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More on the Chicago Teacher Strike

Thursday, 13 September 2012 10:15

I've heard many folks complain that Chicago's teachers are only concerned about their wages and benefits and not over the education received by the children. As my friend Larry Mishel reminds me, there is an important reason that the teachers' union is only talking about wages and benefits in the context of the strike: it's the law.

These are mandatory topics for negotiation under U.S. labor law. Issues about how the schools are run fall under management prerogatives. While the union and management are free to discuss these issues, the union cannot legally strike over them. Therefore if the union were to explicitly put forward conditions that directly related to the quality of education as a reason for the strike, the city could pursue legal action against the union and its officers for conducting an illegal strike. 

It would be appropriate for reporters to point out this fact in discussing the strike. Those unhappy that the union is not making demands on behalf of students should be complaining about labor law, not the teachers' union.

Those interested in how Chicago's teachers envision ways to improve the quality of education might look at this pamphlet they published earlier this year, as cited in a blogpost by Dylan Matthews. Matthews acknowledges that the measures listed are backed up by research showing their effectiveness, but notes that the plan comes with a $713 million price tag.

That's not trivial, but if we assume that Chicago's per capita GDP is equal to the national average, then it amounts to less than 0.5 percent of its annual income. The union also proposed ways to raise the money, all of which focus on getting more money from the wealthy.

My personal favorite is a tax on financial transactions. The Chicago Mercantile Exchange is the largest exchange for commodities and futures trading in the country. The union proposed a tax of 6 cents per transactions, which they calculate would raise about $110 million a year.

Matthews seems to view this tax as impractical suggesting that trading would just move to New York. He cites the example of a tax on stock trades in Sweden which led trading volume to quickly migrate to London.

This is an especially inappropriate example. The tax in Sweden was large (1.0 percent of the value of the trade) and almost seems to have been designed to be evaded. Brokerage houses could open up shops in Sweden for trades done in the U.K.. It is a bit more difficult to imagine all of Chicago's traders shutting down over a tax of 6 cents per transactions.

This is not the way I would impose the tax (I would take it as a percent of the trade), but based on past calculations, this tax rate would correspond to roughly one hundredth of a basis point (0.0001 percent) of the nominal value of trades. It's hard to envision the Chicago market shutting down over a tax of this magnitude.

As with the other tax proposals, Matthews is quite right that there will be enormous political obstacles. But if we have a plan on the table that we have good reason to believe will improve the education of our children, and the people with money and power in Chicago don't want to foot the tab, why are we blaming the teachers for the poor educational outcomes? 

Comments (7)Add Comment
effects of transaction size?
written by David M, September 13, 2012 12:32
I'll throw this question out there, it's something I've wondered before--does a per transaction Tobin tax encourage larger transactions, in the same way as I'm more likely to withdraw $200 from an ATM with a high fee rather than $100? And if so, does that matter? Are fewer large transactions preferable to lots of little ones? Or are the proposed per transaction fees so small as to not affect size? Sorry to get off topic. Solidarity!
written by AlanInAZ, September 13, 2012 12:46
From my reading I gather that the issues of priority rehiring for laid off teachers and teacher evaluation are the major stumbling blocks. Everything in the pamphlet seems worthwhile but ignores the major disputed areas of teacher evaluation and rehiring policy.
Hath a teacher not bills?
written by Frankly Curious, September 13, 2012 1:18
I don't quite understand why people place such expectations on teachers. When an auto worker goes on strike, no one expects him to give lip service to the need for better QA on the assembly line. I understand that teachers *are* altruistic in general, but that just begs the question: why does their altruism cause others to expect ever more of it?

Hath a teacher not bills? If you prick him, doth he not require medical coverage?
rahm emanuel & the strike
written by mel in oregon, September 13, 2012 3:41
basically the teachers want better education for all americans, not just the wealthy. & the way they are evaluated is the main issue, the administraters & other evaluaters have no idea what the heck they are doing. teaching to the test is idiotic, so are 40 pupils per classroom. it doesn't make too much difference in how a tax on transactions at the mercantile board are carried out, just get something on board.
Grand Prix
written by David, September 13, 2012 4:49
Hath a teacher not bills?
written by Frankly Curious, September 13, 2012 1:18


Hath a teacher not bills? If you prick him, doth he not require medical coverage?

According to the pricks, he does not.
Hard to believe you'd take Dylan Mathhews seriously
written by Some Guy, September 13, 2012 7:37
Especially considering the obvious bias that would exist for an employee of the Washington Post. Wonkblog has been terrible regarding the teacher's strike. Their wage estimates have been stupid. Their drumbeat for student testing has been incessant and data-free.

Kaplan, part of the Washington Post corporate family, has a financial interest in education reforms that involve using testing to evaluate teachers. To me, that goes a long way towards explaining Wonkblog's crummy coverage of the strike. (Let alone the rest of the WaPo's terrible education reporting.)
Chicago Teachers
written by Juan, September 13, 2012 11:43
The real issue race.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.