The dust hasn’t yet settled from the resolution of the Chicago teacher strike, but it appears that the reforms the city were able to retain will result in a better “true” merit pay system than the “phony” merit pay plan they were forced to concede.
Let me explain the difference between true and phony merit pay. True merit pay — the kind of compensation for job performance found in most industries — provides effective employees with continued employment and regular raises while ineffective workers lose their jobs. If you do a good job you get to keep getting a pay check and if you don’t you have to look for work somewhere else. That’s true payment for merit because un-meritorious workers stop getting paid altogether.
In phony merit pay — the kind that hardly exists in any industry — there is a mechanistic calculation of performance that determines the size of a small bonus that is provided in addition to a base salary that is essentially guaranteed regardless of performance. You can stink and still keep your job and pay. The worst that can happen is you miss out on some or all of a modest bonus. To make it even more phony, in the few cases where this kind of phony merit pay has been tried, the game is often rigged so that virtually all employees are deemed meritorious and get at least some of the bonus.
According to the initial reports, the city of Chicago abandoned its efforts to institute this latter, phony merit pay. As the Chicago Teachers Union put it: “The Board agreed to move away from ‘Differentiated Compensation,’ which would have allowed them to pay one set of teachers (based on unknown criteria) one set of pay versus another set of pay for others.”
But the city preserved key provisions that result in at least some amount of true merit pay. Specifically, the city preserved the ability to continue opening new, non-unionized charter schools at a rapid clip. It is already the case that almost 50,000 of the 400,000 students in Chicago’s public schools attend charter schools. As students migrate from traditional to charter schools, enrollment in the unionized sector has plummeted, causing 86 traditional public school closures over the last decade. Enrollment is so low in many existing traditional public schools that 120 additional schools are eligible for closure next year. As long as the city can continue to open charter schools and as long as there is demand by students to leave for charters, traditional public schools will continue to be closed in large numbers.
When Chicago closes a traditional public school for low enrollment the teachers are laid off. The new contract appears to place some limits on this, but the practice has generally been preserved. In addition, unlike in some other big cities, principals in Chicago are free to hire teachers as they see fit and are not forced to take teachers laid off from school closures. The new contract does require that half of all newly hired teachers come from those laid off and guarantees re-hiring only for the highest rated teachers, but according to the city’s summary of the agreement: “Principals maintain full authority to hire whichever teacher they deem best.”
The net effect of growing charter schools, closing under-enrolled traditional public schools, and only hiring back the best and most desired teachers from those schools is a true merit pay system. Bad teachers are let go. Good teachers not only get their job back, but they also get an extremely generous pay raise over the next four years for staying and being good. That’s real merit pay.
The Gates Foundation, Michelle Rhee, and various other reform groups have pressed ahead with efforts to build a machinery to rate teachers and provide bonuses to the ones that have higher ratings. They’ve pulled out the stops, devoted millions of dollars, and even twisted the truth to advance these merit pay systems because they are convinced that this is the most politically feasible and effective way forward. Choice, especially vouchers, holds little appeal to them because they see it as a political dead-end.
As I think the events in Chicago help demonstrate and as I had feared in the Ed Next piece I wrote with Stuart Buck, the political calculations of these reformers are entirely mistaken. Building reform around a top-down system of teacher evaluations and merit pay is too easily blocked, diluted, or co-opted. But expanding choice continues to be a political winner and will result in real merit pay… and I believe real progress in student learning.
Jay P. Greene's Blog 
Forcing standards, and accountability, on the district system is akin to teaching a bear to dance. They’ll never be any good at it; it’s a wonder that they can do it at all.
The irony is that it’s not necessary to force standards and accountability on independent, i.e. charters, private, parochial, schools. As an inevitable function of competition standards will arise.
Even in the presence of the dominant institution, the district-based public education system, informal standards have arisen. They’re rough standards and barely merit the use of the word “standards” since they consist of nothing more then dissatisfaction with the district schools and the comparison inherent to the decision to enroll your child in any of the alternatives but that’s a standard nonetheless.
Looks like Rahmbo did to the teacher’s union what Golden Tate did to that Dallas Cowboy’s linebacker;
http://hisstoryisbunk.blogspot.com/2012/09/upon-further-review.html
The problem with “true” merit pay for teachers remains the accurate assessing of excellence. We have heard all the arguments against using standardized tests to fairly assess teachers. Experienced teachers know that students/classes can wildly differ from year to year. Moreover, we rarely hear of cronyism, politics, or administrative ineptitude that may unfairly target teachers who speak out or do not have friends in the right places.
In my school, the administration’s desire to implement merit pay is not only an attempt to repress salary expenses and to weed out incompetent or “stale” teachers, but also to pit teachers against one another. Who will share lessons, teaching ideas, assessments if the other guy might get the credit? I created most of the lessons, exercises, and exams for our 10th grade course that the other teachers use, yet admin has no idea that the other teachers depend on my work. If I were to say so, it would make me look small, and administration would not much care as my colleagues are popular teachers. I believe that teachers ought to work together to create the best classes and the highest standards. Yet merit pay stifles cooperation and rewards self-promotion and potentially sycophancy.
Perhaps all other professionals and workers contend with the same workplace pressures and dynamics, but many are paid significantly more to do so. My husband works for a Fortune 500 Company and might lose his job at any moment if he under performs, but his corporate management provides support and feedback that most schools do not–full-time managers who oversee 5 or 6 reports, administrative assistants, extensive yearly reviews, etc.
Tenure (which ought only to be awarded after fair and rigorous process) allows a teacher to concentrate on her class, voice her opinions without fear of reprisal, and to collaborate with other teachers. We seem to have forgotten that a major reason for tenure was to protect teachers from possible misuses of administrative power.
If principals can’t be trusted to make hiring decisions then who will make those decisions? And in what industry do supervisors not hire employees?
[…] Education researcher Jay P. Greene argues the agreement between the school system and the Chicago Teacher’s Union is a victory for true merit pay over “phony merit pay.” […]
[…] I’ll leave it to my discerning readers to make what you will of Hess’s assessment, though someone else probably could mention the impacts on students and parents, too. Anyone looking for some unexpected bright spots might want to mull Jay Greene’s insights on the demise of phony merit pay in Chicago. […]
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Here is a teacher’s view of merit pay – makes sense to me.
http://teaching-abc.blogspot.com/2014/06/merit-pay.html
Patrick Andrew Fleming
In Chicago – Phony Merit Pay is Dead, Long Live True Merit Pay | Jay P. Greene’s Blog