West Virginia is currently in the throes of a teacher pay debate. The teachers want raises and a cap on their exposure to increasing health insurance premiums. Much of the debate has centered around the insufficiency of past pay increases, the comparative pay of teachers in surrounding states, and the effective diminution of their disposable income if it is subjected to market based health insurance increases. The debate misses the larger problem with the manner in which teachers’ salaries and benefits are determined in West Virginia.
We’ve unnecessarily eliminated all free market pricing mechanisms from the process of setting teachers’ salaries and benefits. The free market would set the price of teacher labor by virtue of what actual consumers would be willing to pay for a particular teacher’s services and benefits. That function of the market having long ago been eliminated, there is no way to determine the ‘correct’ price for an individual teacher’s services. Instead, it’s left to political (rather than market) processes, where price is determined by the political pull of teachers’ unions weighted against representatives’ mandate to balance the budget while (as always) operating under the perpetual influence of the next election.
Good teachers would undoubtedly benefit immensely from a system that determined teacher pay based upon free market mechanisms rather the ‘one size fits all’ deals cut by unions on behalf of all public educators. Teachers unions will never support free market initiatives because they 1) necessarily result in higher pay for more effective teachers and therefore, 2) create a class of teachers who perceive themselves to be unfairly treated and thus not adequately served by the unions and thus, 3) erode the unions’ power and influence.
This political issue over teacher salaries and benefits is a good context in which to see this inefficient paradigm at work first hand. Elected representatives are trying to cope with a budget that must be balanced and an electorate that is clamoring to be heard from both sides of the issue – but particularly from the side advancing the cause of teacher pay raises and increased benefits packages. Why particularly the teachers? Because they have the political pull, a perceived vested interest, and the most to gain from winning the issue.
On one hand there is a self-interested political power base in the teachers’ who, for the most part, individually had nothing to do with creating or maintaining this system, but have operated within its paradigm their entire careers. They’re organized and they want what they want. They perceive that they wear the white hat in this political battle and they’ve taken that mantle for themselves in the press and in the public statements made by their union leaders and by many political officials who either truly agree with them or are willing to patronize them in hopes of gaining their political support in the future.
On the other hand there is everyone else – the mass of citizen tax payers who have varying experiences with their respective employers and health insurance. No doubt, many have long suffered the experience of seeing their disposable income reduced annually by increasing annual health insurance premiums. As a result, this group is naturally somewhat unmoved by teacher complaints that their disposable income may now suffer because of their own health insurance premiums increasing. Many who are not employed in government jobs have been laboring under that harsh reality for years. But as a group, they are not sufficiently organized to take a strong position in opposition to unions who are demanding benefits for members which non-government employees cannot get in the private sector. The individual benefit or detriment regular citizens will realize from whatever pay scheme the system ultimately puts in place is difficult, if not impossible, to quantify. Their perceived individual interest in the outcome of the issue pales in comparison to that of the teachers.
Everything about this problem ultimately lies in the fact that that there is no market based pricing mechanism for teacher pay and benefits in West Virginia. As a result, the teacher faction makes appeals as to what the universe of all teachers in West Virginia “deserve”. If free market mechanisms were employed we would see that some teachers deserve a raise and some don’t. And some deserve a bigger raise than others. Rather than implementing market mechanisms to determine what individual teachers actually deserve, the entire question gets dumped into the arena of representative majoritarianism – can a political faction persuade or threaten a sufficient number of elected representatives to their side of the issue to get what they want as a collective group from the public fisc. That is no way to set the price of labor in a free society, regardless of how much flexibility West Virginia has, or doesn’t have, in the budget.