacher pay in terms of personnel policy. The researchers of this 2008 study found that teachers being offered performance pay showed an up to 20% increase in productivity following the measures. Future research should consider the long-term effects of the increase in productivity and labor concerns. As a complex but worthwhile consideration that “if they work harder, the reward for each unit of effort will be reduced, leaving their earnings the same despite more effort” (244). This concern is refuted in Woessman’s presentation in the symposium overview on the subject, 2011. He wrote that long-term equilibrium effects are outweighed by positive association between pay for performance and student achievement.
For decades, pay for years of tenure programs have penalized talented young teachers and rewarded characteristics which are not related to student outcomes, like whether the teacher has a master’s degree (Gordon, 2006). It is time to follow the lead of international evidence suggesting that students with teacher compensation according to performance are more likely to find high performing, successful students. We know, also, that teachers who experience a campus for paid performance also experience a higher degree of support for the program. Expanding pay for performance models will be critical in attracting workers of high quality, who are the most likely to support such a program. Going forward, it will be important to communicate these benefits to labor unions, who might present considerable dissent to unequal pay between workers, should the benefits to student and teacher welfare not be placed centrally in the conversation.

Belfield, C. and Heywood, H. (2008). Performance pay for teachers: Determinants and consequences, 20(3), 243-252.

Hanushek, E. and Woessmann, L. (2011). Overview of the symposium on performance pay for teachers. Economics of Education Review, 30(3), 391-393.

Gordon, R., Kane, D., Staiger, D. I (2006) Identifying effective teachers using performance on the job. The Brookings Institute.

Lavy, L. (2009). Evaluating the effect of teachers’ group performance incentives on pupil achievement. Journal of Political Economy, 110, 1286-1317.

Lazear, L. (2000). Performance pay and productivity. American Economics Review, 90, 1346-1361.
Muralidharan K. and Sundararaman, V. (2011). Teacher opinions on performance pay. Evidence from India. Economics of Education Review, 30(30), 394-403
Muralidharan, K. and Sundararaman, V. (2009). Teacher performance pay: Experimental evidence from India. National Bureau of Economic Research, Cambridge, MA
Woessmann, L. (2011). Cross-country evidence on teacher performance pay. Economics of Education Review, 30(3), 404-418.

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