Here's an article in the New York Times about the growing popularity of merit pay:
Scores of similar but mostly smaller teacher-pay experiments are under way nationwide, and union locals are cooperating with some of them, said Allan Odden, a professor at the University of Wisconsin who studies teacher compensation. A consensus is building across the political spectrum that rewarding teachers with bonuses or raises for improving student achievement, working in lower income schools or teaching subjects that are hard to staff can energize veteran teachers and attract bright rookies to the profession.
This is why the Missouri State Teachers Association has been thinking about merit pay. It doesn't make sense to give spectacular teachers the same pay as uninspiring ones. Not surprisingly, though, the concept hasn't caught on with the NEA:
The National Education Association[...] has adopted a resolution that labels merit pay, or any other pay system based on an evaluation of teachers' performance, as "inappropriate."
The NEA complains that teachers' wages lag behind those in other professions. When you consider the benefits and vacation time teachers receive, that gap narrows or disappears. But in a way, the NEA is right. The most talented teachers earn far less than they would if they applied their skills to other jobs. Merit pay would reward expectional teachers so that they won't be pushed out of teaching.