Stakeholders in the rubber room

August 31, 2009 at 2:28 pm 3 comments

Like a lot of econ soc people nowadays, I’m generally more interested in “open systems” analyses of organizational fields than in anything that opens up the black-box of the firm, but two article (New Yorker and NY Times) make me seriously envy the people who do qualitative case studies. At least read the Times article and if possible the NYer, but here’s an outline:

  1. In NYC it’s almost impossible to fire a school teacher who has tenure (which they reach after three years). Termination involves an extremely long (NYer compares it to the OJ trial) and expensive arbitration hearing. Apparently in the last few years a total of 8 teachers have been fired mostly or entirely for poor performance, in general you have to do something like molest a kid or be a serious drunk to get fired, and even in these cases that would only be at the end of a long arbitration process.
  2. In the past few years, the NYC school chancellor has shut down schools that he judges to be failing. Some of the teachers were hired by other schools but several hundred have either not applied or have been rejected. The chancellor would like to figure out a way to fire these remaining teachers, but because of point “1” most of the teachers in these schools go into the “reserve pool,” continue to be paid, and are sometimes used as subs until they get a permanent job but mostly are kept idle.
  3. NYC public schools have a hiring freeze, which in practice means that vacant positions can only be filled from the reserve pool.
  4. Many principals would rather leave the positions vacant that hire the reserve pool teachers.

Regardless of whether you sympathize more with the reserve pool teachers or with the chancellor and principals, you can agree that this is an organization with a serious internal power struggle among stakeholders and a conflicting set of rules, incentives, and expectations. There’s so much going on here that it could fill many a b-school/soc dissertation, but I’ll try to hit a few of the obvious points in a couple hundred words.

The first thing to note is that the principals clearly have a very strong preference (both expressed and articulated) for new workers over displaced incumbents. The young workers are apparently superior both in terms of price and perceived quality. The price thing is simple, since (like most civil servants) school teacher salaries are determined by seniority and credentials, it’s much cheaper to higher new entrants than incumbents. (NYC teachers start at $45,530 but with enough seniority and credentials can make up to $100,049). Furthermore there’s a kind of option value to hiring young workers in that they don’t have tenure (yet) and thus the principal can try them out on a probationary basis, whereas once you hire a displaced incumbent you’ll be stuck with them, even if problems manifest immediately.

The quality thing is more complicated. The principals perceive the reserve pool teachers as far below average because they came from failing schools and nobody else wanted to hire them when the schools closed. If you take seriously a preferential attachment/cumulative advantage argument that the schools with the most disadvantaged students and the worst reputations got stuck with the most incompetent teachers then this is an entirely rational inference on the part of the principals. Likewise it makes sense if these were good teachers ex ante but after having spent a few years in these schools they learnt (and cannot be trusted to later unlearn) a shared student/teacher culture of mediocrity. The only way I can think of to argue that the principals’ perception is flawed is to note that status is defined by one’s associations, so it’s plausible to imagine that teachers whose skill and motivation are actually typical of the district would acquire stigma from having worked with stigmatized students. (This latter model implies that family background is such a strong determinant of school outcomes that the schools did not fail the students, but vice versa). Another dimension of stigma could be ageism (which Gary Becker might define operationally as a taste for young workers net of productivity). Thus we can come up with both valid and invalid reasons why principals might think the reserve pool teachers were incompetent. Indeed, they seem to be judged deficient not just relative to the opportunity cost of young workers but in absolute terms — some principals say “they planned to eliminate open positions from their budgets rather than take on teachers they considered undesirable.”

However it’s not just that the perceived undesirability of the incumbents but the perceived desirability of the new entrants. The poor economy can be seen as a shift in the supply curve for labor so for any given price point you’re going to get a higher quality worker. Simply put, you get a better worker for your $45,530 a year when unemployment is high and it’s a buyer’s labor market, as it is now. Thus by historical standards the applicant pool now has to look really good.

