The Costs of Teacher Collective Bargaining
Chicago's teachers are on the verge of striking—for the third time since 2012. Median teacher pay in Chicago Public Schools (CPS) is over $78,000 a year. CPS spends another $27,500 per teacher on benefits. And CPS is offering its teachers an 8.7 percent pay boost over the next four years. So why are Chicago's teachers threatening to strike?
Well, Illinois teachers are supposed to contribute nine percent of their salary towards their defined benefit pension; CPS teachers currently contribute two percent, with the district picking up the rest. The city is asking that teachers contribute the requisite amount—hence, the uproar.
CPS is already looking at a shortfall of $300 million in 2017. Mayor Rahm Emanuel has backed a $250 million property tax hike to help address the underfunded pension system, which has about $10 billion in liabilities. If teachers picked up their full nine percent pension contribution, it would save CPS about $130 million a year. As Emanuel put it in August, he was asking teachers to "be part of the solution, of a fair deal to strengthen our classroom and secure their position."
Meanwhile, the Chicago Teachers Union (CTU) is angry that CPS has been forced to cut staff and is demanding that the system hire more nurses and counselors. That would obviously be easier to do if unions worked with the district to control things like pension costs.
This all brings to mind an intriguing Cornell University working paper recently published by Michael Lovenheim and Alex Willen. Titled "The Long-Run Effects of Teacher Collective Bargaining," the 2016 paper is a pioneering look at the impact of teacher collective bargaining on long-run labor market and educational attainment outcomes for students. Using the fact that states have adopted "duty-to-bargain" laws at different points in time, Lovenheim and Willen explore how the presence of collective bargaining affects long-term outcomes.
Lovenheim and Willen find that collective bargaining leads to worse labor market outcomes. They report that students who live in a state with a "duty-to-bargain" law for all 12 years of their schooling have two percent lower earnings and work 0.50 fewer hours per week by the time they're 35-to-49. Using the 1979 National Longitudinal Survey of Youth, the authors also find that collective bargaining leads to sizable reductions in mastery of cognitive and non-cognitive skills.
As they write, "Our results suggest laws that support collective bargaining for teachers have adverse long-term labor market consequences for students." Regular readers know that I'm always inclined to treat this kind of sweeping scholarship with a lot of caution. That's not because of any particular concerns about the quality of the data or the analysis. It just seems self-evidently prudent to be cautious when drawing clear causal conclusions from complex econometric models that use sprawling data sets to address complex social interactions.
That said, I find the logic of the analysis pretty compelling. Chicago is a case study in how teachers' unions have siphoned vast sums out of classrooms and into retirement and health benefits that do nothing for students—and that frequently, I'm afraid, aren't configured to help attract or keep terrific teachers. We'll see how Chicago's latest drama plays out, but it sure seems like the CTU is bent on demonstrating the costs of collective bargaining.