Chicago Teachers Go on Strike

The average teacher in Chicago makes $76,000 a year for nine months of work. They were offered 16% salary increase spread over four years. Given the system has a $665 million deficit this year and a bigger one next year, I am wondering why there should be a raise at all.

Nonetheless, the New York Times reports With No Contract Deal by Deadline in Chicago, Teachers Will Strike.

“We do not want a strike,” David J. Vitale, president of the Chicago Board of Education, said late Sunday as he left the negotiations, which he described as extraordinarily difficult and “perhaps the most unbelievable process that I’ve ever been through.”

Union leaders said they had hoped not to walk away from their jobs, but they said they were left with little choice.

“This is a difficult decision and one we hoped we could have avoided,” said Karen Lewis, president of the Chicago Teachers Union.

The political stakes now may be highest for Rahm Emanuel, the Democratic mayor in a city with deep union roots. He took office last year holding up the improvement of public schools as one of his top priorities, but now faces arduous political terrain certain to accompany Chicago’s first public schools strike in 25 years.

Late Sunday, Mr. Emanuel told reporters that school district officials had presented a strong offer to the union, including what some officials described as what would amount to a 16 percent raise for many teachers over four years — and that only two minor issues remained. “This is totally unnecessary, it’s avoidable and our kids do not deserve this,” Mr. Emanuel said, describing the decision as “a strike of choice.”

Strike of Choice

Every strike is a strike of choice. Moreover, given projected budget deficits and with pension plans even deeper in the hole, the 16% raise offer was actually far too generous.

The ideal approach by mayor Rahm Emanuel would look something like this.

  1. Immediately fire all 25,000 teachers, disband the union, and kill defined benefit pension plans
  2. Offer teachers their jobs back with a zero percent pay raise with three days to decide
  3. For each day beyond three, the city would reduce its offer to teachers by $2,000 a day
  4. Offer generous relocation expenses to those willing to come to Chicago to teach
  5. Offer substitute teachers full-time jobs

It is time to break the back of the insidious grip public unions have on the state of Illinois. There is no better place than Chicago to start.

Illinois Policy Center Response

After writing the above, I received this email alert from John Tillman at the Illinois Policy center.

Dear Mike,
Now that Chicago Teachers Union President Karen Lewis has announced that CTU will strike Monday morning, it is very clear: Children are not the top priority for teachers who belong to the Chicago Teachers Union. The two things that matter most to these teachers are money and avoiding accountability for poor performance.

Lewis and the CTU waited hours to announce the teacher walkout so they could hold a live press conference at the top of the 10 p.m. news hour. This focus on press impact rather than the impact on children’s and parents’ lives should once and for all tell Chicago Public School negotiators and Mayor Emanuel this: The time is now for the transformative reforms the children and parents need. The Mayor and CPS should pull all offers from the table and reset the negotiations.

The fiscal reality is that Chicago Public Schools are broke. CPS will be draining cash reserves this year just to stay afloat, and will be $1 billion in the red next school year. The 30 percent raise CTU originally asked for is out of the question, and so are other double-digit raises that CTU has demanded. Average teacher pay in Chicago is already at $71,000 without benefits, while the average Chicagoan makes only $30,203 and the unemployment rate in the city is nearly 11 percent.

The reality facing students is much more grim. Four out of 10 children who enter a CPS high school will not graduate. That’s why the focus of these negotiations should be on reforms that empower parents rather than perpetuating a broken system. Monday morning, more than 80,000 kids in Chicago will show up to be taught in charter schools or independent private schools, and those teachers will be showing up to work – unlike the teachers who belong to the CTU. These schools have something in common that is different from those CPS schools that will not operate tomorrow: the CTU is not the monopoly provider of labor to those schools.

At minimum, CPS must put the option of merit pay back on the table. Chicago cannot be a place where bad teachers are protected at the expense of great teachers who deserve to be recognized and rewarded. And Chicago must allow for more educational competition. As Milton Friedman said, “The only solution is to break the monopoly, introduce competition and give the customers alternatives.” By expanding the number of charter schools and establishing opportunity scholarships, we can begin to chip away at the monopoly that the Chicago Teachers Union has over the city’s educational system. We must empower parents to choose what is best for their children, instead of letting Karen Lewis decide when kids can and cannot learn.
John Tillman

