We Have Merit Pay at the Collegiate Level

Here is a link to a WSJ article yesterday on the role of the teacher's union in pay and education quality:

http://online.wsj.com/article/SB100014240529702...

If anyone believes that Don is fundamentally wrong in his comments, he/she is a "true believer" who cannot be bothered with evidence or rational discourse. Another fact is that in may public school systems, teachers of all disciplines are on the SAME salary schedule. So not only is merit not rewarded, but specialty in areas of high demand and/or low supply are not differentially rewarded; afterall that wouldn't be fair and it wouldn't foster union solidarity. Whatever!

Indianjim,

Here in Texas teachers' unions are very different, since teachers cannot, by law, strike or collective bargain. Therefore the unions are little more than insurance and information providers.

AND, as a classroom teacher of 17 years experience I know a little bit about teachers and education. I even work in a school that has a merit pay scheme and got a nice bonus check. It had not the slightest effect on how a teach, I do the best I can all the time. My beef with Don is that as an economist he believes everyone is motivated by money.

BTW, the idiotic statements I was referring to were not yours but Hayek's belief we should cut teacher pay.

Uh, had you not taken Burk Files to task for moran I probably would have let this pass:

It had not the slightest effect on how a teach, I do the best I can all the time.


My beef with Don is that as an economist he believes everyone is motivated by money.

How much will your pay have to be cut before you are motivated by money?

Brotio,

A cut in pay would motivate me to seek another job. I DO have children, a house and a crippling need for food.

Mike,

I realized after the fact that you were probably not talking about what I had written. Sorry.

Texas has a lot of things in line better than elsewhere in the nation; I'm glad that unions are more hamstrung then elsewhere. This naturally makes them less destructive.

You sir, should stick to teaching economics and quit making idiotic statements about things you know nothing about.

OR, find yourself a school that's willing to try your little experiment and enroll YOUR children.

Mike in Texas,

I have what Hayek recognized (and arrogant scientism is blind to) is a highly under-rated form of knowledge: the knowledge of particular place and circumstance. I have worked at an Indiana university for 27 years and live within walking distance from the campus; I know my institution intimately from may angles as I have not only taught undergraduate and graduate students, but I have done grant work, I have done committee work, I have done administrative work, I have been involved in the university governance system, etc. etc. If you are in Texas, as your blog handle suggests, and if you have never been to my fair city in Indiana, and if you have never worked at my university for an extended period, then YOU SIR are at an impossible knowledge disadvantage, your fatuousity notwithstanding.

My statements are neither "idiotic" nor are they things I "know nothing about." Indeed SIR, I know exactly that of which I speak. Hayek's point about the importance of the knowledge of particular place and circumstance is something that you should educate yourself about, it will save you looking the fool next time you are tempted by "The Pretense of Knowledge." To that end, I suggest your read for example his Nobel address via the link below:

http://nobelprize.org/nobel_prizes/economics/la...

I agree that merit pay improves performance when Barzel's metering problem does not create severe perversions. I'll give an example. In the college of business where I am employed teaching "merit" has been driven largely by evaluations of students on surveys given during the last two weeks of each semester. This has led to a variety of perversions, not all leading to better educated students. Some of my colleagues in a quest for better student survey numbers have eased standards. This has resulted in two departments in the college giving out much higher grades on average than in the other three departments; my department is an outlier persistently adhering to the standard that an average performance gets a grade of C. But students who are accustomed to the easier standards elsewhere on campus build the expectations error into their evaluations of the faculty in my department; not surprisingly the evaluations of faculty in my department tend to be consistently lower than in other departments.

This can be solved in a variety of ways. One solution implement at another university by Glen Hubbard (in his role as dean) was to impose a grade cap on the average grade assigned in any course. I thought the idea had MERIT and tried to get it implemented at my university for 4 or 5 years running; I ran into a brick wall. On the positive side, the experience taught me that university governance at my university is pointless and I followed John Galt's recommendation and "shrugged."

MERIT should be objective not subjective. The subjective part, as you lived through, leads to perversions. What gets incentivized gets done, and the teachers were incentivized not to teach but to "suck up". On the other hand if you have standardized tests you are accused to teaching to the tests. I have not seen a workable model yet, except for seeking and screening for the right attitude in the instructors and the students. This too creates another set of problems...

