Nineteenth century historian and political scion Henry Brooks Adams had an infinitely high regard for the power of the teacher. Said Mr. Adams, “A teacher affects eternity; he can never tell where his influence stops.” Research on teaching efficacy generally supports his claim: teachers have a significant and enduring influence on student performance. In fact, teacher quality has been shown to impact student achievement more than any other school-related factor.

But how does this knowledge translate into cold calculations about cash? Just how much is a good teacher worth anyway? Such questions are the focus of ongoing (and often contentious) debate, prompting a closer, more critical look at how we pay public school teachers in our country. Traditional compensation systems, long advocated by teachers’ unions, emphasize degrees earned and time on the job. But a budding merit-pay movement is attempting to change that, interjecting marketplace sensibilities into a profession that has historically provided few monetary incentives or rewards for high-fliers.

Time magazine’s current cover story, “How to Make Great Teachers,” by Claudia Wallis delves deeply into issues of teacher compensation and merit pay. Ms. Wallis points to Denver, Colorado’s innovative compensation plan, ProComp (highlighted last fall in an NCEA column), as a successful model for merit pay. According to Ms. Wallis, early research on ProComp, while not conclusive, is still promising: “A pilot study found that students of teachers who enrolled on a trial basis performed better on standardized tests than other students.” The program is also boosting the number of teachers interested in working in Denver’s disadvantaged schools.

The Time article did not include data on merit pay released (pdf) from the University of Arkansas late last month. But these new findings only bolster the case for merit pay. Evaluations of the second year of the Achievement Challenge Pilot Project in Fayetteville, Arkansas found that “students in the merit pay schools improved by nearly seven percentile points in math, by nine percentile points in language, and by six percentile points in reading” on the Iowa Test of Basic Skills. Teachers, eligible to receive bonuses up to $10,000, had some concerns about the program’s implementation, but overall, they were more satisfied with their salaries than their peers in nonparticipating schools. Teacher participants also indicated they did not experience the negative working conditions or “divisive competition” so often cited by merit pay opponents.

This data surely comes as an unwelcome surprise to the nation’s largest teachers’ union, the National Education Association (NEA), a group that has vigorously and consistently blocked merit pay provisions. According to the NEA, “Merit pay systems force teachers to compete, rather than cooperate.” Moreover, the “fundamental problem” when it comes to compensation, says the NEA, “is lower teacher pay, period.”

But focusing on higher pay for all teachers, as the NEA recommends, is ill-conceived and has little bearing on student achievement, says a new report from the Locke Foundation’s education analyst, Terry Stoops. Released last month, this Annual Report on Teacher Pay (pdf) also finds that NEA salary rankings (placing North Carolina 25th in the country) fail to consider critical regional differences like cost of living, which clearly vary from state to state. According to Mr. Stoops, the average North Carolina public school teacher actually makes $5,400 more than the average teacher elsewhere in the U.S., when salaries are adjusted for cost of living and other factors. This earns us a salary ranking of 10th-highest in the country. Rather than universal pay hikes, Mr. Stoops advocates implementing “a comprehensive teacher pay program that attracts and rewards excellence.”

It’s time we did just that. If we’re really serious about raising student achievement, we must spend wisely. But we also need to understand that the “fundamental problem” isn’t low pay; it’s a compensation system that fails to differentiate financially between the teachers who help kids achieve and those who do not. That needs to change. Period.