If you were a principal, would you rather hire a recent graduate of Rutgers, maybe even a fired up “Teach for America” participant from Columbia, or a teacher who has been occasionally subbing since the district shut down PS 1373682 because only 5% of the students were reading at grade level? What about when you consider that between seniority and credentials (which are of dubious pedagogical utility) you’d have to pay the lifer about 1.5x – 2x the salary of the kid? The obvious answer is that most principals have an extremely strong preference for the kid and get pretty frustrated when told they have to hire the lifer.

The teacher’s union likes to emphasize the price argument and alleges that the district is trying to push out teachers with a lot of seniority. From one perspective this is an implicit admission that the seniority payscale is decoupled from productivity and thus in pushing for such a payscale the union itself has created the unintended consequence of making incentives for the district to try to push out senior teachers. From another perspective (which I’m assuming the union would be sympathetic to), young teachers are not signing up for the $45,530 a year they get at the start, but for the whole career, an important part of which is the expectation of regular raises. Under this model, the seniority payscale (and for that matter, the comparably generous pension system) is effectively a form of deferred compensation and it’s not so much that senior teachers are “overpaid” so much as that they are effectively drawing backpay and in attempting to cut them loose the district is engaging in the time inconsistent bargaining.

Another issue you see in all this is that classic of 60s org theory, loose coupling:

Several principals — who did not want their names published for fear of angering the administration or the teachers’ union — said they were circumventing the restrictions by offering new teachers jobs as long-term substitutes or hiring them as specialized teachers but placing them in regular classrooms. Some said they planned to eliminate open positions from their budgets rather than take on teachers they considered undesirable, and others said they were holding out in the hope that Mr. Klein would lift the restrictions.

That is, these principals have some slack and autonomy and are using it to evade the rules so as to get more desirable workers, either by hiding the position under a different line-item or simply by keeping it vacant so they keep the option value in the event that the rules change (a case of “regime uncertainty”).

Overall what we’re seeing is a shift in the institutional model of the school district driven by policy entrepreneurs (most notably Klein and Bloomberg) which is embraced by some stakeholders (principals) and resisted by others (teachers). The chancellor describe the change as moving from a system that serves the interests of adults — read, teachers — over students to vice versa, but another way to describe it is a shift from a highly institutionalized model that emphasizes process and rights, to one that puts more emphasis on measured results. A corollary of this is a shift, characteristic of the broader economy, from lifetime employment to one where the employee’s value to the organization is continually evaluated. What has not yet happened, but what the chancellor would like to see, is a switch from a system that puts its highest priority on avoiding false accusations against teachers (and has substantial due process safeguards to ensure this) even at the expense of thwarting accurate accusations to one that emphasizes getting an estimate of teacher quality and not worrying so much about cases where the bias goes against the teacher.


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  • 1. Noah  |  August 31, 2009 at 5:06 pm

    I think we’re seeing some parallels in LA, but with more of a move to create charter schools with some degree of autonomy from the rest of the school board. Instead of closing “bad” schools, in LA the move seems to be trying to have other organizations come in and try to do a better job of running the school. My understanding of the charter schools is that they have more hiring and firing autonomy.

    Firing a teacher in LA is just as hard as it is in NY – the LA Times ran a series about it a few months ago.

    Comparative case study anyone?

  • 2. Matt  |  September 4, 2009 at 11:29 pm

    The New Teacher Project ( is a good source of information on precisely these issues. Um… in case you were interested.

    (And no, I don’t work for them – they turned me down :/)

  • 3. kp  |  December 4, 2009 at 7:48 am

    I am very curious as to why only in urban schools is there a strong desire to go purge the ranks of any one with more than 3-5 years experience? Could the problem be embeded in the fact that there is a strong deficiency in managerial experience, many of the new schools are opening with Principals in there mid to late 20’s who honestly do not have the experience to handle the questions, How are we going to do this and Why are we doing this? When my Dr. was on vacation his sub who was new to practicing argued with me about taking a test that I told him would be positive he insited on waisting my time with the test anyway, I left and saw my Dr. the following week. I say this for this reason why is it that teaching is the only proffesion that experience is a detraction and lack of experince is prized? Things that make you go HMMMM.

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