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News from EPI Legislation weakening public-sector unions in five states cut school districts’ spending on teacher salaries and benefits

A new report by EPI economist Emma García and EPI research associate Eunice S. Han finds that legislative measures restricting public-sector collective bargaining rights in Idaho, Indiana, Michigan, Tennessee, and Wisconsin in 2011 and 2012 effectively reduced spending on total teacher compensation by about 6%, spending on teacher salaries by about 5%, and spending on teacher benefits by 9.7%.

The authors explain that there are direct and indirect ways the restrictions on collective bargaining in these five states could influence district spending on teacher compensation. Directly, spending on teacher compensation would decrease as a result of some of the restrictions on collective bargaining rights over teacher salaries and benefits, such as the cap on salary increases to the level of inflation and the ban on unions negotiating over benefits that were stated in some of the laws.

Indirectly, districts’ spending on teacher compensation would decrease as the changes in legal institutions ultimately weaken the strength of public-sector unions. As the bargaining power of teachers’ unions weakens, the demand for unions is more likely to fall, as more teachers expect lower benefits from unionization. This lowered demand and reduced union membership would put pressure on the financial capability of unions, decreasing their bargaining power even more.

Finally, in states where unions could no longer collect mandatory fair share fees from nonunion members, some teachers in the bargaining unit—knowing that the union must represent them regardless of membership—may want to enjoy the advantages conferred by union contracts without paying for them, which is likely to further undermine unions’ financial capacity (something that is known as the “free-rider” problem.)

“Reduced education spending and lowered teacher compensation have negative effects on teacher well-being and student outcomes,” said García. “These findings serve as an early warning of potentially negative repercussions on the educational systems in states that pass similar changes in labor laws.”

The authors explain that their findings also shed light on the consequences of the 2018 Supreme Court decision in Janus v. American Federation of State, County, and Municipal Employees (“Janus”), which prohibited state and local government worker unions from negotiating collective bargaining agreements with fair share fee arrangements. Though the laws in Idaho, Indiana, Michigan, Tennessee, and Wisconsin lack the scale of the Janus decision, and they differ from one another and from the substance and legal focus of Janus, all have been described as an attack on unions’ membership and strength.

Likewise, the framework that they propose can be used to estimate the effects of curbs to public-sector workers in recent years in several other states, such as Kentucky, which passed a so-called “right-to-work” law in 2017, and Iowa, which passed a law to significantly restrict the bargaining rights of teachers and other public-sector employees in 2017.

“State legislators in Idaho, Indiana, Michigan, Tennessee, and Wisconsin launched unprecedented initiatives substantially restricting or entirely prohibiting the collective bargaining rights of public-sector employees, including public-school teachers. These laws negatively impacted all teachers, regardless of their union membership,” said Han. “Our evidence suggests that legal changes affecting collective bargaining for teachers are more likely to be a hindrance to enhancing the educational system and improving teacher well-being, and they may impose costs down the road when further efforts are needed to fix their negative consequences to labor market and educational outcomes.”