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Can teacher bonuses help close the achievement gap?

Researcher: Matthew Springer
Matt Springer feature image

Our teacher compensation system is broken.

Not only is it broken, but the way we pay teachers is doing harm, says Matthew Springer, the Robena and Walter E. Hussman, Jr. Distinguished Professor of Education Reform at Carolina’s School of Education.

The single-salary pay schedule commonly used by school districts across the country contributes to an inequitable distribution of highly effective teachers that is stifling academic progress among the nation’s neediest students.

The Edge

An inequitable distribution of highly effective teachers is contributing to hard-to-close achievement gaps in American K-12 education. Research by Matthew Springer and colleagues has identified that paying highly effective teachers salary incentives — when the incentive programs are carefully designed and implemented — can help reduce teacher turnover, leading to higher student achievement. New research is pointing to factors that can make salary incentive programs more effective.

That has motivated Springer and colleagues to examine how teachers are paid, specifically looking at whether bonuses and teacher evaluation systems support and contribute to retaining good educators, and whether differentiated compensation leads to gains in student achievement. He’s found evidence that incentive pay systems can have positive effects — provided they are carefully designed and implemented.

Roots of a broken system
Most school districts in the U.S. use a single-salary pay schedule, setting compensation based on teachers’ years of experience and their highest academic degrees. Single-salary pay schedules were first adopted during the 1920s to professionalize compensation practices and to help eliminate then-rampant gender and racial discrimination, nepotism and favoritism in teacher compensation practices. Single-salary schedules also had the effect of easing salary negotiations between school boards and teachers’ unions during a period of labor-management strife in the early part of the last century.

Single-salary schedules are a workplace anomaly. Most professions offer higher salaries to reward those with high-demand skills or expertise and to recruit and to retain the most effective employees. Consider medicine or higher education, where pay varies significantly by specialty or field.

According to Springer, single-salary pay systems exacerbate the most pressing problems in American K-12 education.

A large body of research finds that the inequitable distribution of highly effective teachers helps explain the student achievement gap. Schools with higher concentrations of low-income, non-white, and low-performing students have a more difficult time retaining teachers, especially the most effective ones.

The subsequent sorting of teachers across schools helps fuel racial- and poverty-related achievement gaps. Schools enrolling children from the most disadvantaged backgrounds are more likely to be staffed by novice teachers, less-prepared teachers, and teachers instructing out-of-field. As a result, children enrolled in schools with high concentrations of disadvantaged students are exposed to higher teacher turnover and lower quality instruction.

In short, Springer says, when teacher pay is equalized, teacher quality is dis-equalized.

What we’ve learned from reform efforts
Since the landmark “A Nation at Risk” report in 1983, policymakers have pursued three waves of compensation reform.

The first wave of compensation reform typically took the form of career ladder programs in which teachers earned additional compensation for taking on new responsibilities, or knowledge- and skill-based pay plans in which teachers were rewarded for successfully completing activities — such as portfolios, additional certifications, earning graduate degrees in subjects taught — that demonstrated higher levels of expertise and understanding of exemplary practices.

Despite three decades of interest and a variety of experimentation in pursuit of a better way to compensate educators, efforts have not always been well conceived or adequately aligned with district and labor market realities.

A second reform wave at the turn of the century was characterized by pay-for-performance and market-oriented strategies such as hard-to-staff school and subject bonuses, representing a shift toward compensation systems based on student outcomes — a shift that was accelerated by the 2001 “No Child Left Behind Act.” During this period, Congress, states, and local school districts in several cities allocated funds for a variety of pay-for-performance plans.

A third wave of reform, ushered by the Obama Administration’s “Race to the Top” grant program, provided incentives for states to develop and implement educator evaluation systems that would inform teacher promotion, tenure, certification and compensation decisions. An important feature of these reform efforts was that compensation was coupled with other educator supports such as job-embedded professional development or peer-to-peer coaching.

Despite three decades of interest and a variety of experimentation in pursuit of a better way to compensate educators, efforts have not always been well conceived or adequately aligned with district and labor market realities, Springer and other researchers have found. That’s among the reasons, Springer says, why several high-profile experiments failed to produce evidence that incentive pay for teachers improved student test scores or changed teacher instructional practices or behaviors.

Those perceived failures in compensation reform efforts attracted widespread attention in the news media and within the education profession, with teacher associations, think tanks and advocacy organizations often taking the simplified stance that compensation reform in education does not work, Springer says.

But, according to Springer, careful analyses of the reform efforts do reveal evidence that differentiated pay plans can have positive effects. A close look also points to what is needed to design and implement successful teacher compensation reform initiatives.

