The Hidden Costs of the LA Teachers Strike

 

The recent teachers strike in Los Angeles was resolved on terms that have generally been regarded as a victory for the teachers against the embattled Los Angeles Unified School District (LAUSD). The LAUSD is financially strapped because of ever heavier pension obligations for retired teachers and high operating expenses. Nonetheless, the LAUSD capitulated to the demands of the teachers union, the American Federation of Teachers (AFT). It agreed to a 6% pay raise for the teachers to be phased in over two years, and class size was reduced by two students per class. The District also vowed to beef up its employee base by hiring 300 nurses, 82 librarians, and 17 counselors by 2020.

LA mayor Eric Garcetti, who has higher political ambitions, crowed: “When we see a problem, we fix it.” AFT President Randi Weingarten noted optimistically, “Everything teachers are demanding would strengthen public schools.” Going out on strike, she said, was about “ensuring that all public schools have the conditions they need for student success.” But those remarks, as Jason Riley of the Wall Street Journal notes, must be taken with a large gain of salt, for self-interest offers a better explanation of the AFT’s strategy than its supposed altruism. The AFT thought that its gambit was worthwhile for its members, but a closer look at the settlement shows that in the long-run, the union teachers got less than they hoped for, while everyone else lost big time.

The initial sticking point is the interim costs—none of which are recoverable—that stemmed from the shutdown of the school system for six days. The teachers took a big salary hit—about $2,250 in wage losses per teacher, or three percent of salary. The District lost around $100 million because state funding is tightly tied to the days that students are in school. The teachers were willing to roll the dice because they thought that their losses would be offset by long-term gains, but that outcome depends on their political ability to persuade the California legislature to raise taxes to fund the expensive settlement, which given the state’s tricky financial condition is far from certain.

Other stakeholders, to use the fashionable term, were not so lucky. The negative impact of the strike on families with school–age children was felt from day one. School lunches were not provided; day-care schedules had to be rearranged; time off from work was taken; educational opportunities that cannot be recouped were lost. Employers and other groups suffered from the ripple effects. No sober analysis should ignore these tangible setbacks to innocent third parties. To avoid such a situation, the original design for public unions was that they could not strike, but had to settle for compulsory arbitration. But that prohibition never held. Now when unions do strike, their strategy ignores the collateral damage.

Next is the nettlesome question of how to pay for the added expenses brought on by the settlement. The final settlement included an understanding that a Los Angeles S.O.S. would go out to the California legislature asking it to increase funding to support the City’s additional budgetary needs. Without that funding, the District will run through its rainy-day surplus. The District Superintendent Austin Beutner pointed out in a plaintive Wall Street Journal op-ed that the LAUSD faces a structural deficit of some $2 billion, even before footing the bill for the additional expenditures. LA residents supported the deal in part because they seemed confident that the California legislature would authorize new taxes to pick up the slack.

It remains uncertain whether parents and families in other parts of the state will be as generous as the Angelenos hope. The California teachers unions have cultivated powerful legislative allies, so it is not entirely unreasonable to think that some assistance will be forthcoming. But either way, the news is grim. If the extra money is not forthcoming, there will be massive financial dislocations, including a possible state takeover of the LAUSD, which could upend all the teachers’ gains. And if new taxes are imposed, they will weigh down productive enterprises throughout the state. When a local government lives beyond its means, the costs do not disappear. What remains is a messy fight over who picks up the tab.

The AFT also prevailed upon the LAUSD to urge the California legislature to limit the number of new charter schools in the district, even though the LAUSD’s board was elected on a reformist, pro-charter school platform. There are now 277 charter schools in LA with over 138,000 students from kindergarten through high school. There is surely demand for more. But to the AFT, these schools spell competition: If they drain away students from a failing public school system, less money will flow into the District-run public schools, which means less money goes into the pockets of unionized school teachers.

Teachers unions habitually claim that neighborhood public schools cannot be expected to perform well if they lose their best students to charter schools. But this argument ignores the enormous losses to those students who are chained to their public school desks when better alternatives beckon. If any private business sought to lock in its customers in this fashion, howls would be heard across the land. But unions play by different rules that build inefficiencies into a bloated public school system. As an article of faith, they refuse to face the possibility that charter school competition might induce them to raise their game—and lower their contract demands.

