What We Know About Differential and Performance Pay for Teachers

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Written by: Stephanie Aragon
March 13, 2019

Among governors’ State of the State addresses this year, a majority spoke about teacher compensation, including differential pay that attracts teachers to certain schools or positions and pay-for-performance programs that reward teachers. This is also a topic we’ve received a number of information requests for. If you’re a policymaker exploring this issue in your state, here is some context that may help:

This report provides a high-level overview on the research on teacher financial incentives (including differential pay and pay for performance) and finds that state financial incentive programs have the potential to direct teachers to shortage areas and ensure they stay — but they lose their lure if they are not sufficient, sustained and paired with improvements to working conditions.

For differential pay specifically, this study finds that the loan forgiveness and bonus programs as part of Florida’s Critical Teacher Shortage Program were cost effective and reduced teacher attrition. (The study also provides a helpful overview of the research on pay differentials for teachers working in hard-to-staff subjects or schools.) Another study in Georgia shows that pay incentives for math and science teachers cut teacher turnover rates by 35 percent.

For pay-for-performance initiatives, this study finds that providing teachers with bonuses based on their performance for four years improved students’ reading achievement after one, two and three years of implementation and students’ math achievement after three years. After each of those periods in implementation, the cumulative effect amounted to about three to four weeks of learning. Additionally, this national study shows that districts with these initiatives secured new teacher hires who had graduated from colleges and universities with average SAT scores that were about 30 points higher than the new teacher cohorts hired by districts that did not adopt pay for performance.

We frequently receive questions from policymakers about teacher compensation issues. A full response, including additional information on state policy, can be found here. If you have a question about teacher compensation or other education policy topics, please contact us.

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