There is little debate among educators, politicians, and taxpayers that widespread systematic reform is needed to revitalize the American education system. For some, the new bright idea in education reform comes in the form of merit or performance compensation systems. A Denver Teacher Pay on Stage examining Denver's experience suggests that the city’s merit-pay systems represents a systematic change in the American education system, but essentially the program is the same ineffective performance pay system that has failed to work for the last century.

The merit pay system is an alternative pay system that aims to reward outstanding performance by teachers and encourage student achievement. Monetary bonuses are given to teachers whose students demonstrate improved standardized test scores, and for teachers who obtain higher secondary education, or work in challenging districts. Although the merit pay system appears at first glance to provide a viable solution, it has historically shown very little statistical evidence supporting significant gains in student achievement. As recent as 2006, a study by The Urban Institute found that most of the eighteen Pennsylvania school districts in their study did not “succeed at implementing lasting, effective, monetary or non monetary incentive plans that had demonstrated [the] ability to improve student learning." The study also found that the program encouraged competition and employee divisiveness and generally lowered morale. The merit pay system leads to competition among teachers for the best and brightest students, leaving the children in most need of dynamic and enthusiastic educators completely to the waist side. One of the most obvious inefficiencies of the merit system is its focus on raising teacher’s compensation rather than raising the level of quality education. Although the merit system aims to drive student achievement through teacher compensation, the system literally discourages teachers to work with learning or emotionally disabled students who are less likely to make significant improvements in test scores. It also may potentially encourage teachers to help students cheat on standardized tests in order to secure a bonus.

The merit systems focus on improving teaching performance is certainly on the right track, however the merit pay system should reward teachers for obtaining higher levels of training and certification in the field they teach with progressive student loan forgiveness and tuition reimbursement programs rather than just salary incentives. Research suggests that high school math and science students learn more from teachers who are certified within their field. Thus, student achievement levels will improve if school districts provide incentives for educators to master their craft. Alarmingly, research also shows that in high-poverty schools students are 77 percent more likely to be assigned to an out of field teacher than in low-poverty schools. These statistics illustrate perfectly how the American educational system continually fails to properly address the actual problems that lead to poor levels of student achievement. The merit pay program is just another example of education policy reform that will never be able to generate significant results because it fails to adequately address the correlation between student performance and subject mastery. Unless American education policy changes to reflect this relationship and work toward providing education based incentive plans for teachers, hundreds of thousands of students will continue to fall through the cracks.