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Are Teacher Unions Our Most Destructive Lawful Organizations? January 31, 2008

Posted by federalist in Education, Government Regulation, Unions.
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Labor unions are often justified as analogs to corporations. Whereas corporations concentrate capital to produce profit for shareholders, unions concentrate labor to produce benefits for their members. But profit and labor benefits are not necessarily analogous. Under the constraints of our current regulatory regime profit is an absolute good. Are unions, as currently allowed, net producers of anything good?

For-profit corporations selfishly seek to maximize the profits of their shareholders. But our government does not allow them to profit through anticompetitive or destructive practices. Under these conditions shareholders benefit from profits, but every market participant also potentially benefits because the very fact that a corporation is earning a profit indicates that it is providing useful goods and services at competitive prices. Profit-seeking in this regime is thus absolutely constructive behavior.

Unions likewise exist to selfishly maximize the benefits of their “shareholders” (members). But is that a net social good? In a theoretical framework selfish actors may all be equally virtuous. However the reality of our regulatory regime for organized labor has turned unions into nothing more than rent-seeking organizations. I.e., unions exist only to exploit regulatory advantages at the expense of others. They do not produce anything good for anyone other than their members. This is not unjustifiable per se — after all, corporations explicitly exist only to produce profit for their shareholders. The fact that profit in a free market has positive externalities is ancillary to their purpose. Thus we can’t fault unions for acting selfishly anymore than we can fault individuals or corporations for acting selfishly. The problem is that our government has accorded unions unilateral privileges to capture rents. In contrast to corporations, whose destructive tendencies (e.g., abusive monopolies or cartels) are restrained by regulation, government has turned organized labor law into a license to engage in destructive behavior. As a result destructive behavior is all we get from unions.

We must disabuse ourselves of the notion that legally-advantaged unions have any redeeming characteristics. A union in theory should enjoy the same rights as a corporation. I.e., it should be allowed to act collectively on behalf of its members. However, it should not be allowed to secure and abuse a position of monopoly power.

The unions we face today are always monopolies or cartels. None seems more privileged than public school teacher unions. Consider these characteristics:

  • By law teacher unions have a monopoly on teachers. The union can and does forbid schools from employing teachers who are not union members. It can and does require that union dues be withheld from existing teachers who do not wish to be formal members of the union. The school is forbidden from entering into a voluntary employment contract outside of the union’s purview. How does this benefit anyone except the union members? On the contrary, it hurts people who want to work for the school under other terms, and it hurts the school’s ability to employ people under other terms — even if both of those parties consider such a contract to be mutually beneficial.
  • Teacher unions always oppose merit pay. They require that teachers be paid only based on seniority and other fixed criteria of the union’s choosing. This prevents exceptional teachers from earning what they are worth to the school, and it deprives the school of the ability to select for exceptional teachers. How does this benefit anyone except mediocre and below-average union members?
  • Teacher unions always demand “tenure,” which essentially means that an existing teacher cannot be demoted or fired for any but the most limited and extreme reasons. How does this benefit anyone except union members who have inadequate performance or excessive compensation?
  • Teacher unions always oppose charter schools, vouchers, or any other measure that could reduce their power or create competition for them. How does this benefit anyone except union members?

The practical impact of all of these positions is to create excess rents for union members, all at the expense of the general public. In this regard organized labor is just like organized crime. The one inexplicable difference between the two being that the former is enabled by laws and the latter is proscribed by laws.

Every citizen is paying a price for this union cartel: We pay higher taxes to cover their excessive compensation, and we entrench lower quality teachers in the public schools. In organized crime it is sometimes hard to find the true cost to society. Excess rents tend to accrue to the bosses, and those individuals go to great lengths to conceal their finances.

In organized labor (we hope) there are no bosses collecting rents from the syndicate. Excess rents are thus left in the hands of the union members. Since members are engaging in legitimate employment it can be tricky to differentiate the excess rents from their fair wages. However, we can get a sense of the magnitude of excess rents by looking at the demand for union jobs, and here we have grounds for outrage: In many school districts, even during record-low unemployment, it is common to see hundreds of qualified applicants for every union position.

Are these excess rents producing exceptional teachers? There are no grounds for believing such a hypothesis. On the contrary, the fact that unions persistently oppose any measure of accountability or merit compensation suggests that union members themselves don’t believe they deserve their pay.

We, the public taxpayers, should be outraged.

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1. federalist - March 11, 2008

Rick Berman comes up with a market solution to union entrenchment:

The Center for Union Facts will ask parents, students and other teachers Tuesday to nominate the “worst unionized teacher in America.” The center says it will choose 10 and offer each $10,000 to quit; “winners” must allow the center to write about them on its website.

2. federalist - July 26, 2008

More on this subject here.

3. federalist - January 7, 2009

Are we outraged yet? From TheBulletin:

Neal McCluskey, associate director of Cato’s Center for Educational Freedom, began by analyzing the contentious matter of how much money teachers make compared to how much other similarly educated professionals earn on average. Many teachers’ unions argue for higher teacher pay because educators tend to earn lower annual salaries than other professionals, but Mr. McCluskey writes that teaching tends to be more lucrative for each hour worked and easily permits working second jobs during nights, weekends and summers — opportunities of which many teachers avail themselves. He determined that even the lowest-paid teachers earn more on average — $35.49 per hour — than accountants, registered nurses, underwriters and computer programmers.

4. federalist - September 4, 2009

Michael Barone (Liberal journalist shocked teacher unions shield incompetence) summarizes the symbiotic relationship between teacher unions and the Democratic Party:

It’s good for just about everyone involved: the teachers’ unions get taxpayers’ money, the Democratic party through the teachers’ unions gets taxpayers’ money. Just about everyone, that is, except for the kids.

5. federalist - February 23, 2010

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