About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

Union Watch Highlights

Majority of Michigan Leaders Say Unionized Workers Have Had a Negative Effect on Their Community’s Fiscal Health
By Kathy Barks Hoffman, August 29. 2011, Detroit News
A majority of local leaders in Michigan question whether union workers are causing their communities more financial harm than good, according to a survey conducted amid an ongoing debate over proposed pay and benefit cuts for Wayne County’s unionized employees. Those cuts, proposed by the Wayne County executive, are tied up in court, and Detroit Mayor Dave Bing has warned workers the city could be taken over by a financial manager if they don’t pick up a larger portion of their health care and pension costs to shrink a looming deficit. It’s under that backdrop of tight budgets and falling revenues that 56 percent of local leaders told the University of Michigan survey that unionized workers have had a negative effect on their community’s fiscal health, according to an advance copy of the report obtained by The Associated Press. (read article)

California Gov. Brown’s appointees to prominent jobs have close ties to unions
By Michael R. Blood, August 28, 2011, San Diego Union-Tribune
Gov. Jerry Brown is a quirky Democrat known to break from convention, but in one way his young administration looks all too predictable: He is seeding state government with fellow Democrats, political supporters and appointees linked to powerful labor groups that helped install him in office, an Associated Press review found. Public employee unions representing nurses, teachers, firefighters and other workers spent millions of dollars in the 2010 campaign to put Brown in charge in California, fearing Republican Meg Whitman would make good on her promise to shrink the state payroll and collar the soaring cost of government pensions. So far, Brown has placed a string of appointees with ties to those unions in prominent jobs that intersect with labor: The state agency that negotiates worker contracts is now headed by a former champion of the prison guards union, and the chief lawyer for the agency that settles disputes between workers and state managers has ties to the powerful California Nurses Association. (read article)

Time for Unions to Face the Reality of a Changing Economy
By Doug Heye, August 26, 2011, U.S.News & World Report
We communicate more than ever. But how we communicate has changed. With the loss of customers that comes with changes in technology, Verizon is faced with the dilemma horse buggy manufactures faced with the advent of the car—adapt or die. This makes the current labor dispute between Verizon and the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) a possible case study for the future of contract negotiations with companies facing evolving technologies that change their very business models. (read article)

Employers Irate About NLRB’s New Union Rule
By Nathan Koppel, August 26, 2011, Wall Street Journal
The National Labor Relations Board yesterday finalized a rule requiring private employers to post notice about employees right to unionize. The notice should state that “employees have the right to act together to improve wages and working conditions, to form, join and assist a union, to bargain collectively with their employer, and to refrain from any of these activities,” according to a statement from the NLRB. The rule takes effect in November, but lawyers who represent employers are already voicing their discontent. (read article)

Why Unions Moved Left
By Steven Malanga, August 26, 2011, Wall Street Journal
Although the field of Republican presidential contenders is still in flux, the National Education Association (NEA) decided in early July to endorse President Obama’s 2012 re-election bid. The move by the nation’s biggest teachers union was entirely expected. The NEA—the fifth biggest giver to political campaigns in the past 20 years, according to the Center for Responsive Politics—supports almost no one but Democrats for federal office, having given just 5% of its campaign contributions to Republicans since 1990. Don’t expect anything different from the nation’s other biggest unions, private or public, including the dozen unions on the Center’s list of… (read article – subscription required)

Wisconsin Public Employees Rally Against Increased Pension, Health Care Paycheck Deductions
August 26, 2011, WISC-TV
More than six months after plans were introduced for state workers to pay more for their health care and pensions, the impact is finally being felt in employees’ paychecks. Hundreds of state workers and union supporters marched up State Street Thursday afternoon to mark the first day cuts showed up on their paychecks. Those taking part in the solidarity march and rally said state workers have sacrificed enough and that it’s time the corporate class paid its fair share. (read article)

N.L.R.B. Tells Companies to Ease Right to Unionize
By Steven Greenhouse, August 25, 2011, New York Times
The National Labor Relations Board issued new regulations on Thursday that require companies to put posters on their bulletin boards that inform employees about their rights to unionize under federal law. Under the new regulations, businesses would have to display notices that explain the right to bargain collectively, to give out union literature and to work together to improve wages and conditions free of retaliation. (read article)

Chicago Teachers Union Threatens to Strike Over Raises; Silent on Failing Schools
By Kyle Olson, August 25, 2011, Big Government
There’s a gross injustice being perpetuated in Illinois’ public schools, and the CTU isn’t going to take it anymore.  In fact, the powerful teachers union is considering a strike in hopes that it would create so much public pressure that the Powers That Be have no choice but to correct this outrageous injustice. Like many Illinois citizens, the CTU has seen reports that three out of four state high school graduates are not ready for college.  And the union’s response has been, well … the CTU hasn’t really said anything about it. You see, the fact that students are leaving Illinois’ K-12 public education system totally unprepared for college, the workplace or life in general – that’s not really the CTU’s thing. Instead, the union is “upset” and feeling very “disrespected” because the Chicago Board of Education doesn’t have the money to pay CTU members the four percent pay raise they were promised in their contract. (read article)

