Michael Meeropol: The Striking Teachers Are Striking A Blow For All Of Us

May 4, 2018

Have you ever heard of the Economic Policy Institute? As their name indicates, they do research on economic policy. Their goal is to “…include the needs of low- and middle-income workers in economic policy discussions.” In other words, they don’t write for the one percent. I have often utilized their research in my classroom. Every time I want to show that the minimum wage in purchasing power is lower today than it was in 1968 despite decades of nominal increases, I utilize EPI’s tables.

They recently sent out a newsletter that detailed the relationship between the weekly pay of teachers and the average weekly pay of people in both the country and each state with comparable levels of education. It is shocking but hardly surprising that, “In no state are teachers paid more than other college graduates.”

Everyone who is a parent (and anyone else who cares about the country’s future) knows how important it is that children get an excellent education to prepare themselves for a world where technology is changing everything very quickly and people have to be able to adapt to new challenges. As a former college professor, I know how important it was for my success with undergraduates for the young people who entered my classrooms to have acquired basic competencies. Most important, in my opinion was the ability to read critically, write well and think for themselves. (I also believe some basic “numeracy” – the mathematical equivalence of literacy – is also important because people get numbers thrown at them all the time, and being able to figure out what these numbers really mean is extremely important.)

At the beginning of every semester of Principles of Economics I would routinely admonish my students that the most important thing one can achieve as a truly educated person is to be able to teach oneself once formal education ends. And here’s the crucial point: None of my students could have succeeded in this without a strong foundation in K-12 education --- and that requires not merely competent but outstanding teachers.

Journalists and politicians all talk a good game about how important teachers are. Yet we as a society fail to back up those words with deeds. Even in high income states like New York and Massachusetts, teachers are paid less than people with comparable education levels. For the United States as a whole, the average teacher’s weekly wage is 77% of the nation’s average. In the states that have recently seen teacher strikes, the pay gap is much worse. Arizona and Colorado are at the bottom of the list. Their ratios are 63 and 65%. No wonder teachers are striking.

State governments APPEAR to be attempting to meet these legitimate teacher demands. But it’s really a sleight of hand. The legislature grants a pay increase and then cuts the budget elsewhere – say in Medicaid spending. The Arizona teachers have made clear that even the proposed 20% raise and $1 billion more for the education budget is unacceptable without new revenue – yes, without raising taxes.

The right wing --- including too many economists --- have spent the last 40 years demonizing taxes and spending at all levels of government. They argue that when government takes “your money” and spends it on government programs it harms us the taxpayers. According to this approach, one should control one’s own money and government involvement should be MINIMAL ---

It actually began in California with a ballot question called Proposition 13. It was a Constitutional Amendment that limited property taxes and, most importantly, limited the rate of increase that local governments could impose when faced with needs for increased revenue.  For details see https://www.californiataxdata.com/pdf/Prop13.pdf One of the most bizarre results of this amendment is contained in the following provision:

“Proposition 13 replaced the practice of annually reassessing property at market value with a system based on cost at acquisition. Prior to Proposition 13, if homes in a neighborhood sold for

higher prices, neighboring properties might have been reassessed based on the newly increased area values. Under Prop. 13, the property is assessed for tax purposes only when it changes ownership. As long as the property is not sold, future increases in assessed value are limited to an annual inflation factor of no more than 2%.”

What this meant is that as the value of the property one owned increased, the local government could not utilize that increased value to increase revenue. If I lived in my house for 40 years and the house next door were sold four times during those 40 years, the property fight next to me would be taxed at a much higher rate than my property. Other provisions made it necessary for the Legislature to get a 2/3 majority to raise taxes in the future. Given these constraints on raising revenue, it is not surprising that California teachers receive less than 90% of the pay of those with comparable educations, making that state worse than New Jersey, New York, Pennsylvania and Rhode Island in terms of relative teacher pay. (California also does a worse job that Vermont, North Dakota, Montana and Alaska.)

