Friday, August 21, 2020

Unions and Inequality: Looking at the Obvious

At the same time that a particular labor union (teachers) has successfully pushed to keep school buildings closed, we are reminded that unions are part of the "solution to inequality."  As an update to an old literature on unions and inequality, let's first look at distributional effects of closing school buildings.

The chart shows that closing school buildings reduces learning for all groups, but especially low-income and minority pupils.  So the actions of teacher unions today (they are far more likely to have their schools closed) will add to inequality in the future as the pupils enter the labor market.

Now let's look at today's labor market.  The weekly cash earnings of teachers are 22 percent more than those of nonteachers.  As a result of being offered more and richer fringe benefits (see the table below), their weekly compensation is 39 percent more, which I estimate assuming that retirement benefits involved an average 5 percent employer contribution for nonteachers and value teacher's pensions according to actuarial calculations (17 percent of salary).

It appears that an occupation that is well above average income is closing schooling buildings to the detriment of millions of low-income and minority children.

1 comment:

Shadeburst said...

The McKinsey data make the "home schooling is best" argument look silly.