Good Luck on this matter.

Burke

Thanks; yes, there are always problems in this world of scarcity. As Thomas Sowell, I think it was, put it: "There are no solutions, only tradeoffs."

75% of employees think they belong to the best 25%.

In a merit based system that notion leaves at least 50% of employees very frustrated.


Do teachers in private schools all get merit based pay? I would be surprised.


And what is merit in education? Even the link to the later pay of the students is laughable, or the same "access" to so called top universities (who discriminate openly in favour of the rich, famous & offspring of alumni).

Of all people i studied with, the ones with by far the highest income are those whose daddies owned big companies and were made director upon graduating.

They would even be extremely wealthy when illiterate.


To base any "merit" ranking on later salaries, is proving one doesn't understand the fractal nature of wealth distribution. But it is difficult to explain to people who strive to get their kids into Yale, ...

Oh please, you're giving us anecdotal stories to "prove" some point about merit pay?

I only question what is merit in education. Do you know it and how to measure it?

I was at a Rock Climbing gym with my oldest daughter, who likes to climb rocks - I stay on the ground but foot the bill. We overheard a conversation, at the wall next to the wall my daughter was climbing, between a young lady and an older couple. The young lady was complaining that she had almost $70,000 in student loans and could not get a job with her Master Degree. (Wait for it.) The older couple were fawning attention on her about taking such a difficult courses of study and were surprised she could not get a job.

I, being a curious person, and after the other couple and her had finished their discussion - wander over, daughter by my side, and let the young lady know that I had overheard the conversation and wanted to know in what filed did she obtain her Masters. She said her degree was in "Peace Studies". "Piece studies like in math or economics?" was my response. I had to ask two or three times to get what I had just been told.

I wandered off and said nothing. As we left the gym my daughter, 12 or 13 at the time, comment very quietly as she does "What a moran". She earned, a hug, a kiss and some ice cream for that. Even a 12 year old can see through some of the BS in the educational system - what can't.... Ugh!

So pay for performance in education - great idea.

So pay for performance - you bet. I believe that all High Schools should have base plus merit and the merit is based upon the percent that actually graduate. Bonus point for % that are accepted at accredited College, Universities and yes trade schools.

College and Universities should have a similar model though altered slightly. They should have a base pay, plus bonuses for the percent that graduate and get jobs with in 6 months and weighted by the average starting pay rate, expressed as the pay rate as a percentage of the overall student's debt burden.

The Colleges and Universities should also be liable for misrepresenting the value of some of their degrees. Some of these degrees are a fraud upon the student and those who make student loans. I am not saying do not offer the degrees but make full disclosure to student and lender alike - required. The student should know that a decent job upon graduation with a degree in Peace Studies or a Masters in Peace studies is unlikly to get you a job. Further the lender needs to know the risk of the underlying loan is directly proportional to the path of studies the debit student pursues.

Full Bisclosure along with Merit Pay

Burke Files

Uh, it's spelled "moron" not "moran"

You are correct. I use voice recognition software due to an injury to my right hand. The software, after some research, appears to have a default that does not allow for harsh words. You recognized one error, I have found a few more such as ash pole and truck. Dragonware has not responded to my calls on these matters as of yet. Censored without even being naughty!

Burke

A merit pay system in the public schools would give your daughter's rock climbing friend a high salary for high marks received while earning her Peace Studies degree at whatever academy she attended.

But I'd go even further than you. I'd pay educators or educational institutions directly from a tax on their students, say ten percent of income for 30 years after graduation. Prior to graduating students, educators could receive credit for their taxes, and if an institution ultimately could not pay its bills, its assets, including its interest in the income of former students, would be dissolved and distributed by the market to other educators.

Dear martinbrock - What a great idea to be paid as a royalty on the performance of your students. Interesting competitive dynamics for students and teachers.

I would pay money to be the one to introduce this at a teachers union conference and to see the look on their faces.

Burke

This form of compensation also creates incentives for lifelong investment in a person's education. I'm an employer, and I'd like to invest in an employee's skills, but I'm reluctant, because the employee might not remain with my firm long enough to realize the value of the investment.

In this scenario, I can buy this right to ten percent of the employee's income from his educators before making my investment. If my investment increases the employee's value, I might still recoup the investment if he leaves the firm, because the entitlement to ten percent of his income then is more valuable.