Finding the promising evidence
Springer has closely examined educator compensation systems and reforms to pay practices for more than a decade. He and colleagues have studied the effects of retention bonus programs and merit pay plans for teachers, examining whether they are effective in retaining high-performing teachers and in supporting students’ academic achievement.

Springer, with Luis Rodriguez of New York University and Walker Swain of the University of Georgia, examined a 2013 pilot pay initiative in Tennessee, conducting one of the first studies to use a rigorous causal research design to evaluate a retention bonus program targeting highly effective teachers. In addition to seeking to determine if the one-time bonuses helped retain high-performing teachers, it was designed to gauge whether the bonuses produced long-run benefits for students. (Springer, Swain & Rodriguez, 2016)

After accounting for potential confounding factors, Springer and colleagues found evidence that schools’ participation in the retention bonus program drove improvements in student test scores compared to scores among students in otherwise similar non-participating schools.

With regard to whether the bonus program had any impact on retaining teachers identified as high-performing, the study found — only in tested subjects and grades — a consistently positive effect that was both statistically and substantively significant. However, there was not a significant overall effect on retention among all top-performing teachers. Springer and colleagues identified 1) design concerns — for example, bonuses for teachers of non-tested subjects were based on school-level measures, not those of individual teacher effectiveness — 2) implementation concerns — such as the timing of the process for applying for the bonuses — and 3) noncompliance in the distribution of the bonuses that could have hampered the program’s effectiveness.

Springer and colleagues followed with another study of the Tennessee retention bonus program (Swain, Rodriguez & Springer, 2019), this time examining the program’s effect on student achievement, an area where little has been published with respect to retention bonus programs.

At first glance, the estimated effects of Tennessee’s retention bonus program appear modest, increasing the likelihood of a highly effective teacher returning to high-poverty “Priority Schools” by roughly 20 percent. However, because highly effective teachers are typically replaced by less-experienced, less-effective teachers, the retention bonus program had the equivalent of a profound intervention.

Springer explains the strength of the effect this way: The average teacher in Tennessee produces one year’s worth of academic growth in their students on average, which places them at the 50th percentile of the teacher performance distribution. The average teacher retained as part of the state’s retention bonus program was at the 84th percentile of the teacher effectiveness distribution, while the average teacher hired to replace them was at the 25th percentile, a very large difference in teacher effectiveness.

Also, after accounting for potential confounding factors, Springer and colleagues found evidence that schools’ participation in the retention bonus program drove improvements in student test scores compared to scores among students in otherwise similar non-participating schools. Reading achievement gains appeared to persist at least a year after the bonuses were removed. Impact on math scores was smaller, but the authors note evidence that result may have stemmed from smaller effects of the bonuses on math teachers’ decisions to stay in Priority Schools.

The authors conclude: “In line with several studies before it, the findings presented here indicate that financial incentives can marginally shift teachers’ decisions to persist in the challenging work environments of high-accountability, high-poverty, racially isolated schools, and promote higher levels of learning than would have occurred had they left.”

A meta-analysis reveals more evidence
Early studies, including work by Springer, report little evidence that incentive pay systems have improved student test scores. These studies gained attention from the education community, fueling arguments against incentive pay systems and, as Springer notes, casting a shadow over compensation as a viable reform strategy for improving public education.

According to Springer, even the studies that found little or no effect of teacher incentive pay on student achievement can provide valuable information that helps reveal complexities and mechanisms that blocked the success of some reform experiments.

But, Springer argues a careful evaluation of those studies uncovers evidence that points the way to establishing effective teacher incentive pay programs.

Springer, with colleagues Tuan Nguyen of Kansas State University and Lam Pham of Vanderbilt University, conducted a meta-analytic study of the teacher merit pay literature. They identified nearly 20,000 records for screening which were subsequently reduced to 137 studies that warranted a full review, yielding a final sample of 45 studies that were independently coded, 37 of which were included in the final analytic sample.

They found that characteristics of merit pay programs implemented in the U.S. differed in two key ways from those implemented abroad. Merit pay programs in the U.S. were implemented for a shorter amount of time, on average (3.5 years vs. 5.9 years). The average size of bonus awards in the U.S. was also not as large as pay awards abroad (10.1 percent vs 45.5 percent of per capita income).

Springer and colleagues then examined the association between teacher merit pay programs and student test scores. They found, on average, the effect of teacher participation in a merit pay program is associated with a statistically significant 0.043 standard deviation increase in student test scores among the studies conducted in the U.S. That’s roughly equivalent to three additional weeks of learning, or 9 percent of the black-white test score gap.