Dems election loss in Michigan may cost labor boss
By Nolan Finley, August 25, 2011, Detroit News
Scapegoating continues for last year’s Democratic rout in Michigan. Now it’s AFL-CIO President Mark Gaffney with a target on his back. The United Auto Workers, the Boss Hog of the labor council, has formed a search committee to identify possible replacements for Gaffney, who has headed the 390,000-member union for 12 years. UAW president Bob King is said to still be seething over the major-league butt kicking Republicans gave Democrats in 2010. The GOP reclaimed the governor’s office, swept the Legislature with a big majority and reclaimed the state Supreme Court. While everyone expected some erosion of Democratic power following eight years of Jennifer Granholm, the severity of the losses was shocking. (read article)

Public Employee Unions’ Wisconsin Waterloo
By George F. Will, August 24, 2011, Washington Post
The residues of liberalism’s Wisconsin Woodstock — 1960s radicalism redux: operatic lamentations, theatrical demonstrations and electoral futilities — are words of plaintive defiance painted on sidewalks around the state capitol. “Solidarity forever” was perhaps painted by a graduate student forever at the University of Wisconsin. “Repubs steal elections” is an odd accusation from people who, seeking to overturn the 2010 elections, cheeredDemocratic lawmakers who fled to Illinois — a congenial refuge for labor-subservient Democrats — in order to paralyze the duly elected legislature. The authors of the sidewalk graffiti have at least read Jefferson: “The tree of liberty is watered by the blood of tyrants.” The tyrant is “$cott Walker American Fa$ci$t.” (read article)

Michigan deals another blow to unions
By Kathy Barks Hoffman, August 24, 2011, San Diego Union-Tribune
Michigan Republicans dealt another blow to public employee unions Wednesday as they pushed ahead with a plan to force local governments and school districts to cap health care spending or risk losing state aid, a move that would require workers to pay more for coverage and limit officials’ ability to negotiate local contracts. The measure expected to be signed by Gov. Rick Snyder is just the most recent loss for public sector unions in the longtime labor stronghold and during a year in which government employees nationwide are being forced to pay more for pension and health care benefits to help stem massive budget shortfalls, (read article)

Chicago Union Leaders Grab Millions in Pension Loophole
By Dane Placko, August 23, 2011, FOX Chicago News
How would you like to get a 25 percent annual return on your retirement investment? It’s a great deal, and it’s not available to regular folks. But it is — legally — available to union officials who started their careers working for the City of Chicago. Take Tim Foley, who’s the head of International Brotherhood of Electrical Workers (IBEW) Local 134. Under a little-known provision of the state pension code, union officials like Foley who worked for a brief time as City of Chicago employees are entitled to purchase credits in the city’s pension fund equal to their service time and salary at the union. (read article)

Verizon’s Unions Strike, Life Goes On
Video interview with Megan McArdle, August 23, 2011, Wall Street Journal
(watch video)

Kasich Tries to Calm Ohio Unions Pushing Vote on Bargaining Law
By Mark Niquette, August 23, 2011, Bloomberg
Since Ohio Governor John Kasich signed a law restricting government unions similar to one backed by Wisconsin’s Scott Walker, he has spent months trying to avoid a divisive referendum on the measure, using private talks and public pressure. After Walker braved a Capitol occupation and residents began trying to recall his legislative allies, Kasich supported private discussions with labor leaders in June, said Curt Steiner, a Republican consultant who hosted the talks at his Columbus office. When those proved fruitless, Kasich held news conferences last week urging opponents to consider a compromise taking the issue off the Nov. 8 ballot. Walker and Kasich said after taking office in January that stopping collective bargaining was key to mending state and local budgets. (read article)

A strike too far: Verizon unions’ lost leverage
By Megan McArdle, August 22, 2011, New York Post
If a union falls by the wayside and nobody notices, does it make a difference? Verizon’s union workforce will return to work tomorrow, after a 16-day strike.  You may have noticed that you didn’t notice. Unless you belong to the Communications Workers of America or the International Brotherhood of Electrical Workers — or happen to live or work near a Verizon facility beset by shouting picketers — you probably didn’t pay much attention.  People who recently moved didn’t get their phone lines installed quite as quickly, and a few companies reportedly waited days for repairs.  But, mostly, the strike was a nonevent, even for Verizon customers. (read article)

Jack Dean is editor of, formed to monitor developments in all three pension spheres nationwide — public employees, corporations and social security. PensionTsunami, like UnionWatch, is a project of the California Public Policy Center. Dean is a former newspaper editor and a past executive director of the Reason Foundation. He has been active in politics for more than three decades and currently serves as president of the Fullerton Association of Concerned Taxpayers.