I'm not sure the 30 year limitation is a good idea for this reason, but it seems more politically palatable. I'm basically discussing a limited form of chattel slavery here. If the educators are entitled to 100%, rather than 10%, the system is precisely chattel slavery.

Martinbrock: The alternative to the long term contract you discuss above is to simply pay a worker a wage that nets out his/her training cost during the training period and then raise the worker wage to his/her competitive level after training. Walter Oi discusses this in detail in his famous article about labor as a quasi-fixed factor of production.

It's not an effective alternative for two reasons.

First, human beings have a very long childhood before becoming productive, and this childhood grows longer and longer as the division of labor increases. In other words, we spend more and more time in school before taking our first job. Some of this schooling is a waste of time, but that's a separate issue.

Someone must finance this childhood training before employers value wage labor in a market. The scheme I suggest has this effect primarily, insofar as it replaces taxpayer financed, public education.

Second, labor is free, and I strongly support free labor for many reasons; however, if you invest in my training, your return on the investment depends upon my willingness to remain in your employ.

Raising my wage to a competitive level after the training is precisely what you do not want to do, because you then lose the value of your investment to me. A competing employer has not born the cost of the training and so will pay me more, so the more you invest, the more I'm attracted to other employers, thus depriving you of the yield of the investment.

Some employers try to solve this problem with tuition reimbursement programs that require employees to repay the tuition if they leave an employer within a fixed period. This approach has some merit, but it doesn't address the problem well, because the most effective training often is on-the-job training, and the line between this training, which can be the employer's investment, and the employee's own labor can be very blurry. Often, a new employee provides much of this on-the-job training to other employees.

Of course, you could buy the entitlement to ten percent of your income from your childhood educators yourself, if you could afford the price or obtain the credit, and you could then resell the entitlement to an employer or other educator in the future if need be.

You could even "sell yourself" this way now, in theory, or your parents could "sell you" to an educator, but the contracts would confuse many courts, because the terms are so non-standard now, and most employers and educators would think you odd if you offered the terms.

If your parents sold you, statesmen might construe the obligation as involuntary servitude, but somehow, they don't construe their own taxes financing whatever they choose to label "your education" this way.

Martin,

I think you have missed the point, maybe I wasn't explicit enough. Walter Oi has a fabulous paper on labor as a quasi-fixed factor (JPE, 1962) I suggest you read it, if you have not already.

In case you have not let me give an overview: Oi's theory makes several predictions: 1) the workers receiving "firm general" training will "pay" for ALL of their training costs in the form of lower waged during the training period; 2) workers receiving "firm specific" training will pay for only part of the cost of training in terms of the lowering of wages during training. Walter provides a test of his theory in the paper, showing that workers with "firm specific training" are less likely to be laid off during recessions than workers with "firm general training".

Yes, I didn't understand that the employee pays for the training during the training period. Employers could also promise pay raises to employees obtaining specific training at their own expense. It amounts to the same thing.

The scheme is possible, but it doesn't address an employee who needs credit to increase his value. The "equity" approach can be beneficial to adults as well as to children.

Teachers unions make me sick. All union members in any industry have to realize that what they're doing is agitating for the biggest piece of the pie for themselves, getting as much as the can for workers as a group - sticking together to force managements hand. I suppose that's their perogative, although I've never been very union-friendly. But teachers unions are different, in my mind. If a unionized steel worker cripples his company with his demands, some other steel producer (the unionized Nucor Corp., for example) will fill the void.

If unionized teachers cripple their schools, students have very little resort to any other options. Not all children are as lucky as Don's to be able to escape to private school (and I'm very glad for you that they can... although I've gotta say, Fairfax public schools are quite good, relatively speaking - I went to school in Arlington, but one of my sisters and my wife went to school in Fairfax).

Nice letter. And to be honest, even if your kids did go to public school I wouldn't worry too much about it. I would imagine that the school board leader is well acquainted with the obstructionism of teachers' unions. Even if she can't take your suggestion literally, I bet she could sympathize with it (unless, of course, she started her career as a teacher too).

Well after this anti teacher-union rant how can anyone not say you're a centrist? Heck that's downright right-wing of a position! BTW, Nucor Steel is non-union workforce.

