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.
"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.
Immediately fire all 25,000 teachers, disband the union, and kill defined benefit pension plans
Offer teachers their jobs back with a zero percent pay raise with three days to decide
For each day beyond three, the city would reduce its offer to teachers by $2,000 a day
Offer generous relocation expenses to those willing to come to Chicago to teach
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 CEO
Roadblock to Reform
Addendum:
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Revised estimates of Japan's growth have been cut in half, from 1.4% to .7%. More importantly, Japan has a small but shrinking current account surplus (in spite of running a trade deficit for some time).
Once the current account surplus vanishes, and I believe it will, Japan will become somewhat dependent on foreigners to handle its budget deficit. Good luck with that at 0% interest rates.
Japan's economy expanded in the second quarter at half the pace the government initially estimated, underscoring the risk of a contraction as Europe's debt crisis caps exports.
Gross domestic product grew an annualized 0.7 percent in the three months through June, the Cabinet Office said in Tokyo today, less than a preliminary calculation of 1.4 percent. The median forecast of 26 economists surveyed by Bloomberg News was for a revised 1 percent gain. The current-account surplus fell 41 percent from a year earlier to 625.4 billion yen ($8 billion) in July, a finance ministry report showed.
Gridlock in parliament may limit fiscal stimulus just as Japan's expansion is restrained by weakness in global demand, strength in the yen, and the winding down of car-purchase subsidies. A slowdown in Asia may further curtail exports and add to pressure for monetary easing after Chinese data yesterday suggested the region's biggest economy is losing steam.
In a sign of slackening foreign demand for Japanese goods caused by the euro zone debt crisis and China's slowdown, the July current account surplus came 40.6 percent below year-ago levels, reflecting a drop in exports.
However, due to a slower rise in imports, the fall in the surplus to 625.4 billion yen ($8 billion) was less pronounced than the forecast 56.8 percent drop to 455.0 billion.
Should the economy require more fiscal stimulus, the policy response could be delayed as policy making has ground to a halt due to a stand-off between the ruling and opposition parties.
Mathematical Impossibilities
Notice the absurd reliance on stimulus, in spite of a shocking amount of debt, exceeding 200% of GDP.
Moreover, the idea of fiscal stimulus is actually preposterous given the government wants to hike taxes to do something about the deficit and mammoth amount of debt.
Japan wants to do two things at once and it is mathematically impossible.
Tax hikes are certainly not going to stimulate a thing, and on August 10, Japan Parliament Passed Sales-Tax Increase doubling the nation's sales tax by 2015 as a step toward fiscal reconstruction.
Addendum:
Note to All Facebook Users: If you have not yet voted for your favorite charity (it costs nothing to vote), please do so. Chase is giving away $5 million to charity, and I have a cause that I support.
This post is about "Bobo". I wrote about Bobo before. He is in his early 50s, highly skilled, and willing to travel. In his latest email, he says "I'm down to one bag, one laptop, and one phone."
When he loses his job, he gets another within a few days.
Here is an update from "Bobo" on what the last year was like.
Hello Mish
The US mining job I was at just ended. They gave me one hour to clean out my desk. That was nice. A power plant where I once worked only gave me 5 minutes.
Hire. Fire. Boom. Bust. Construction is a fast world.
Lucky for me I can get another job in a few days or so. This is the third consecutive time I've overlapped the next job with the severance package from the one before. Call it sweet revenge.
Last year I worked for 3 companies, in 2 countries, and 5 states. This year, so far, I worked in 2 countries and 3 states.
There is plenty of work, but my lifestyle is not for everyone. I have no kayaks, no canoes, no bikes, and no golf clubs.
I'm down to one bag, one laptop, and one phone.
Now I'm in Quebec. Round and round we go. Where I end up no one knows!
It took me exactly one day to get fired in the US and hired in Canada. I'm building a huge metal processing plant. I went from gold mining to copper processing.
I went from dusty cowboy sage brush to foggy misty pines. This must my northern limit. I'm absolutely freezing here. And it's only August.
This place is just scattered homes in the woods with a small village or two. The big city has a population of 50,000 and is about two hours away. It is about 2/3 English, 1/3 pure French, with a sharp accent that's very difficult to understand. Regardless, it's too far for a daily commute.
At least all the locals are friendly.
The area is primarily green forests and a million lakes. I saw a moose wandering around this morning, 50 feet from my office window. Last night I had a face-to face encounter with one at 90 km per hr. It was dark, and the moose was running across the road as I drove by. I just missed it. Even this morning, I can still see that moose head staring at me.
Today is a cool, cloudy, misty, pouring, raining day. Now I know where all the lakes come from. I have turned up the heat already, every night. It's going to be a long winter.
I'm working 10 days on, 4 days off. Their travel desk seems pretty good. They want to book my next 3 trips out already. I can fly anywhere in the world for the 4 days, but 4 days in Europe doesn't seem worth it. South Beach Miami, though, is looking nicer and warmer all the time.
There are no apartments or hotels here. There is just a scattering of houses in the woods or cabins on a lake, and everyone is renting out rooms because of the construction boom. I rented a place for $500 a month, half what I paid in in the states. However, I now have to pay for a car, insurance, gas, and maintenance. Moreover, I lose on every transaction here. For example, I went to deposit $1000 into a Canadian bank, and they tried to charge me a $40 fee due to exchange rates.
In the US I got by without a car on one job. Here I need one. For that I need a Canadian bank account. I bought a dumpy used car because I'm only here for a year or so. Still, I have to register the car in Canada. To do that, I need insurance. For that I need a Canadian driver license. So I drive the 2 hours into town to get one. Then I find out I have to provide 6 years of my past driving records and past insurance to get insurance.
Everything is higher cost. Their generous per diem tilts in my favor, but everything is still a huge hassle.
I haven't done much work yet. Rather, I'm just settling in and dealing with a new apartment, car, insurance, banking, training, site orientation, phone, car insurance again, driver's license, work permits, and a mountain of paperwork in general.
The good news is I only have 3 more working days before my 4 day break.
My world is spinning so fast that I am forced to make decisions and to live in a way I would never choose. All this for a job.
Bobo
In honor of Bobo I present "King of the Road" by Roger Miller
Addendum:
Note to All Facebook Users: If you have not yet voted for your favorite charity (it costs nothing to vote), please do so. Chase is giving away $5 million to charity, and I have a cause that I support.
They use stopwatches at McDonald's. They know, to the second, how long it should take to make a batch of fries. And they use spreadsheets, too, to whittle the price of each fry down by a hundredth of a cent if they can. They're big and it matters.
Small businesspeople often act like direct marketers. They pick a number and they obsess over it. In direct mail, of course, it's the open rate or the conversion rate. For a freelancer or small business person, it might be your bank balance or the growth in weekly sales.
I think for most businesses that want to grow, it's way too soon to act like a direct marketer and pick a single number to obsess about.
The reason is that these numbers demand that you start tweaking. You can tweak a website or tweak an accounts payable policy and make numbers go up, which is great, but it's not going to fundamentally change your business.
I'd have you obsess about things that are a lot more difficult to measure. Things like the level of joy or relief or gratitude your best customers feel. How much risk your team is willing to take with new product launches. How many people recommended you to a friend today...
What are you tracking? If you track concepts, your concepts are going to get better. If you track open rates or clickthrough, then your subject lines are going to get better. Up to you.
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