The teachers are rioting in the streets and many other unions have joined them. They believe they are underpaid and the new contract will make them even worse off. To make matters worse (from their perspective) the government is no longer going to allow collective bargaining of salary and any non inflation pay increases must be voted on by the government. I will argue that they are either not underpaid or they should bust their own union.
Teachers claim they are underpaid, which I can only take as meaning they are getting paid below their fair market value. Fair market value is defined as a price both the willing supplier (teachers in this example) and the willing buyer (the state in this example). Said differently, if there was no coercion against either party, what salary and benefit package would the individual teachers agree to.
Unions are criticized by the vast majority of economists as artificially raising the salary of their participants. For example, if I was getting paid $1.00 an hour for a job if I joined the union, I would get paid $1.50 an hour. Of course, this extra 50 cents doesn't come from thin air it comes from the consumers of the good (the tax payers in this example). The extra cost might make the business uncompetitive but the state has a permanent resource stream.
Sometimes, unions do not artificially raise the salary. They work with management to deflate the members. The union bosses might know the management team, they might be wanting to move over to the company after their union job is up, etc. In this case, the savings are passed on to the consumer but the one who pays is the worker. They are paid less than they deserve to be for no reason other than the union is corrupt.
This leads me to my pain point. If teachers HONESTLY believe they are underpaid, they should get rid of their unions. This means they would do better to negotiate their contracts on an individual basis and they should do so.
The practical reality is that teachers likely aren't underpaid (as defined as current fair market value). They are probably paid above market wages as evidenced by teachers in charter and private schools being paid less than public school teachers. The teachers are really arguing that the public isn't properly valuing their services. This is a wholly separate debate and one they surely cannot win while just claiming to be underpaid. They should go on TV and try to boost demand of their product (which will raise their salary) by talking about how important their job truly is.
If demand is increased the salary will rise and there will be a new fair market value. If demand does not increase, it is disingenuous for teachers to claim to be underpaid and not remove their own union.
