October 19, 2009

Binding Arbitration, the Board Game

Justin Katz

Let's you and I play a game. We'll start out with you giving me a certain sum of money. Then every five minutes, I'll propose how much more money you should give me, and you can propose a slightly lower increase, and if I refuse to accept those terms, we'll take our disagreement to a "neutral" third party who'll give me the increase I demand about 60% of the time and give me the increase you offer the other 40% of the time. Sound good?

Not surprisingly, the Providence Journal's newest regular contributor, Tom Sgouros, union consultant and an intellectual force behind the 2008 Economic Death and Dismemberment Act, thinks that's a nifty way to resolve the hardest fought teacher contract battles. As he writes, with the folksy, personalized calm of an infomercial:

To me, binding arbitration seems as good a way as any to resolve these kinds of conflicts. In binding arbitration, two sides present their "last best" proposals to a neutral panel of three arbitrators (one chosen by each side and one chosen by both) who decide between them. The arbitration statute spells out the permissible grounds for a decision, too, so it's not as if arbitrators can just make up stuff.

Of course, as Andrew put it on Matt Allen's Violent Roundtable, Friday night, we don't take that approach in other public interactions. The General Assembly doesn't take issues that it's having difficulty resolving to a "neutral" third party to set policy on, say, prostitution, gambling, or a school funding formula. The people whom we elect and hire just have to work things out or pay the political consequences. Also of course, as I describe in the current issue of Providence Business News, binding arbitration seems somehow always to result in an increase in teacher remuneration, in Connecticut, even in the most struggling towns. And it's never below a 2% raise. Curious.

The tack that the union backers have decided to use in opposition to such observations is to explain that binding arbitration is not to blame (or credit) for Connecticut's having the highest-paid teachers in the nation, the Education Enhancement Act of 1986 is. That's fine, so far as it goes, but the point isn't that binding arbitration will give Rhode Island that last little kick to the top, from the fourth highest-paid teachers in the nation to the absolutely highest-paid teachers. The point is that binding arbitration would prevent communities from adjusting remuneration downward when the towns run out of money, the parents realize that less and less money is available for the programs that define a well-balanced and opportunity-rich education, or the residents realize that their big bucks are buying pitiful proficiency in math and science.

And union-promoted clichés notwithstanding, teachers are very well paid and are not likely to suffer a change in that reality. Sgouros makes a play for just such an insinuation, with the following:

In 1986, despite seven years of binding arbitration law, Connecticut teachers were only 19th in the country in surveys of teacher pay. The average teacher salary then was around $13,000, and it was not hard to find teachers moonlighting as weekend bartenders, editors, writers, and construction workers, where they were paid more than in their "main" gig.

In the interest of charitable discourse, we'll assume that it was an innocent error that Tom cites the number for the average beginning teacher salary but calls it the average salary overall. Perusing data compiled by the American Federation of Teachers, one finds that the average salary in Connecticut was actually around $27,000 (11th highest in the nation) — and let's not forget that we've seen roughly 96% inflation since 1986, so those salaries are actually twice as valuable as they seem, from our current perspective.

As for beginning teachers — fresh out of college, or in the middle of a career change — having to work additional hours at a second occupation, well, such is not a foreign experience to other young professionals. Stepping back from the pro-union rhetoric, emphasized in the binding arbitration debate, it's clear that what's being requested is not fairness, but continued treatment as some special class removed from the experiences of fellow Rhode Islanders.

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Innocent or not, that's a HUGE error. Look at it this way, if the *average* was $13,000 a year, and if faculties were anything like they are today, where the majority were on the higher end of the scale, that means quite a few teachers were making down around $5,000 a year?

When you get "facts" like that wrong, you lose all other credibility.

I still don't understand why they want a system where the lose, on average.

Posted by: Patrick at October 19, 2009 2:09 PM

Every time I have a conversation with Mr. Sgouros he essentially vomits up a phonebook's worth of raw numbers onto the table and I have to just groan and turn away. Typically he is using it to support propositions like that we have normal taxes in RI or that our public employees are paid totally reasonable salaries. While I do have scientific training and therefore appreciate the value of meaningful data, it would take me literally hours to go through it all and see where he is taking liberties with the terms (obviously something is always out of whack if those are the conclusions he is reaching).

Thank you for doing it for those of us who don't have the time to refute the misinformation and are tired of being accused of being anti-intellectual for not just accepting his warped conclusions based on a mountain of meaningless numbers and claims divorced from all reality.

The most brilliant economics professor I had in college was employed by the Department of Energy for his first job after he got his PhD. He told me one day that his job at the department consisted of analyzing the national energy data, being told what the Department heads wanted the data to say, and then making the data say what the Department heads wanted it to say under threat of being fired if he didn't. He assured us that it was quite possible to make the data say anything he wanted it to after he became adept at selectively choosing which data he wanted to focus on and how he chose to present it. I'm glad to say that after several years of that government job the moral implications caused him to quit. I am sorry that Mr. Sgouros has not yet done the same under his union masters.

Posted by: Dan at October 19, 2009 6:05 PM

I teach with a guy (one of the few conservatives teachers we're blessed with) who worked for the government back in the 80's. Some statistical analysis for the military. His motto was, "Tell me the results you want and I'll write the study."

Posted by: Kramer at October 19, 2009 8:38 PM
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