Beginning in 1978, the tax cutting mania swept the national political dialogue based on what came to be known as “supply side economics.” (For details, see my book SURRENDER, particularly pages 79-81. For a textbook treatment, see Howard Sherman and Michael Meeropol, Principles of Macroeconomics, Activist vs. Austerity Policies  (M.E. Sharpe, 2013): 333-335). This culminated in the era of Reaganomics with the passage of the Economic Recovery Tax Act of 1981. But it went much further with subsequent tax cutting under George W. Bush in 2001 and 2003 and the variety of state “experiments” in tax cutting, the most dramatic of which was the State of Kansas under Governor Sam Brownbeck.

And that Kansas example is quite dramatic. In 2012. the state's income tax was cut – the top two rates (over 6%) were cut to a bit under 5% and the bottom rate was reduced from 3.5% to 3%. Small businesses’s pass through rates went from 7 percent to ZERO. (This permitted a lot of rather large businesses (including two highly paid basketball coaches) to redefine themselves as small businesses and game the system.) The result was a drastic fall in revenue, no improvement in the job market (Brownbeck had promised massive job growth as the result of the “stimulus” from the tax cuts), and such a backlash that in 2016, the State Legislature consisting now of more Democrats and newly moderate Republicans overrode Brownbeck’s veto and raised taxes in an attempt to reverse the severe budget cuts that occurred when revenue tanked. Among the impacts of the tax cut was a drastic cut in the education budget. For details see “Kansas Tried a Tax Plan Similar to Trump’s. It Failed.

Last December’s “Tax Cuts and Jobs Act” pushed through by the leadership of Congress without significant hearings or discussion follows the same playbook. There will be virtually no positive impact on incentives but big windfalls for the super-rich. For details, see the Tax Policy Center’s analysis.

All of these tax cutting approaches have two major things in common --- they cut taxes dramatically for the highest income people while giving crumbs to others (and nothing – even increases – to many). The second thing they do is cut revenue drastically leading to future pressure to cut budgets (this is immediate at the state and local level because these entities cannot run budget deficits the way the federal government does).

Another thing they have in common is that they fail miserably at delivering rapid increases in the levels of investment and economic growth. For details on the failures of Reaganomics see SURRENDER, chapters 7, 8 and 9 (with a summary table on page 168). The short version is that the Reaganomics decade (from the recovery in 1983 through the peak in 1990) was actually worse than previous periods of recovery – including the “bad old” 1970s.

Another argument in favor of tax cuts that reduce revenue (the supply side assertion that the tax cuts always pay for themselves because of improved incentives has been proven wrong time and time again --- not only with the Reagan era tax cuts of 1981) is that it will force governments to weed out “waste fraud and abuse” --- in other words get rid of all the “waste” in government spending.

Now, I do believe that the federal government wastes a lot of money.  This is particularly true in the defense budget. I am also sure that there are states and localities that waste money as well. However, for the most part state and local governments provide extremely important services to their citizens --- one of the most important of which is K-12 education.

The right-wing demonization of taxation and spending has led to the denigration of public sector employees.--- especially teachers and other employees who are not first responders. Police and fire-fighters often get special treatment – a useful “divide and conquer” strategy for budget cutters. The result of this denigration of (particularly) teachers --- with emphasis on the so-called terrible behavior of teachers unions who allegedly protect “incompetents” to the detriment of public school students --- has been a deterioration of teacher pay and funding for K-12 education. Beginning in West Virginia in February, and spreading to Kentucky, Oklahoma and now Arizona and Colorado, teachers have finally said ENOUGH.

Teachers perform one of the most important jobs in the country --- preparing the next generations for their roles as citizens and productive workers. The question before us, the taxpayers, is will we recognize that the only way to truly fund K-12 education and pay teachers what they deserve is to RAISE TAXES. Yes, I said it --- we have to RAISE taxes and reverse the anti-tax mania that has swept the country over the last 40 years.

Tax cutting and budgetary austerity have seriously harmed our country. (In fact, much of the textbook I have written with Howard Sherman attempts to respond to the various arguments in favor of governmental austerity. [Principles of Macroeconomics: Activist vs. Austerity Policies – M.E.Sharpe, 2013 – Second edition coming August 2018!] Spoiler alert --- we think those arguments are all bogus!!

Bravo to all the teachers who are fighting back. They are fighting for ALL of us!

Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author (with Howard Sherman) of Principles of Macroeconomics: Activist vs. Austerity Policies.

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