Published: January 1, 2007

Rethinking Merit Pay

Can states and districts make performance bonuses work for teachers?

Minnesota math teacher Bob Nystrom has a shot at earning a bonus of up to $2,000 this school year. He just has to receive high marks on his evaluations, help boost his school’s test scores, and meet an ambitious classroom goal he set earlier in the year.

Such performance incentives have long been a staple in private industry. Until recently, though, they were rare in public education, where pay is almost always determined by years of service.

Exact numbers aren’t available, but performance pay’s recent expansion has been dramatic, according to James Guthrie, director of the Peabody Center for Education Policy, an education-reform group at Vanderbilt University. One-third of all U.S. public school students will likely soon have teachers who are paid, at least in part, based on their success in...