Why Do Unions Oppose Merit Pay?
Gary Becker off-handedly remarks:
Not surprisingly, teachers unions fight hardest against
reforms that change the way teachers are paid, especially when they introduce
incentives for teachers to perform more effectively.
I don’t doubt that unions tend to oppose merit pay, but the reasons are unclear. Profit-maximizing monopolists still suffer financially if they cut quality; the same should hold for unionized workers. Why not simply jack average wages 15% above the competitive level, and leave relative wages unchanged?
Or to put the puzzle another way: Once you’ve secured a raise for all the workers in your union, why prevent employers from offering additional compensation for exceptionally good workers?