News Story

Teacher Pay Hikes Happen Despite Expired Union Contract

An article in The Saginaw News about teachers working for the last three years without a contract came with a headline that read: “Saginaw teachers still paid their 2008 salaries, not taking cuts requested by several board members.”

But for many of those teachers, working without a new contract has not meant working without pay hikes. Teachers with less than 12 years of service in the Saginaw Public Schools receive what are called “step increases,” which are wage increases based on length of service. Step increases are a regular feature of teacher union contracts and are provided in addition to the adjustments to base salary that would typically be negotiated with a new contract.

If the terms, base wages and step increases from an expired contract remain in force, as they do in the Saginaw Public Schools, then teachers will receive the step increase raises even though no changes are made to standard base pay.

The Saginaw News mentioned the “step” increases, but didn’t give details.

In 2008, when the old contract expired, 347 of the 691 teachers in the district had less than 10 years of experience, according to the Michigan Department of Education.

Here is an example of how step increases work for this district: A teacher with six years of service and a bachelor’s degree, if hired after Jan. 22, 1996, would have received a salary that increased from $41,458 in 2008 to $43,585 in 2009, then to $45,866 in 2010 and $48,307 in 2011. That’s a 16.5 percent increase over three years despite the expired contract.

And Michael Van Beek, education policy director for the Mackinac Center for Public Policy, said there is another big bonus to not having a new contract: Teachers have avoided any of the additional heath care cost-sharing that has occurred in other districts with newer contracts.

According to the school district, the cost of health care benefits has gone up 28 to 36 percent since 2008, depending on the plan chosen by the employee. In 2009, the district paid $1,325 a month for employees in the MESSA Choices II family plan. A Mackinac Center survey reveals that this is the most popular plan for teachers in district.

The MESSA plan is affiliated with the Michigan Education Association, the state’s largest teachers union.

A Saginaw teacher pays $38.50 a month for the family plan. That’s about 3 percent of the total cost for 2009, with the district picking up the rest. In Michigan, private-sector employees pay an average of 21 percent of their health care premium costs, according to a Kaiser Family Foundation survey.

And for fiscal 2009-10, MESSA premiums increased by 13 percent.

“The school absorbs all of the rising health care costs, and the teachers take on none of it,” Van Beek said.

According to the Bureau of Labor Statistics, the vast majority of the U.S. workforce was not unionized during 2010. More than 92 percent of private-sector employees and 60 percent of public-sector employees were not represented by a union.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.