Unsurprisingly, it's a political nonstarter due to union opposition.

Issue 1: A kids past performance and out of school issues dramaticly impact learning independent of the teacher. So teachers in schools in poor areas are often at a huge disadvantage under most of these systems.

Issue 2: Without an increased budget paying meaningfully more money to great teachers can significantly reduce the income for new and or average teachers.

Issue 3: It fails to attract talent because it does not increase the all important starting salary.

PS: Teacher direct compensation is a significant portion of US educational costs but bumping the minimum starting salary to say 50k is not nearly as expencive as you might think. Paying new teachers more, reducing seniority perks which reduces pension obligations and adding incentive based bonuses is IMO a far better use of funds than the administrative overhead that keeps increasing over time.

A VAM score is (actual score of their students - expected score of statistically similar students). If a kid has low past performance, his expected score will be low, and thus the bar is lowered for his teacher.

VAM tends to hurt teachers in top schools far more than those in the bottom schools due to the ceiling effect - if your students expected score is 97%, there is no room for them to improve.

As for teacher pay, this is a non-problem. Teachers are overpaid when you account for pension, job security and summer vacation - as a result, there is a glut of people attempting to work as teachers, rather than a shortage.

Students are not predicted to score 97% school wide due to reversion to the mean.

As to a teacher glut it's not a question of body's it's a question of quality. Plenty of people would be CEO of Ford for far less money that does not mean there over paid.

This is simply nonsense. How would this fact not be reflected in the mean performance of students grade 8, income in [$0,$15], race=white, grade 7 percentile in [25%,50%]?

I'm beginning to think that most of the critics of VAM don't even understand what it does and are merely repeating critiques of blindly measuring raw test scores.

I'm beginning to think that most of the critics of VAM don't even understand what it does and are merely repeating critiques of blindly measuring raw test scores. And your ignoring the huge statistical significant difference having an under preforming peer group has on student performance.

I'm also curious - if this effect cannot be included in a model, how can one demonstrate it's existence in a statistically significant manner?

They can and do. However, when it comes to teacher pay and student performance such things are politically untenable. No Child Left Behind does not mean except for when your peer group is full of truants.

The best evidence for this is actually from tracking randomly assigned edge cases. Often good schools will accept X numbers of students from another area and when they pull randomly from the pool of available students it's not hard to track what's going on and compare crossovers performance with students from each area that stayed in that area.

The "teacher" works for an after school tutoring academy. He makes most of his money selling access to his online video for $4/hr.

I don't know of anything preventing that here. Except, of course, for lack of demand for it.