Any claim that the teachers go on strike “for the kids” gives rise to an obvious puzzle. How does pushing for higher wages, blocking competitive schools, and seeking legislative funding from outside the district help students? The answer that commonly comes is that these steps allow the School District to keep the current teachers. Higher wages make sense when an employer is trying to attract better employees or reward good performance. But it doesn’t make sense to pay more for the existing pool of teachers, many of whom are only employed by the District because of provisions in their contracts that make termination difficult.

Just imagine what would happen if the LAUSD could operate without any union. Onerous work rules would vanish and the schools would have the flexibility of non-union charter schools. Next, the LAUSD could introduce sensible wage levels, by raising wages in hard-to-fill areas like the sciences, and lowering them where the supply is greater. Better wage systems could help attract younger teachers now shut out of the current system. There is no virtue in a seniority system that requires the district to keep its most expensive teachers, even if they are over the hill. Lower total instructional budgets are not inconsistent with a superior work force. Indeed, the extra savings could allow the District to expand its offerings or to lower the overall tax burden. Some turnover in personnel should be welcomed, not disparaged, as a way to rejuvenate the system.

The counterargument is that the LAUSD and other school districts could set wages so low as to spur an exit of capable teachers. But at that point, the correct response is not to introduce a union, but for a District, like any rational employer, to raise wages until it meets its needs. To help with that task, it might well be wise to think about undertaking novel structural reforms. One possible approach is to break the large and ungainly LAUSD into smaller components. Nothing from that restructuring requires any change in California’s current funding mechanism. Indeed, the separate districts should be prohibited from colluding in setting wages or other terms of employment. The objective here is to create an effective competitive market with both public and private schools, without any entry or exit restrictions.

It is worth noting that the root of the current union structure depends on a key decision made close to 60 years ago. In 1962, President John F. Kennedy issued an executive order that gave limited recognition to federal employee unions, which led to a surge of similar rules at the state level. That key policy change should be roundly condemned on social grounds, even at this late hour. The executive order violated the basic principle that a public office is a public trust, which means that when any public school board deals with its employees and suppliers, it should seek the best deal for the public at large.

Unions hate being described as monopolists endowed with powerful legal protection. But that is precisely what they are. The sooner the law stops teachers unions and legislators from colluding against the public good, the sooner we shall be able to provide public school students with the education they deserve.

© 2019 by the Board of Trustees of Leland Stanford Junior University

There are 4 comments.

  1. Barfly Member

    The progressive project is and has always been to transfer wealth, status, and power from those who work at objectively measurable pursuits to those who do not.

    • #1
    • January 30, 2019, at 2:19 PM PDT
    • 1 like
  2. Unsk Member

    Richard, Correct me if I’m wrong but didn’t the Kennedy 1962 EO violate the National Labor Relations Act that forbade public employee unions?

    Fine, detailed post btw. However, it should be noted that the Public Employee Unions effectively own California, it’s governor, it’s legislature and many of it’s most populous Counties and Cities where most elected officials are financed and given a tremendous financial advantage by those same public employee unions which few can compete with. Trump could effectively remedy this situation I think with an executive order that would reverse Kennedy’s.

    This illegal strike ( aren’t public union strikes illegal?) is well on it’s way of destroying what’s left of our educational system in LA. Without charter schools many parents would be lost to a very scary school system that only cares about money, power and indoctrinating it’s left wing views.

    The current public employee union situation is making a sham of our democracy particularly in our Blue States and Cities where they have unrivaled power. However, not only are the unions decisively skewing elections across the country but many jurisdictions beyond the blue ones are seriously beholden and seriously in debt to the pension beneficiaries of those Public Employee Unions to the tune of trillions of dollars which are bankrupting effective governance.

    Change and real reform is long past due.

    • #2
    • January 30, 2019, at 4:53 PM PDT
    • 1 like
  3. The Reticulator Member

    Richard Epstein: To avoid such a situation, the original design for public unions was that they could not strike, but had to settle for compulsory arbitration. But that prohibition never held.

    I would like to learn more of this history.

    • #3
    • January 30, 2019, at 7:40 PM PDT
    • 1 like
  4. TBA Coolidge
    TBA

    Might I add that the taxes have been collected, but the teachers not paid…wonder when the taxpayers will get the rebate check. 

    • #4
    • January 31, 2019, at 4:41 PM PDT
    • Like