The signs of autumn are all around us. The breezes grow
cooler; the leaves become more radiant; and school teachers head for the picket lines — or at least threaten to.
Kentwood teachers in West Michigan voted to authorize their
leaders to strike in late September, though
a settlement has now been reached with the school board. Across Lake
Michigan, in Illinois, suburban Chicago public school teachers have already
struck and returned to work, while work stoppages still loom in
But note that teacher unionization and strikes are mostly
the prerogative of the public sector — a pattern reflected throughout the
economy. Over the past half-century, unionism has thrived among government
employees, but has suffered a relentless decline among nongovernment workers.
Libraries full of books have been written on unionism,
but the short answer is this: Private businesses have genuine competitors, and
government agencies do not.
When workers strike in the private sector, they know that
they can demand only so much from their employers before their demands become
counterproductive. If striking workers demand salaries that are too far above
prevailing market wages, they risk pricing themselves out of work. To pay for
excessive salary hikes, companies are forced to raise prices significantly, and
this drives consumers to other, lower-cost suppliers. An eroding customer base
then results in layoffs and even the outright failure of the company.
The UPS strike of 1997 is a case in point. Dissatisfied
with the company’s compensation offer and use of part-time employees, UPS
Teamsters members took to the picket lines. The strike lasted two weeks and was
widely hailed as a victory for the union when a deal was finally reached.
Was it? Due to lost business during and immediately
following the strike,
10,000 workers were laid off. A year later, package volume was still below
prestrike levels, and those workers had not been rehired. The agreement that
settled the strike called for UPS to add 2,000 new full-time jobs by the end of
July 1998, a year after the strike,
but only if package levels had returned to prestrike levels. Since they
hadn’t, those jobs were not added.
So the strike action cost 10,000 jobs and failed to
create the new jobs the union was striking for. A post-mortem economic analysis
of the settlement has
called its merits into question even for the workers who kept their jobs.
Finally, while it cannot be said for certain whether the
strike permanently damaged UPS’ business and its workers’ welfare, it certainly
doesn’t seem to have helped. UPS’ share of the ground shipping market went from
83 percent in 1996 to 78 percent in 2000 to
45 percent in 2003. FedEx’s share of that market grew from 8 percent to 11
percent to 16 percent over that same period. On air-shipping there was less
movement, with FedEx rising from 38 percent to 40 percent, and UPS squeaking up
from 33 percent to 34 percent. Overall, UPS’ dominant position in the shipping
industry has eroded dramatically in the years since the strike.
As the UPS example shows, strikes are self-regulating in
the private sector. Unrealistic demands have very real costs, and workers know
this (or learn it the hard way). On the flip side, companies that offer
below-market wages without some compensating benefit are likely to lose
employees to their competitors, or even to other sectors of the economy.
Business owners know that, too (or learn it the hard way).
This self-regulating nature of private-sector labor agreements
has marginalized the role of unions in direct proportion to the increasing
mobility of the American labor force and to the rise in domestic and global
competition. As market pressures have risen, the need for union action to ensure
that employers at least match market compensation packages has diminished, and
the ability of unions to win major concessions over and above market
compensation rates has also diminished.
The numbers are irrefutable. Private-sector union
membership has dropped like a rock, from
39 percent in 1958 to
8.5 percent in 2002.
None of this applies to the public sector. If the
government starts charging you too much for running schools, you can’t just go
to another, competing government school system for relief, unless you are
willing to move. Within a given district, there is no competing public
school system to which you can divert your tax payments. You’re stuck with the
system you’ve got, and you must pay whatever it asks, no matter how high the
cost — unless of course you would like to sample the public prison system as
School boards ostensibly represent the general public in
negotiations with the teachers unions, but they are no substitute for the
competitive pressures that exist in the private sector. According to the most
recent available data, public schools on average spend twice as much per pupil
as private schools. Public school teachers earn 50 percent more on average than
private school teachers and have vastly more generous retirement and health
benefits, as well.
With results like that, the rapid growth in public school
teachers union membership should come as no surprise. Membership in the National
Education Association rose from 766,000 in 19611
2.7 million today. The American Federation of Teachers has grown from 71,000
members in 1961 to
1.3 million members today. As a whole, public school employees are more than
six times as likely as private-sector workers to be union members.
Unionism is thriving in the public schools and in the
public sector generally because it is not self-regulating. Public school workers
can continue to increase their demands year after year with little risk of
putting their jobs in jeopardy, and with little need to justify their growing
Though they operate at twice the cost per pupil of the
private sector, public schools perform no better and in fact often perform
worse. Though they cost American taxpayers roughly $10,000 per pupil every year
(and much more in large cities), nearly a quarter of young Americans are
National Labor Relations Act of 1935 expressly excluded government agencies
from being forced into collective bargaining with their employees. Back then,
enough people realized that without the self-regulatory incentives of the
marketplace, union demands could grow unchecked by reason or reality.
How high will the cost of public schooling have to rise
before we rediscover that early 20th century wisdom?
Myron Lieberman, "The Teacher Unions" (New York: Free Press, 1997),
Andrew J. Coulson is senior fellow in education policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.