While the uncovered average effect size is not as large as some other education interventions, careful examination of the teacher incentive pay literature illuminates factors that can inform more effective design and implementation of incentive pay programs, which is where the debate needs to focus, Springer says.

Pointing to what works and why
According to Springer, even the studies that found little or no effect of teacher incentive pay on student achievement can provide valuable information that helps reveal complexities and mechanisms that blocked the success of some reform experiments.

Some implementation factors that have hampered the success of teacher incentive programs include:

• In the 2013 Tennessee initiative, implementation was late, giving principals little time to take advantage of the bonuses as a retention incentive. Also, there was considerable noncompliance with the rules regarding distribution of bonuses, making it difficult to rule out that principals offered bonuses selectively. (Springer et al., 2016)

• In New York City’s Schoolwide Performance Bonus Program, the incentive system was overly complex, and for the most part, bonus payments treated teachers within the same school equally irrespective of their individual performance. (Marsh et al., 2011)

• In the federally funded Teacher Incentive Fund program, researchers reported that in the fourth year of implementation 42 percent of teachers in the treatment schools were still unaware they were eligible to earn a performance bonus. Teachers in treatment schools also reported that the maximum bonus available was no more than 40 percent of the actual maximum bonus districts awarded. (Chiang et al., 2017)

Springer argues that more careful implementation of teacher incentive pay programs is needed. He says the next, and possibly pivotal, generation of teacher compensation reform will be distinguished by three characteristics:

Intent, meaning compensation reform that is aligned with organizational goals and objectives and designed to attract, retain, reward, and appropriately compensate talented educators.

Operationalization, referring not only to better measurement of the multi-dimensional nature of teaching and learning and the framing of incentive rewards, but also to the adherence to design in the implementation of incentive pay programs.

Validation, capturing the ways researchers, in partnership with practice, study compensation reform and leverage insights from behavioral economics and psychology to design, monitor, and refine cutting-edge pay systems.

The nation’s lowest performing schools need strategies to identify and retain their most effective teachers.

Springer also outlines the following considerations that policymakers and education reform leaders must consider when designing and implementing teacher incentive pay programs:

• Take steps to ensure principals and teachers in eligible schools are aware of the bonuses and are supported throughout the implementation process to ensure compliance with program guidelines.

• Consider creating opportunities for permanent or longer-term salary increases for teachers with consistently high ratings.

• Make a concerted effort to address the broad range of factors that reduce the desirability of working in low-performing, high-poverty schools, including concentrated poverty itself.

• Be aware that any program that relies on observations and test-score-based, value-added estimates to differentiate teachers are only as strong as the measures of effectiveness are accurate.

The nation’s lowest performing schools need strategies to identify and retain their most effective teachers. Instead of policies that target for dismissal educators with poor evaluations or low value-added estimates, salary incentives that seek to retain highly effective teachers can reduce unwanted turnover, avoiding the associated financial burdens and social upheaval.

More importantly, retaining highly effective teachers can boost academic achievement for students. Properly designed and implemented salary incentive programs, combined with efforts to improve working conditions in lower-performing schools, can help close achievement gaps in our nation’s schools, delivering the promise of education to all of our students.


Chiang, H., Speroni, C., Hermann, M., Hallgren, K., Burkander, P., Wellington, A., and Warner, E. (2017). Evaluation of the Teacher Incentive Fund: Final Report on Implementation and Impacts of Pay-for-Performance Across Four Years. Washington, DC: Mathematica.

Marsh, J.A., Springer, M.G., McCaffrey, D.F., Yuan, K., Epstein, S., Koppich, J.E., Kalra, N., DiMartino, C., Peng, A. (2011) A big apple for educators: New York City’s experiment with schoolwide performance bonuses. Santa Monica, CA: RAND Corporation.

Pham, L., Nguyen, T., and Springer, M.G. (2019). Teacher merit pay and student test scores: A meta-analysis. Working Paper. Chapel Hill, NC: University of North Carolina.

Springer, M.G., Swain, W.A. & Rodriguez, L.A. (2016) Effective teacher retention bonuses: Evidence from Tennessee. Educational Evaluation and Policy Analysis. Vol. 38, No. 2, pp 199-221.

Springer, M.G. (2019) You get what you pay for: Why we need to invest in strategic compensation reform. Working Paper. Santa Monica, CA: National Institute for Excellence in Teaching.

Swain, W.A., Rodriguez, L.A. & Springer, M.G. (2019) Selective retention bonuses for highly effective teachers in high poverty schools: Evidence from Tennessee. Economics of Education Review. Vol. 68, pp 148-160.