Teaching is a non-profit, tax-payer funded profession. When you start talking about merit-pay you are talking about making teachers compete for a very limited piece of the pie--a pie that will not increase no matter how hard everyone works. There is no additional profit to generate if everyone works harder, there are no billable hours, there is no client base to expand.
This is such a good point and one I had not read or thought of.
As for the idea that merit pay is standard in all taxpayer-funded jobs outside of teaching--this is incorrect. My husband works for our city government and I just confirmed with him that while he does receive evaluations, they have no relationship to his pay and never have. When he gets a raise, it's because the city has determined that the market rate for his skills has increased, or because his union fought for it, or because of increasing seniority. He could be disciplined or fired for poor evaluations, but he does not get paid more for outstanding ones.
FTR, my husband's GRE scores were 790/790/790 (though it looks like that's not as rare as I thought, which actually makes sense to me). He is damn smart, but he stays in his relatively low-paid public position for a variety of reasons. It's very family-friendly (he's an extremely involved dad) and he derives personal satisfaction from the altruistic nature of the position. I guess the fact that I didn't even know if he could get a performance-based raise goes to show how much we focus on externally judged "performance" here. He judges himself (harshly, sometimes); some random superior's evaluation is secondary. I'm the same way. I don't rely on other people or even on money to tell me I'm making a difference or performing well.
