In nearly every sector of the American economy, human nature and financial incentives combine to produce better widgets or improve service.

Unfortunately, common-sense performance standards are not fully used in education, where an arcane approach to salary distribution and teachers unions concerned more with status quo than quality education has created a system that is failing both the students in it and the country around it.

In its last triennial survey of student knowledge in 30 developed countries, the OECD's Programme for International Student Assessment found that American students lag far behind the international norm in math, science and reading.

Only about 70 percent of American students graduate from high school. The number is lower for urban, Hispanic and black students who suffer achievement gaps that keep them three years behind white students.

Our education system is a mess, with long-term consequences for the students it fails. Reforms have been suggested that restructure education delivery, but most controversial are those that affect compensation for the agent of delivery — the teacher.

And the most electrically charged of these is supplementing base pay with merit pay — a system whereby teachers are rewarded for increased achievement by their students as demonstrated by standardized testing.

Criticisms of merit pay are numerous, and most of them have little to do with what is best for kids. Reflexive opposition by teachers unions have pre-emptively biased many teachers against the idea, but in recent years there has been undeniable momentum toward acceptance of merit pay by state and local union members, and successful models exist in numerous states and school districts.

The important question — indeed, the only question we should ask — is "Does merit pay give us brighter children?" And the answer is, "What a silly question. Of course it does!"

Merit pay provides incentives to attract energetic younger teachers and experienced professionals considering career change, and to retain good teachers. When the quantified success of the student is the metric for a pay increase, the achievements of that student will be the singular focus of his or her instructor.

In 2006, the city of Houston implemented a merit program rewarding teachers as much as $5,000 for campus and individual improvements. In two years, the district significantly increased its teacher retention and doubled its "exemplary" schools.

Denver commenced its merit-based plan systemwide in 2007 with support of 60 percent of its teachers. Its diverse incentives contain premiums in 10 categories, including mentoring, attendance, teaching in underperforming schools and "hard to fill" positions. Although national metrics are not yet available, preliminary testing and teacher satisfaction indicate that the new salary method is working well. Programs in Florida and Minneapolis have also demonstrated quantifiable success.

In underperforming areas, cries for reform and objections to those reforms are loudest. The District of Columbia school system abysmally fails its 90 percent black student body, which often ranks last in national testing. Yet when reformist School Chancellor Michelle Rhee suggested attracting and retaining good teachers with incentive pay, she faced intense criticism from teachers unions.

To maximize student success, merit pay should be tailored to the unique demographics of a school or district, but include student achievement goals, voluntary teacher participation, objective testing that drives merit pay and removes personal bias, and communication between all stakeholder groups.

As evidence of the successes of merit pay mounts, we should embrace teacher incentives as one reform that can deliver a more promising future to our kids, especially for low-income and minority students that the current system is clearly failing. Why would we not? Along with our children, teachers are one of our nation's most important resources. Rewarding them for pushing a child up the ladder of knowledge just a little further is the very least we should do.


Kerri Toloczko is senior vice president of policy at the Institute for Liberty (www.instituteforliberty.org), a privately funded conservative think-tank. Reach her at kerri.toloczko@instituteforliberty.org.