Exactly - that's why I mentioned Nucor rather than some other company. Oops - looks like that was typo, sorry.

So I don't get the point of your rant, ArrowSmith - are you a union man?

I hate Illinois Nazis.

LMAO!

The real problem with public shools is that they are funded by extortion and therefore do not and cannot represent consumers' preferences.

Yet the average person looks at you all googly-eyed if you tell that to their face. You might as well be an alien, such is the extent of the mass brainwashing - PUBLIC EDUCATION IS GOOOOOOOOOOOOOOOOOOOOD.

Also it should be noted that the richer districts have good public schools. If you are not fortunate enough to live in such a district, then yeah your kids are screwed.

Richer districts have good public schools because parents have the ability to "choose" where their kids go to school. That is, they can afford to move to a better (school) district or, alternatively, send their kids to a private school. These schools still have to compete on some level but our current public school system makes the costs of doing so prohibitively high for less affluent individuals who do not have the wealth or flexibility to take their "business" elsewhere.

Lizzaroni,

I wouldn't go so far as to call any public school good. They're just better than poorer schools.

I think giving parents vouchers would improve education for all students.

I'll piggy-back on brotio's post and go farther.

My spring experience dovetails into the information I have been reading for years now, and that which I learned as a senior petty officer, training, counseling, and work, that being that nothing is accomplished without discipline.

Any school can be a good and productive school if it can maintain and enforce discipline. Private schools can do so far better than public schools.

The two advantages that I see in a private school is that they can cull their teachers on a regular basis to hire and keep only those that actually are capable, and they can enforce standards that keep the students in learning mode and not distracted by cool competitions, clothing styles, and beauty competitions.

My son is in private school.

Don,

Did you really actually send that letter?

Do you really like making enemies of those who teach your children?

I mean, it's a brilliant letter to post at this blog, but actually sending it seems most unwise.

Do this across every public school system in the country with a concurrent reduction in taxes and it will do more good than the Obama stimulus.

Wait! I forgot, According to Obama all spending is stimulus so overpaying teachers has to continue to stimulate the economy. Plus those donations to the democrats from the teacher unions have to come from somewhere - it may as well be the taxes we pay to support the schools.

Ding Ding Ding, slam dunk!!!!! ;-)

Brilliant! This is why I keep coming back to Cafe Hayek.

Great idea. Why not cut staff by 10% across the board as well?

Brilliant! Incentives either matter or they do not.

Beautifically argued.

Aii yi yi, Don. That letter is equal to sticking a stick into a fire ant mound and stirring it around.

Let us all know if your children suddenly become incorrigible and spend a lot of extra time in detention or become harassed by the teachers.

So true vidyohs, but I doubt that the good professor's son attends public school ;)

So true David, I did make an assumption that wasn't warranted by Don's letter.

However about this:

"When an idea fails thousands of times, not even President Obama is going to make it work." Rick Nelson.

I make no assumption when I tell you that applies to Obama's socialism as well. But, that doesn't mean that we can't have Soviet Russia style socialism forced upon us.

I'm not really sure why you're telling me this, but I assure you that I am every bit as disgusted by the actions of our executive branch as you are sir, and I agree with you that the federal government is slowly amassing powers that do not rightfully belong to it- at least partially due to the sanction and/or apathy of the general populace.

I thoroughly enjoy your commenting on this blog. Keep fighting the good fight.

I was 'fessing-up to assuming, which we both know is not a good thing.

The other was certainly not to insult you or your awareness, if there is such a thing it was a rhetorical statement, though addressed to you, it was intended of course for general consumption by those who might take notice.

Glad to know we are on the same side of the real issues, and I return the compliment as I appreciate your insights and comments.

Got it. Good to know. See you around the Cafe.

Good point. Public schools are required to take all comers, including the bad cases. By contrast once a student gets to a university course, the assumption is that he/she is already disciplined and ready to do the job. That definitely makes the job of the professor/instructor easier. So it's another apples/oranges thing and I'm surprised Prof. Boudreaux didn't realize that.

"Public schools are required to take all comers, including the bad cases."

That's what happens when you have a monopoly. This is exactly how the public schools (administration and teachers' unions) wanted it. They can't whine because there system doesn't work.

Correction: their system. Sorry.

You realize that you can edit your posts, don't you?