Sometimes (i.e. rarely) economic theory presents ideas that aren’t intuitively obvious. One such idea is that teacher shortages are designed into our schooling system. Understanding this perspective is important if one wants to battle the government about pay.

Worker strikes seem odd to most of the general public because they work in more conventional labour markets. If they feel they are underpaid, they can search for a job with another employer. Similarly, employers will pay each worker as much as needed to recruit and retain them. 

However, the teacher labour market is far from conventional. If you want to be a class teacher in England, you have to work in a school that will pay you a wage according to the DfE pay scale. (NB. Nearly all Academies and private schools rationally lock their pay into the DfE pay scale.) This is called a monopsony labour market. Most teachers are trapped by this because they love working in a school, with its class teaching, strange hours, and holiday arrangements.

We know this because on Teacher Tapp last week, 62% wouldn’t consider taking an alternative job that conforms to more typical employment arrangements: 1-to-1 tutoring, 9-5 working hours, but with only six weeks’ holiday a year. We also know that many teachers feel trapped in the profession by accumulating specific skills that aren’t so transferable to other workplaces.

Monopsony employers exert considerable power over workers since they know they have nowhere to go if they want to work in that profession. Their bargaining power is considerable, and it is possible to impose poorer working conditions than those in more competitive labour markets would ever tolerate. However, monopsony employers face a problem. To attract an extra 10,000 workers into the profession, they must pay not only them but also every single existing teacher in the profession more money. This would come with an enormous increase in the pay bill for the half a million teachers in this country. By their calculation, the benefits of the extra 10,000 teachers simply do not outweigh the costs of paying everyone more. In monopsony labour markets, worker shortages are not a flaw, but rather a deliberate feature of the system.

You might be asking yourself why a democratically elected government would intentionally lower wages and compromise the quality of education provided to its citizens. Political scientists would likely argue that the government is trying to balance the competing objectives of winning votes by keeping taxes low and improving the education system. It is important to keep in mind that, even if the government were to raise teacher wages, the majority of students would still be taught by the existing workforce who are already employed, and would thus not experience the benefits of an improvement in schooling.

Unfortunately, the effects of teacher shortages fall disproportionately on schools that serve disadvantaged communities. Countless research papers (including many I’ve written) show that higher free school meal schools have higher teacher turnover, more inexperienced teachers, teachers who teach out of their subject specialism, and so on. Perhaps the Tories have rationally calculated that teacher shortages are never likely to reach their (ever-shrinking) core demographic of affluent communities?

Depressing stuff, right? Winning the pay dispute against a powerful monopsony employer is not easy for the unions. The government could hold out until teachers cannot afford to strike or until shortages become so stark that public unrest becomes an issue. However, they have a general election to fight soon, so time is not on their side.

One tip that economic theory offers for those trying to fight a monopsony employer is to beware of wage discrimination. Monopsony employers have to try and persuade new teachers into the profession without paying existing teachers more. They do this by offering special routes or perks to small groups of teachers and new joiners, whilst persisting in depressing wages on the main pay scale. We’ve seen many of these over the past twenty years: golden hellos for new teachers in shortage subjects, limited student loan write-offs, special grants for certain trainees, Teach First (a route with a unique salary structure and perks to circumvent the unattractive one). It’s easy for teachers to fall into thinking that little perks for new teachers are fine since they are costless to them. However, the cost is masked as a weakened position in the pay dispute.