Welcome to the Profit of Education website. Continuing the conversation begun in the book Profit of Education, we discuss the latest economic evidence on education reform.

Unions and teacher compensation

Kristine West and Elton Mykerezi have a new article out that looks at what the presence of a union does to the makeup of teacher compensation contracts. Specifically, they model contract outcomes using data from 100 large districts, about three quarters of which are unionized. Much of what they find confirms widely beliefs.

In terms of traditional pay plans, unions:

  • Probably increase starting salaries.
  • Increase the raises that come with experience and graduate education.
  • Shorten the number of years it takes to max out on the salary schedule.
  • Increase the ratio of benefits to salaries.

Of course one advantage of a statistical analysis compared to casual empiricism is that one gets measures of the size of the union effect, as well as the direction. For example, West and Mykerezi estimate that the presence of a union increases the return to getting a masters degree by 2 to 4 percent. That’s less than I would have guessed. Similarly, unionization increases the benefits ratio by about 4 percent.

In terms of performance pay plans, unions:

  • Decrease the probability of performance pay plans that include student test scores by 20 percent.
  • Probably increase the probability of performance pay plans that do not include test scores, but only by a few percent.

One caution in all this, the data is four years old. For most work, this might not matter. But today, teacher unions are rapidly rethinking what kind of compensation schemes work best for their members.

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